13 April 2016 California increases paid family benefits — San Francisco ordinance would require fully paid parental leave On April 11, 2016, California Governor Jerry Brown signed legislation into law, increasing the partial wage replacement rate under the California Paid Family Leave (PFL) and State Disability Insurance (SDI) programs from the current 55% to 60% or 70% effective January 1, 2018, depending on the individual's income. (AB 908.) Under the statewide California Paid Family Leave (PFL) program, employees who contribute to the California state disability insurance (SDI) fund are entitled to six weeks of partial (55%) pay each year while taking time off from work to bond with a newborn baby, newly adopted child, or new foster child. The 55% wage replacement is funded through employee payroll contributions. a. 70% for those who make up to 33% of the California average weekly wage. According to the bill analysis, implementation of AB 908 will likely increase the employee contribution rate by 0.1% over what it would have been for calendar years 2019 through 2021. For calendar year 2016, employers withhold from employees' pay at a total SDI/FLI rate of 0.9% up to a taxable wage base of $106,742 (maximum withholding of $960.68 for the year). San Francisco is poised to be the first U.S. city to require six weeks of 100% paid parental leave. The current version of the ordinance, which passed a final reading on April 12, 2016, must be approved as anticipated by San Francisco Mayor Ed Lee within 10 days following the Board's final passage. Effective January 1, 2017, the San Francisco ordinance would require San Francisco employers with 50 or more employees to make up the difference (currently 45%) through partial wage replacement to covered employees taking parental leave under the California PFL program. On July 1, 2017, the ordinance's partial wage replacement requirement would expand to employers with 35 or more employees and on January 1, 2018 to employers of 20 or more employees. A "covered employee" is an employee (1) who commenced employment with the employer at least 180 days prior to the start of the leave period, (2) who performs at least eight hours of work per week for the employer within the geographic boundaries of the city of San Francisco, (3) at least 40% of whose total weekly hours worked for the employer are within the geographic boundaries of the city of San Francisco, and (4) who is eligible to receive paid family leave compensation under the California PFL law for the purpose of bonding with a new child. During the leave period, a covered San Francisco employer would be required to provide partial wage replacement to the employee in an amount that, added to the California PFL compensation, equals but does not exceed 100% of the employee's gross weekly wage. Prior to January 1, 2018, the employer's wage replacement obligation would be 45%. Effective January 1, 2018, for employees eligible for the state PFL wage replacement rate of 60%, the employer's wage replacement obligation would be 40% (30% for employees eligible for the PFL wage replacement rate of 70%). In cases where an employee has multiple covered employers, the wage replacement amount would be apportioned between or among the employers based on the percentage of the employee's total gross weekly wages received from each employer. Conversely, in a case where an employee works for a covered employer and a non-covered employer, the covered employer would be responsible only for its percentage of the employee's total gross weekly wages. Effective January 1, 2016, the state's maximum weekly PFL benefit amount is $1,129, which represents 55% of a person's weekly wages based on an annual salary of approximately $106,740. Employees who earn more than $106,740 in 2016 do not receive the full 55% of their salary under the state PFL program. A San Francisco employer's wage replacement obligation under the ordinance would be proportionally capped by reference to the state PFL maximum weekly benefit amount. Using the 2016 state rates (which will likely change for 2017), an employer's maximum weekly wage replacement amount under the ordinance would be $924 per week. (The state's PFL maximum weekly benefit amount ($1,129) is 55% of $2,053; 45% of $2,053 is $924.) For more information, see the current summary of the ordinance. Other than California, two other states, New Jersey and Rhode Island, currently have employee-funded paid parental leave laws that provide for partial wage replacement for a limited amount of time spent bonding with a new child. As we previously reported, a recently-enacted New York budget bill provides for employee-funded paid parental leave starting January 1, 2018. The New York parental leave program will also provide only for partial wage replacement. Vermont Senator and presidential candidate Bernie Sanders is advocating for paid federal parental leave benefits funded by employee contributions into an insurance fund, such as Social Security (S. 786).
Document ID: 2016-0674 | ||||||||||||||||||||
