San Francisco passes Paid Parental Leave Law



April 06, 2016

Employment Law Alert

Author(s): Marjorie S. Fochtman

The City of San Francisco is the first in the nation to require employers to pay for parental leave. In 2004, California became the first state to create a family leave insurance program that provides partial wage replacement of 55% of weekly wages up to a cap of $1,129 for employees on leave for family care giving or bonding with a new child. The State of New York recently passed a similar law. Now, San Francisco will require employers to “top up” the Paid Family Leave benefits for up to six weeks by paying supplemental compensation consisting of the difference between the state-provided benefits and an employee’s full pay for new-child bonding. The new law takes effect on January 1, 2017, for employers with 50 or more employees and on July 1, 2017, for employers with 20 or more employees, regardless of location.

An employee is eligible for the parental supplemental compensation if the employee: (1) has worked for the employer for at least 90 days, (2) works an average of at least eight hours per week, (3) works at least 40% of his or her weekly hours in San Francisco on average, and (4) is eligible for the state’s Paid Family Leave

The leave may be used any time during the first year after the birth of the child or after placement of the child through adoption or foster care. This paid leave is in addition to benefits the mother may receive for disability due to pregnancy and childbirth.

Employers have the discretion to require that employees use up to two weeks of unused accrued vacation or PTO leave before taking California Paid Family leave. These two weeks will help meet an employer’s obligation to provide San Francisco parental supplemental compensation during the leave period.

As a precondition of receiving the supplemental compensation, an employer may require an employee to agree in writing to reimburse the full amount of the supplemental compensation if the employee voluntarily resigns from employment within 90 days of the end of the employee’s leave.

If an employer terminates a covered employee during the leave period, the employer’s obligation to pay the supplemental compensation continues for the remainder of the California Paid Family Leave period.

Employers must post a notice regarding employees’ rights under the new law and the posting must be provided in all languages spoken by more than 5% of the employer’s San Francisco workforce.  In addition, employers must retain records documenting supplement compensation paid to employees for a period of three years and allow the Office of Labor Standards Enforcement access to the records.

Interestingly, when the state passed the state-funded Paid Family Leave program in 2004, it provided no job protection for employees taking advantage of the paid leave. San Francisco’s Paid Parental Leave is much more protective of employees. Under the ordinance, an employer may not discriminate or take adverse action against any person in retaliation for exercising the right to supplemental compensation.

The law includes an administrative enforcement scheme with penalties, and a private right of action permitting remedies of reinstatement; back pay; payment of any supplemental compensation withheld; the dollar amount of the supplement compensation withheld from the employee multiplied by three, or $250, whichever is greater; payment of an additional sum as liquidated damages of $50 per day for each employee whose rights were violated; and attorneys’ fees and costs.

The requirements do not apply to employees covered by a collective bargaining agreement but only if these requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms or the agreement was entered into before the effective date of the ordinance.

Employers with employees in San Francisco should evaluate their current family leave policies and implement policies and procedures for compliance with this new law.

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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