Goodwin Insights June 22, 2017

Small Employers Must Comply With SF Paid Parental Leave Ordinance

Since 2004, the State of California’s Paid Family Leave (PFL) insurance program has provided partial pay benefits for employees to take up to six weeks off work to care for a family member or to bond with a new child. The program is funded entirely by employee contributions and, currently, employees can receive up 55% of their standard weekly earnings, subject to a cap of $1,173.

Passed in late 2016, the new San Francisco Paid Parental Leave Ordinance requires employers to make up the 45% difference between the PFL payments from the state and the employee’s standard weekly earnings when PFL is taken for the purpose of new child bonding. All San Francisco-based employees (part- and full-time) must be provided with up to six weeks of compensation, subject to certain caps. 

Since January 1, 2017, employers with 50 or more employees company-wide, have been required to comply with the new San Francisco Paid Parental Leave Ordinance. The compliance deadline for companies with 35 or more employees is quickly approaching on July 1, 2017. Employers with 20-35 employees have been given a reprieve until the start of 2018.

To be eligible for this compensation, the employee must:

  • Work for the employer for at least 180 days prior to the leave of absence and take the leave of absence within one year of the child’s birth, adoption, or foster care placement;
  • Work at least eight hours per week for the employer and work in San Francisco at least 40% of his or her weekly hours for the employer; and
  • Independently apply for and receive both California PFL and San Francisco Ordinance benefits, and notify the employer of the receipt of such benefits

Employers may require the employee to use up to two weeks of the employee’s accrued vacation/PTO to meet the maximum six-week compensation obligation. Additionally, employers that already maintain a policy providing at least six weeks of paid leave for the purpose of child bonding are not required to pay any additional compensation under the Ordinance. While the Ordinance places a significant financial burden on employers, some of that burden will be lifted when, on January 1, 2018, the PFL payment will increase to 60%-70% of the employee’s standard weekly earnings—thus reducing the amount the employer will need to chip in.

The Ordinance has other complicated coverage, compensation, and administrative requirements. Please contact Goodwin’s California employment experts if you need assistance with implementation or with reviewing and revising leave of absence policies and procedures.