Employment Law Alert: San Francisco Paid Parental Leave Law Update

As discussed in detail in our July 1, 2016 Employment Law Alert, the San Francisco Paid Parental Leave Ordinance requires employers to provide eligible San Francisco employees taking leave to bond with a new child with up to six weeks of “Supplemental Compensation” equal to the difference between the employee’s California Paid Family Leave (“PFL”) benefit and the employee’s normal gross weekly wages such that the employee receives 100% of their weekly salary, subject to a weekly maximum benefit amount, during the six weeks of leave. Effective January 1, 2017, the ordinance applies to employers with 50 or more employees. The ordinance applies to employers with 35 or more employees as of July 1, 2017, and employers with 20 or more employees as of January 1, 2018. The San Francisco Office of Labor Standards Enforcement (“OLSE”) has issued Rules Implementing the Paid Parental Leave Ordinance. We have summarized some of the most import aspects of these Rules below.

Employee Notification

• Posting: Employers are required to post in a conspicuous place a Notice regarding employees’ rights under the ordinance at any workplace or job site where a covered employee works.

• Leave Form: In addition to the posting requirement above, covered employers must provide employees with a copy of the San Francisco Paid Parental Leave Form within a reasonable time after the employee tells the employer of the fact that she or he is expecting a child, or sooner if the employee inquires about paid parental leave. Employers are also encouraged to give a copy of the leave form to each current and new employee.

• Employee Handbook: The Rules provide that if the employer publishes an employee handbook that describes other kinds of personal or parental leave, the employer shall include a description of the rights to Supplemental Compensation under the San Francisco Paid Parental Leave Ordinance in the next edition of the handbook it publishes following the adoption of these Rules. Employers are advised to review and update their employee handbooks in compliance with this requirement.

180-Day Eligibility Period For Covered Employees

• To be eligible for Paid Parental Leave benefits, an employee must, among other requirements, have commenced employment with the employer at least 180 days prior to the start of the leave period. The Rules clarify that this means the employee’s first day of employment with the employer was at least 180 calendar days prior to the first payable day of his/her leave under the PFL program for the purpose of bonding with a new child.

• The Rules further provide that, for an employee who separates from employment prior to reaching at least 180 calendar days of employment, his or her prior days of employment shall count towards the 180 day eligibility period if the employee returns to work for that same employer within one year of the separation date. In addition, an employee who separates from employment who has satisfied the 180 days of employment requirement shall not be required to complete a new 180 day eligibility period if rehired by the same employer within one year of the separation date.

Employer Size

• To qualify as a Covered Employer under the Ordinance, an employer must “regularly employ” the required threshold number of employees. The Rules provide that when calculating whether an employer employs the threshold number of employees, it must include all employees, regardless of their status or classification (e.g., temporary, full-time, part-time), or location (i.e., the employer must count both those employees who work within San Francisco and those employees who work outside of San Francisco).

• If the size of an employer’s workforce fluctuates from week to week, the number of employees shall be calculated by taking the average number of employees performing paid work for each week during a “Lookback Period” (the three monthly pay periods, six bi-weekly or semi-monthly pay periods, or 12 weekly pay periods preceding the start of the first day of an employee’s PFL leave period or preceding the first day of any increment of intermittent PFL leave).

• The Rules provide that all employees within a “controlled group of corporations” must be counted for purposes of determining whether an employer meets the threshold number of employees for coverage under the ordinance. The term “controlled group of corporations” is defined as set forth in Section 1563(a) of the United States Internal Revenue Code, and includes (1) a parent-subsidiary controlled group, and (2) a brother-sister controlled group.

Preconditions to Receiving Supplemental Compensation

In order to receive Supplemental Compensation under the ordinance, employees must satisfy the following preconditions:

• Eligible employees must complete and submit to their employers the San Francisco Paid Parental Leave Form. Employees shall submit the leave form to the employer within a reasonable time following the employee’s receipt of the Notice of Computation from the California Employment Development Department (“EDD”).

• The employee must also either: (1) provide the employer with a copy of the “Notice of Computation” from EDD (Option 1); or (2) provide EDD with permission to share the employee’s PFL weekly benefit amount with their employer (Option 2). The Rules strongly recommend that employees select both Option 1 and Option 2 to expedite receipt of Supplemental Compensation.

The EDD permits employees to apply for PFL benefits up to 49 days after the first day of the leave period, or later with good cause. As a result, most employees may not satisfy the preconditions of receiving Supplemental Compensation until after their PFL period begins, and some may not satisfy the preconditions until after their PFL period ends.

For employees who satisfy the preconditions for receiving Supplemental Compensation prior to or during their PFL period: The employer shall make a good faith effort to make the first Supplemental Compensation payment on the payday for the next full pay period following the employee’s satisfaction of all the preconditions for Supplemental Compensation. Thereafter, the employer shall make a good faith effort to make subsequent payments in accordance with the employer’s regular pay schedule. In no case shall the employer pay the total Supplemental Compensation amount later than thirty days after the last day of the employee’s PFL period.

For employees who satisfy the preconditions for receiving Supplemental Compensation after their PFL period has concluded: The employer shall pay the total Supplemental Compensation no later than thirty days after the employee satisfies the preconditions for Supplemental Compensation.

Intermittent PFL Leave

Employees may receive PFL benefits intermittently, meaning the employee does not have to take the six weeks of leave consecutively but instead may spread it out in separate increments within a 12-month period.

To apply for intermittent PFL, EDD requires that the employee indicate on the EDD CA PFL Claim Form that the employee has “worked or will continue to work” during the PFL period. An employee taking intermittent leave is also required to inform the EDD of which days were worked or will be worked between the first day of the PFL period and the last day of the PFL period. Employees who plan to take intermittent PFL shall notify their employer of the schedule of intermittent leave that they have provided to the EDD. If the employee’s schedule of intermittent leave changes, the employee shall notify the employer of any such changes.