Long considered to be at the forefront of providing benefits to employees who take family and medical leave, California recently enacted a new law aimed at increasing the benefits paid out to employees who take time off to care for an ill or injured family member or for new child bonding. Meanwhile, San Francisco’s Board of Supervisors also recently passed a new ordinance requiring employers to provide “supplemental compensation” to employees who work in San Francisco and who take time off for new child bonding, making San Francisco the first city to require such paid parental leave.

Even if you don’t do business in California or San Francisco, these new laws reflect a growing trend across the country to provide greater protections and benefits to employees who take family leave. New York, for example, recently passed a law similar to California’s, providing wage replacement benefits to individuals who take family leave.  Similar legislation is also pending in Connecticut, Massachusetts, and Washington, D.C.  These laws continue the recent trend of mandating paid leave to employees that began with mandatory paid sick leave laws, which have passed in 28 jurisdictions at the state, county or city level.

Read on to find out more about the new California laws.

Increased Benefits Under California’s Paid Family Leave Law

California was the first state in the country to establish a paid family leave insurance program. Called the Paid Family Leave law or PFL, this law provides employees with wage replacement benefits for periods of leave taken to care for a seriously ill family member or to bond with a newborn baby, newly adopted child, or new foster child.  Under a recent amendment, employees commencing a covered leave on or after January 1, 2018, but before January 1, 2022, will be entitled to increased weekly PFL benefits of 60% or 70% of their weekly wages, depending on the highest quarterly wages earned during a base period.  These increased benefits also apply to disability benefits for individuals who are unable to work due to non-work related illness or injury, pregnancy, or childbirth.  Effective January 1, 2018, the amendment also eliminates an existing 7-day waiting period.

San Francisco’s Newest Ordinance on Paid Parental Leave

Employers who do business in San Francisco should also be aware of a new city ordinance requiring them to pay “supplemental compensation” to employees who take leave to bond with a new child and are receiving PFL benefits. This new ordinance, the first of its kind in the country, requires employers to make up the difference between an employee’s regular wages and their weekly wage replacement benefits under the PFL program.

Following are key highlights of the new ordinance:

  • It applies to any employer with 20 or more employees regardless of location. The exact date on which an employer must begin complying depends on the size of the employer.
  • Covered employees must meet several requirements, including minimum length of employment and required hours worked in San Francisco, as well as PFL eligibility for new child bonding.
  • With some caveats, employers will be obligated to supplement an employee’s PFL benefits during the time an employee is on leave for new child bonding for a period of up to six weeks so that the employee’s compensation during that time is 100% of their normal gross weekly wages.
  • Employers can require employees to use up to two weeks of accrued vacation during the time they are on leave for new child bonding to help satisfy or otherwise offset their obligation to pay supplemental compensation. Caution should be exercised, however, if the employee otherwise qualifies for leave under the California Family Rights Act in light of new regulations under that statute which prohibit an employer from requiring an employee to use accrued vacation when receiving PFL benefits or similar partial wage replacement benefits.
  • Employers can also require employees to reimburse them for the supplemental compensation if the employee voluntarily terminates their employment within 90 days of the end of their leave.
  • Employers will be subject to notice and record-keeping requirements.
  • Terminating an employee who has requested supplemental compensation under the new ordinance comes with increased risks; the employer may be required to continue supplemental payments after termination and may be subject to a rebuttable presumption concerning retaliation.
  • The Office of Labor Standards Enforcement is authorized to enforce the ordinance and employees also have a private right of action, subject to administrative exhaustion. Remedies include administrative penalties, liquidated damages, reinstatement, backpay, and attorneys’ fees and costs.

While no immediate action is required with respect to PFL benefits, employers may wish to review their policies to ensure that they accurately reflect and state what benefits are provided through this state program. For employers who have employees that work in San Francisco, it may be prudent to beginning reviewing your parental leave policies and consult with experienced counsel to make sure they are in compliance with the new ordinance.