On April 21, 2016, San Francisco became the first U.S. city to require six weeks of 100% paid parental leave when Mayor Ed Lee signed the ordinance into law.

Effective January 1, 2017, the San Francisco ordinance requires 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 Paid Family Leave (PFL) program. On July 1, 2017, the ordinance’s partial wage replacement requirement expands to employers with 35 or more employees and on January 1, 2018 to employers of 20 or more employees.

For more information, see the ordinance’s summary. See Tax Alert 2016-674 for more information on these law changes.

San Francisco benefits versus California’s state paid family leave program

Under the statewide California 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.

As we previously reported, effective January 1, 2018, recently enacted AB 908:

— Increases the wage replacement rate for PFL and SDI benefits from 55% to:

a. 70% for those who make up to 33% of the California average weekly wage.
b. 60% for those who make more than 33% of the California average weekly wage.

— Sunsets the increased wage replacement rate on January 1, 2022.

— Eliminates the one-week waiting period for PFL claims.

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