Summary

Both the State of New York and the City of San Francisco recently granted paid family leave to eligible employees. Paid family leave becomes effective on January 1, 2017, in San Francisco and on January 1, 2018, in New York.  

In Depth

Both the State of New York and the City of San Francisco recently adopted significant mandates guaranteeing paid family leave to eligible employees. New York now becomes one of four states mandating paid family leave, alongside California, New Jersey and Rhode Island. The State of Washington passed a paid family leave law in 2007, but it has yet to be implemented. At the federal level, family leave is governed by the Family and Medical Leave Act of 1993, which provides eligible employees with up to 12 weeks of unpaid leave. There is as yet no federal law mandating paid leave, however. The new laws adopted in New York and San Francisco represent efforts to bridge that gap.

New York

On April 4, 2016, New York Governor Andrew Cuomo signed into law a paid family leave act (S. 6406-C) that, as of January 1, 2018, will provide employees with up to 12 weeks of paid leave to bond with a child, to care for an ill family member or to address issues while a family member is on active duty in the US Armed Forces. The new law will be implemented as part of New York’s temporary disability insurance program and will cover all private employers.

Benefits under the law will increase gradually over time:

Eligible employees must work for a covered employer for at least 26 consecutive weeks. If the need for leave is foreseeable because of an expected birth or planned medical treatment, the employee must give notice of the intention to take leave at least 30 days before leave begins. There is no waiting period to start receiving benefits; rather, benefits will be payable on the first full day when leave is required. The employer may offer to charge all or part of the family leave time to the employee’s accrued and unused vacation or personal time, so that the employee can continue to receive a full salary. An employer that pays full salary during a period of leave may seek reimbursement in accordance with the law.   

The new law includes job protection. Employers are prohibited from retaliating against employees for taking family leave. While an employee is on leave, the employer must maintain the employee’s existing benefits for the duration of leave. The employee also will continue to enjoy any rights under a collective bargaining agreement (CBA) or employment contract. When the leave period ends, the employee is entitled to reinstatement. However, the restored employee will not be entitled to any right, position or accrual of seniority or employment benefits to which the employee would have been entitled had the employee not taken leave.

Employers are not required to fund any part of the family leave benefit. The program instead will be funded entirely by employees through a nominal payroll deduction. The new law does not cover public employers, but the State of New York, political subdivisions of the state, public authorities, and other governmental agencies and instrumentalities may elect to become a covered employer for the purpose of family leave benefits.

San Francisco

On April 12, 2016, San Francisco’s Board of Supervisors approved the Paid Parental Leave for Bonding with New Child ordinance, which will provide supplemental compensation to employees who take leave to bond with a new child under the California Paid Family Leave Program. San Francisco Mayor Ed Lee signed the ordinance on April 21, 2016, and it becomes effective on January 1, 2017.

Under the pre-existing California Paid Family Leave Program, most employees who contribute to the California State Disability Insurance fund are currently entitled to six weeks of partial (55 percent) paid parental leave (which will increase to 60 percent, and in some cases 70 percent, after January 1, 2018). San Francisco’s ordinance will require covered employers to replace the remaining portion of an employee’s gross weekly wages during the six-week leave period, so that between the California Paid Family Leave Program and the San Francisco supplemental compensation, the employee will receive 100 percent of the employee’s gross weekly wages. The ordinance will gradually cover smaller employers, as indicated below. Governmental entities, including the City and County of San Francisco, are exempt from the ordinance.

To be eligible for supplemental compensation under the ordinance, employees (including part-time and temporary employees) must (1) work for a covered employer for at least 180 days before the leave period starts, (2) work at least eight hours per week within the geographic boundaries of San Francisco, (3) spend at least 40 percent of their working hours within the geographic boundaries of San Francisco, and (4) be eligible for compensation under the California Paid Family Leave law for the purpose of bonding with a new child. The ordinance will not apply to employees covered by a CBA if the CBA expressly waives the requirements of the ordinance or if the CBA was entered into before the effective date of the ordinance.

In addition to the foregoing, a covered employee must agree to allow the employer (if the employer so chooses) to use up to two weeks of the employee’s unused, accrued vacation time to meet the employer’s obligation to pay supplemental compensation. The employee also must sign a form agreeing to reimburse the full amount of the supplemental compensation if the employee voluntarily quits within 90 days of the end of the leave period and if the employer requests to be reimbursed in writing.

As of January 1, 2016, the California Paid Family Leave Program caps the weekly benefit at $1,129, which is 55 percent of a person’s weekly wages based on an annual salary of approximately $106,740. This amount is likely to change, however, in light of legislation signed by California Governor Jerry Brown on April 11, 2016, (AB 908) which will increase the benefits under the California Paid Leave Program for paid leaves beginning on or after January 1, 2018. As of that date, the weekly benefits to eligible employees will increase to 60 percent, and in some cases 70 percent, of an employee’s weekly wages.

Further guidance is necessary regarding this law’s effect on San Francisco employers covered by the ordinance. In all cases, however, the maximum weekly benefit under the ordinance will be proportionally capped in relation to the state’s maximum weekly benefit. Under the 2016 state rates, the maximum weekly benefit under the ordinance would be $924. If an employee works multiple jobs with different covered employers, the employee’s supplemental compensation would be apportioned among the employers based on the percentage of gross weekly wages that the employee receives from each employer.

The ordinance prohibits retaliation against employees who exercise their rights under the ordinance. If an employer fires an employee or reduces the employee’s wages during the leave period or within 90 days of the employee applying for California Paid Family Leave, a rebuttable presumption would arise that the employer is trying to avoid paying supplemental compensation. The presumption can be rebutted with clear and convincing evidence. Under the ordinance, if an employer fires an employee during the leave period, the employer would be required to pay supplemental compensation for the remainder of that period.

Conclusion

Employers should pay careful attention to developments in this area to ensure that they are in compliance with new laws and policies regarding paid family leave at the state and municipal level. Employers also should consider how best to integrate the new policies into their human resources administration.