A comprehensive guide to the San Francisco Leave Ordinance
San Francisco has a paid family leave ordinance that Bay Area employers should be aware of.
California has a state-wide paid family leave law that provides state-administered insurance benefits to almost all employees in the state. San Francisco’s ordinance requires that covered employers supplement those benefits for covered employees.
In this article, we discuss the San Francisco supplemental leave pay requirement.
Which employers are covered by the ordinance?
An employer is any person, including corporate officers and executives, who (1) directly or indirectly (including through a staffing agency) employs or exercises control over an employee; or (2) has 20 or more employees. The statute does not say the date or period in which the 20 employee threshold should be measured. The City of San Francisco and other governmental entities are exempt from the law.
Which employees are eligible for supplemental paid family leave benefits from their employers?
An employee is covered by the San Francisco ordinance if they meet four criteria:
The employee commenced employment with the covered employer at least 180 days before the start of the leave period;
The employee performs at least eight hours of work per week for the employer within the geographic boundaries of San Francisco;
At least 40% of the employee’s total weekly hours worked for the employer are within the geographic boundaries of San Francisco; and
The employee is eligible to receive paid family leave compensation from California’s PFL program.
When it comes to eligibility, California’s PFL program is less restrictive than San Francisco’s ordinance. California requires that employees have contributed withholdings on at least $300 in wages during a base period before they can receive PFL benefits.
As explained above, San Francisco’s ordinance has numerous additional eligibility requirements. Thus, it is possible that an employee could be eligible for benefits from California but not be eligible for supplemental payments form an employer under the San Francisco ordinance. For example, if the employee has only worked for the employee 179 days as of the start of the leave period, the employee would qualify from CA but not supplemental benefits from their employer under the San Francisco ordinance.
For purposes of meeting the eight hour and 40% eligibility requirements, if the employee’s hours fluctuate from week to week, then the San Francisco Office of Labor Standards Enforcement must determine whether the individual is eligible. The agency is required to use an average of the person’s weekly hours worked for the employer during the three monthly pay periods, six bi-weekly or semi-monthly pay periods, or 12 weekly pay periods immediately before the start of the person’s PFL period under CA’s wage replacement law. If the person was on leave during any of those periods, then those periods are not to be counted towards the average. Instead, the agency must consider additional earlier pay periods for that person in order to satisfy the designated thresholds. The agency cannot consider pay periods more than 26 weeks before the CA PFL period begins.
When will a covered employee working at a covered employer qualify for supplemental leave payments?
Employees can qualify for supplemental payments under San Francisco’s ordinance when they receive CA PFL benefits for “new child bonding.” New child bonding means time spent with the employee’s minor child during the first year after the child’s birth or placement with the employee through foster care or adoption.
What must the employer pay to supplement the benefits?
San Francisco employers are required to pay supplemental compensation so that the employee’s California paid family leave benefits plus the supplemental payments equal “100% of the employee’s current normal gross weekly wage.”
How does the employer calculate the employee’s “normal gross weekly wage”?
If the employee’s weekly wage fluctuates, then the normal gross weekly wage is calculated based on the employee’s average earnings from that employer during the three monthly pay periods, six bi-weekly or semi-monthly pay periods, or 12 weekly pay periods immediately preceding the start of an employee’s California Paid Family Leave period.
If the employee was on unpaid or partially paid leave during any of the aforementioned pay periods, such pay periods shall not be counted towards the average. Rather, the average is calculated using additional earlier corresponding pay periods. The employer shall not use pay periods earlier than 26 weeks before the CA PFL period began.
The ordinance has another pay provision that applies in two circumstances:
If the CA PFL weekly benefit amount is based on earnings from a calendar quarter during which the employee did not work for the covered employer; or
If the CA PFLweekly benefit amount is based on a quarter during which the employee earned a higher weekly wage from the covered employer than the employee is receiving at the time of his or her leave.
