8 Things Employers Need to Know About San Francisco’s New Fully Paid Parental Leave Ordinance

On April 21, 2016, Mayor Ed Lee signed The Paid Parental Leave for Bonding with New Child Ordinance making San Francisco the first U.S. city mandating employees are provided with six weeks of fully paid parental leave for the purpose of bonding with a new child. The ordinance will be rolled out on a gradual basis based on the size of the employer. On January 1, 2017, the ordinance will take effect for employers with 50 or more employees – regardless of whether the employer employs all 50 employees within the City of San Francisco.

Covered employers with workers in San Francisco will need to update their written policies and training protocols, as well as post notices and retain records pertaining to the ordinance for a period of three years.

What Are Employers Required to Pay 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 mandates employers make up the 45% difference ("Supplemental Compensation") resulting in employees being paid 100% of their normal wages for those six weeks. 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. However, at the employer's discretion, an employee must agree to use up to two weeks of accrued, unused vacation leave to help meet the employer's Supplemental Compensation obligations. If the employee does not agree, then the employer is not required to provide Supplemental Compensation.

When Will the Ordinance Take Effect?

The ordinance will be rolled out on a gradual basis:

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 less than 20 employees within San Francisco's geographical limits.

What Makes an Employee Eligible for Paid Parental Leave?

Once the ordinance goes into effect, a new mother or father is entitled to receive Supplemental Compensation from their employer if they: (1) commenced employment with the covered employer at least 180 days prior to the start of the leave period, (2) perform at least eight hours of work per week for the employer within the geographical boundaries of the City of San Francisco, (3) work at least 40% of his or her total hours for the employer within the geographic boundaries of the City of San Francisco and (4) are eligible to receive Paid Family Leave Compensation under the California Paid Family Leave law for the purpose of bonding with a new child. The ordinance applies both to part-time, full-time and temporary employees of a covered employer.

What Employer Actions Could Violate the Ordinance?

The San Francisco measure prohibits employers from interfering with, restraining or denying the exercise of or the attempted exercise of any rights under the ordinance. Moreover, employers are prohibited from discharging, threatening to discharge, demoting, suspending, discriminating or taking adverse action against employees in retaliation for exercising their rights under the ordinance.

Such rights include, but are not limited to, the right to:

• Request or apply for California Paid Family Leave
• File a complaint with the Office of Labor Standards Enforcement ("OLSE") or a court
• Inform any person about the employer's alleged violation of the ordinance
• Cooperate with the OLSE in its investigation of alleged violations
• Oppose any policy, practice or act that is unlawful under the ordinance
• Inform any person of his or her possible rights under the ordinance

If an employer takes an adverse action against a person within 90 days of that person exercising his or her aforementioned rights under the ordinance, a rebuttable presumption will arise that such adverse action was taken in retaliation. The employer will have to present clear and convincing evidence that the adverse action was taken solely for a non-retaliatory reason in order to avoid liability under the ordinance.

Further, if an employer reduces an employee's wages during a covered leave period or within 90 days of making a request or application for California's Paid Family Leave, then a rebuttable presumption arises that the employer did so to reduce its Supplemental Compensation obligation. To rebut the presumption, the employer must provide clear and convincing evidence that it did so for another reason.

In addition to a rebuttable presumption arising, 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.

What if an Employer Already Offers Paid Parental Leave?

If an employer already has an existing policy which provides its employees with at least six consecutive weeks of fully paid parental leave within any 12-month period for the purpose of new child bonding, then the employer does not need to further comply with the Supplemental Compensation provisions in the ordinance. The San Francisco Ordinance provides minimum requirements pertaining to paid parental leave and shall not be construed to prevent employers from adopting or retaining leave policies that are more generous than what the ordinance requires.

What if an Employee Quits After Receiving Paid Parental Leave?

As a precondition to receiving Supplemental Compensation, employees are required to sign a form requiring them to reimburse the employer for the full amount of Supplemental Compensation received if the employee voluntarily separates from employment with the employer within 90 days of the end of the employee's leave period. An employer is entitled to reimbursement once they make such a request in writing to the employee.

Who May Enforce the Ordinance?

• The OLSE may investigate any possible violations of the ordinance by an employer and bring an administrative enforcement or a civil action against an employer.
• The City may bring a civil action in court against an employer for violations of the ordinance.
• 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.

What Remedies and Penalties Can Be Lodged Against an Employer Found in Violation of the Ordinance?

• Reinstatement
• Backpay
• Payment of any Supplemental Compensation unlawfully withheld or the amount of Supplemental Compensation unlawfully withheld from the employee multiplied by three, or $250.00, whichever is greater
• $50.00 for each employee or person whose rights were violated for each day that violation occurred
• Injunctive relief
• Attorneys' fees and costs

Next Steps for San Francisco Employers

Allen Matkins is available to help any employer with interpreting San Francisco's Paid Parental Leave for Bonding with New Child Ordinance's requirements and updating their written policies and training protocols.