San Francisco's Board of Supervisors approved an ordinance that will provide employees with six weeks of fully paid parental leave, making it the first city in the United States to do so.

Currently, employees taking parental leave in California are allowed to receive up to 55 percent of their wages for six weeks through the state's disability insurance program, but California law does not otherwise obligate employers to provide any paid parental leave to make up the difference. Once San Francisco's new law takes effect on January 1, 2017, employers with workers in San Francisco will be required to pay for the remainder, which would provide parents with full wages for six weeks.

Who Must Comply?

As of January 1, 2017, the ordinance will apply to all private employers doing business in San Francisco who regularly employ 50 or more employees, regardless of location. Employers doing business in San Francisco with 20 employees or more, regardless of location, must comply after July 1, 2017. If an employer provides benefits that equal or exceed this requirement, the ordinance does not apply.

The ordinance does not apply to the City or any other governmental entity. In addition, rights under the ordinance can be waived through collective bargaining.

Who Is Eligible?

The ordinance applies to employees who are receiving Paid Family Leave benefits through the State for the purpose of new child bonding, including the birth of a child or placement of a child through adoption or foster care.

Full-time, part-time, and even temporary employees are eligible to receive full pay under the ordinance, although employees must work an average of at least eight hours a day and spend an average of at least 40% of his or her weekly hours worked for the employer within San Francisco to be eligible. The employee must commence work with the employer at least 90 days prior to the start of leave. Where an employee's hours fluctuate from week to week, employers must use the average of the employee's weekly hours worked during the three monthly pay periods, six bi-weekly or semi-monthly pay periods, or 12 weekly pay periods, immediately preceding the start of the employee's Paid Family Leave period.

To be eligible, Employee must agree to apply up to two weeks of accrued vacation time to help meet the employer's obligation to provide supplemental compensation.

How Will It Work?

When an eligible employee receives California Paid Family Leave compensation for the purpose of new child bonding, the employer must pay supplemental compensation such that the employee receives his or her full weekly wage. Employees who qualify for the maximum state benefit are entitled to a maximum benefit derived by dividing the state's maximum benefit by the percentage of wage replacement under the California Paid Family Leave Law.

Where an employee works for several employers, the employee's supplemental compensation will be apportioned between the employers.

Employer Takeaways

Employers with employees located in San Francisco should prepare to have a compliant policy by the time the ordinance goes into effect next year. Employers should be aware of the ordinance's notice, posting, and recordkeeping requirements, as well as its prohibition against retaliation.

The ordinance provides for regulatory implementation and enforcement by the San Francisco Office of Labor Standards Enforcement, as well as a private right of action. Remedies include restitution, liquidated damages, and injunctive relief, plus attorneys' fees.

This publication was written by Emily Leahy and the Labor Section Client Services Team.