If either of those criteria are met, then the employer must pay supplemental compensation that provides 100% of the employee’s normal gross weekly wage in his or her current position. However, if the employer reduces the employee’s wages during the leave period or within 90 days of learning the employee intended to use CA PFL, that act creates a rebuttable presumption that the reduction was made to reduce the employer’s obligations under the San Francisco ordinance. The employer will need to provide clear and convincing evidence that the reduction was made only for a reason other than reducing the supplemental compensation obligation. Otherwise, the employer is required to pay supplemental compensation during the leave period based on the employee’s prior wage rate.
What if the employee works for more than one employer?
If the employer works for more than one employer, and all employers are covered by the San Francisco ordinance, then the supplemental compensation amount is apportioned between or among the covered employers based on the percentage of the employee’s total gross weekly wages received from each employer.
If the employee’s weekly wage fluctuates, then for the purpose of apportioning the supplemental wage, the normal gross wages is calculated using weekly wages during the time periods discussed above.
If the employee works for multiple employers, but one or more are not covered by the San Francisco ordinance, then the covered employer is responsible only for its percentage. Of the employee’s total gross weekly wages. In those cases, the employee will not receive 100% of the supplemental compensation amount.
If an employee is employed by multiple employers, then the covered employer is required to provide employers with information pertaining to wages received from all employers during the 90 days prior to the leave period on a form prepared by the city of San Francisco and signed by the employee under penalty of perjury. If the employer fails to provide the form, then the covered employer does not need to pay any supplemental compensation.
Is there a cap on the weekly benefit amount?
Yes. The state of California has a maximum weekly benefit amount for its PFL benefits. If the employee is receiving that maximum amount from CA, then the supplemental compensation paid by the employer “shall not be calculated” to reach 100% of the employee’s total normal gross weekly wage.
Instead, the employer is required to calculate the supplemental compensation by dividing the state’s maximum weekly benefit amount by the percentage of wage replacement provided by CA’s paid family leave law.
What happens if the employee is discharged?
If an employee is discharged before taking leave, but within 90 days of the employee having notified the employer of the intent to take leave, then that gives rise to a rebuttable presumption that the employer discharged the employee to avoid paying supplemental compensation. Unless the employer can rebut the presumption with clear and convincing evidence that it discharged the employee for a reason other than its obligation to pay supplemental compensation, then the employer must pay the discharged employee supplemental compensation.
Can the employer require the employee to use vacation leave toward the supplemental compensation requirement?
To be eligible for supplemental compensation, an employee must agree to allow the employer, in its discretion, to apply up to two weeks of unused vacation leave that the employee has accrued as of the start of the leave period to help meet the employer’s obligation under the ordinance.
If the employee does not agree to allow the employer to use up to two weeks of unused but accrued vacation, then the employer is relieved of its obligation to pay supplemental compensation. The employee will still be eligible for CA PFL benefits.
Are voluntary plans allowed?
Yes. An employer that has approval to pay CA PFL through a voluntary disability insurance plan must comply with the supplemental compensation requirements by providing the payments through the plan or by making the payments directly to the employee.
What does the law say about coordination of benefits?
An employee receiving supplemental compensation may not receive more than their normal gross weekly wages.
As a precondition of receiving supplemental compensation, the employee must either (1) provide the employer with a copy of the employee’s notice of computation of California PFL benefits from the state or another legally authorized statement or (2) at the time of applying for CA PFL, provide the state with authorization to disclose the weekly benefit amount to the employer so the employer can request and obtain that information from the state. If the employee fails to comply with one of those requirements, then the employer is relieved of its obligation to provide supplemental compensation.
In addition, as another precondition of receiving Supp mental compensation, a covered employee must agree, by signing a form provided by the city, to reimburse the full amount of supplemental compensation received from any employer if the employee voluntarily resigns within 90 days of the end of the employee’s leave period and the employee requests reimbursement in writing.
How does EquiLeave promote compliance with the San Francisco leave ordinance?
EquiLeave provides a calculator that helps employers supplement the benefits employees receive from state laws, including California’s paid family leave law. Our calculator estimates the amount the employee will receive from their state PFL program in order to recommend an amount the employer should pay to supplement those benefits so that the employee will receive 100% of their regular wage, as the San Francisco ordinance requires.
