Last year, San Francisco passed the Paid Parental Leave for Bonding with New Child Ordinance making it the first U.S. city to require that employees be provided with six weeks of fully paid leave to bond with a new child. The ordinance will take effect on a graduated basis based on the size of the employer. On January 1, 2017, the ordinance took effect for San Francisco employers with 50 or more employees (regardless of whether all the 50 employees work in San Francisco).
Here's what you need to know:
Employer Payments Under the Ordinance
In conjunction with California's Paid Family Leave program, which provides California employees with 55% of their wages from worker-funded state disability insurance, the San Francisco ordinance requires covered employers to make up the 45% difference ("Supplemental Compensation") so that the employee gets 100% of his or her normal wages for six weeks of baby bonding time. Leave payments are calculated as a percentage of wages up to an annual ceiling of $106,740, so the maximum weekly benefit amount owed by an employer is $924.
At the employer's discretion, an employee can be required to agree to use up to two weeks of accrued vacation/PTO leave to help meet the employer's Supplemental Compensation obligations. If the employee refuses, then the employer is not required to provide Supplemental Compensation.
When the Ordinance Takes Effect
The ordinance will be implemented on a graduated basis with larger employers required to comply first. The schedule is as follows:
50 or more employees - January 1, 2017
35 to 49 employees - July 1, 2017
20 to 34 employees - January 1, 2018
(Employers with fewer than 20 employees are currently exempt from the Paid Parental Leave Ordinance.)
As noted, the number of employees refers to the total number of employees regardless of location. For example, an employer will be covered by the ordinance if it employs 100 employees state- or nation-wide but has fewer than 20 employees in San Francisco.
Employees Eligible for Paid Parental Leave
A new mother or father employed by a covered employer is entitled to receive Supplemental Compensation if they: (1) commenced employment with the covered employer at least 180 days before the start of the leave period, (2) work for the employer at least eight hours per week in San Francisco, (3) work at least 40% of their total hours for the employer in San Francisco and (4) are eligible to receive benefits under the California Paid Family Leave law for baby bonding leave. The ordinance applies to part-time, full-time and temporary employees of a covered employer.
Employer Actions That Violate the Ordinance
Covered employers are prohibited from interfering with, restraining or denying the exercise of any rights under the ordinance. Employers are also prohibited from taking any adverse action against employees in retaliation for exercising their rights under the ordinance.
If a covered employer takes adverse action against a person within 90 days of their exercising rights under the ordinance, a rebuttable presumption will arise that the adverse action was retaliatory. The employer will have to present clear and convincing evidence that the adverse action was taken solely for a non-retaliatory reason.
Finally, if a covered employer terminates an eligible employee during the leave period, the employer's obligation to pay Supplemental Compensation continues for the remainder of the California Paid Family Leave period.
Employees Who Quit After Receiving Paid Parental Leave
As a condition to receiving Supplemental Compensation, employees may be required to sign a form obligating them to reimburse the employer for the full amount of any Supplemental Compensation they receive if they quit within 90 days of the end of their leave period.
Enforcement of the Ordinance
The San Francisco Office of Labor Standards Enforcement ("OLSE") may investigate alleged violations of the ordinance and bring an administrative enforcement or a civil action against an employer. The City may likewise bring a civil action in court against an employer for alleged violation of the ordinance. Finally, a person or entity may also bring a civil action against an employer after he/she/it provides the OLSE and the City Attorney with written notice and more than 90 days have passed without the City Attorney filing suit or the OLSE providing notice of its intent to bring an administrative enforcement action or a determination that no violation has occurred.
Remedies and Penalties For Violation of the Ordinance
An employer that violates the ordinance may be ordered to reinstate an employee who was terminated as well as to pay back pay, three times any Supplemental Compensation unlawfully withheld, or $250.00 (whichever is greater), $50.00 for each employee whose rights were violated for each day that violation occurred, injunctive relief, and attorneys' fees and costs.
Next Steps
Covered employers with employees in San Francisco should update their written policies, post notices about the ordinance, and retain records pertaining to the ordinance for a period of three years.
Our employment law team is available to help employers interpret and implement the ordinance.