In April 2016, San Francisco Board of Supervisors passed the Paid Parental Leave Ordinance (PPL) – the first local mandate in the nation to require fully paid parental leave for new parents. Under PPL, covered employers are required to provide supplemental income to eligible employees who take parental leave and receive Paid Family Leave (PFL) benefits through the State. PPL took effect January 1 of this year, but its application is phased-in over the course of the year.

Which employers are subject to PPL?

PPL applies to employers that employ 20 or more employees. For purposes of determining employer size, all employees, regardless of status or classification, must be counted. This includes employees who work within and outside of San Francisco. For example, an employer based in San Jose that employs a total of 50 employees, five of whom work regularly in San Francisco, is subject to PPL as to those employees who work in San Francisco.

The effective date of PPL is phased in over the course of 2017. Employers with 50 or more employees must comply as of January 1, 2017; employers with 35-49 employees must comply as of July 1, 2017; and employers with 20-34 employees must comply as of January 1, 2018. These dates reflect the point at which employers must begin providing PPL benefits to eligible employees and the date on which the required notice must be posted in the workplace.

Which employees are covered?

There are four criteria an employee must meet in order to be covered under PPL. The employee must: 1. begin work for the employer at least 180 days prior to the start of the PFL payment period; 2. Work at least eight hours per week; 3. Work in San Francisco for at least 40% of his/her weekly hours, and; 4. Apply for and receive PFL benefits from the State.

How are employer benefits provided under PPL?

In order for an employee to receive compensation under PPL, he/she must take several initial steps. First, the employee must file a claim to receive PFL benefits through the State (PFL benefits are available to employees who take time away from work to bond with a new child). Next, the employee must complete the PPL Form and provide the Form, along with the Notice of Computation of PFL Benefits from the State, it to his/her employer. Finally, the employee may be required to provide the employer with the Electronic Benefit Payment Notification to prove that PFL benefits are being received.

How much supplemental pay is an employer obligated to provide?

Once the employee has established himself/herself eligible for PPL pay, the employer must supplement the employee’s PFL benefits for up to six weeks. Generally, PFL provides 55% wage replacement, which requires the employer to provide the remaining 45% of the employee’s wages. However, PFL benefits are capped at $1,173 per week, which in turn caps the employer’s supplemental pay at $960 per week.

Can employers require the use sick or vacation time during leave?

Employers are permitted to apply up to two weeks of accrued but unused vacation time or PTO to cover the cost of the supplemental pay under PPL, subject to some limitations. Sick time may not be used to cover the cost of the supplemental pay.

Does PPL require employers to provide time off that is not otherwise required by law?

An employer’s obligations under PPL require the employee to first be eligible for and receive State PFL benefits. But PFL (and PPL by extension) do not require an employer provide time off to employees for baby-bonding. Those time off requirements may come from other sources of law, such as the Family Medical Leave Act and California Family Rights Act, but an employer too small to be subject to either of these laws is not required to provide additional time off to employees for the purpose of bonding with a new child. However, due to the availability of PFL benefits, most employers choose to provide this time off.

While the concept of PPL is not complex, its effects on employers can be complicated. The City’s Office of Labor Standard Enforcement released a helpful set of frequently asked questions and other information for employer compliance on its website. In addition to reviewing this information, employers should also take steps to ensure company handbooks and other policies reflect the new requirements under PPL.