San Francisco Now Leading Country in Paid Family Leave

In a unanimous vote, the San Francisco Board of Supervisors passed a law mandating up to 6 weeks of fully paid family leave for new parents. Not only does this new legislation provide much needed support for mothers, but it applies to fathers and, as the icing on the cake, same-sex couples as well!  I wouldn’t really call it progressive, as U.S. policy on paid family leave is pretty much non-existent compared to other countries around the world, but it’s definitely an advanced step in the right direction for the U.S.

The State of California currently has a Paid Family Leave Program that pays up to 55% of an employee’s salary for up to 6 weeks, but on the heels of the Board’s legislation, Governor Jerry Brown signed a bill expanding that benefit to up to 70% of an employee’s salary. The programs expansion will take effect in 2018.

Who’s Eligible?

The legislation applies to all covered employees, which is defined as:

1. Someone who is eligible for a Paid Family Leave claim,
2. Someone who started with a covered employer at least 90 days prior to the start of the leave period,
3. Someone who performs at least 8 hours of work per week for the employer within the city (you must work in the city, but you are not required to live within the city),
4. Someone who works at least 40% of their total weekly hours for that covered employer within the city.

That’s right folks–in the midst of recent anti-LGBT laws throughout the country, this legislation doesn’t discriminate. Anyone who meets the above criteria will be covered.  Being eligible for a Paid Family Leave claim falls under California’s disability insurance laws, but basically you have to have been employed prior to the leave period and would suffer a loss of wages when you need to take time off work to bond with a new child. This includes any new child, biological or adopted.

Very Few Employers Exempt

Government entities and employers with less than 20 employees are exempt, which means any private or non-profit business with 20 or more employees anywhere in the world will be considered “covered employers” and required to fork up the additional amount not covered by the State’s disability insurance program. Companies with less than 50 employees will be required to implement the legislation starting in 2018, while companies with more than 50 employees are required to begin January 1, 2017.

Where’s the Money Coming From?

The Paid Family Leave program is an extension of the State’s disability insurance program, which means 55% of the money comes from a tax on employees. Almost all private, and many government and non-profit employees, contribute to the states disability insurance program.  In fact, in order to be eligible to apply for paid family leave, the employee must have paid at least $300 worth of withheld taxes to the program (or if unemployed, you had to be looking for work). Until the Board passed this legislation, new parents were out the remaining 45% of their income.

Under the new expanded Paid Family Leave coverage that will take effect in 2018, workers making minimum wage will be eligible for 70% of their pay while on leave; employees making more than minimum wage will be eligible for up to 60% of their pay.

This means the remaining 30-40% will come from the covered employers. The Board’s bill is currently awaiting Governor Brown’s approval, but it’s expected he’ll sign.

There’s a Downside, but the Benefits Outweigh the Negatives

The biggest downside is the increased responsibility on behalf of the businesses, especially small businesses that may already be struggling. According to the Office of Economic Analysis Impact Report, the law increases the cost of hiring, increases employer compensation by close to $16 million (at a minimum), will reduce the cities jobs, will cause slow job creation and replacement, and would create negative multiplier effects on the local economy.

Only 55% of employees that claim assistance under the Paid Family Leave program actually live within San Francisco, which means the remaining 45% of non-resident employees will inevitably be spending, at least some of, the extra income outside of the city, which, in turn, negatively impacts those small businesses within the city that are footing the bill.

On the plus side, the law would create an additional $26.5 million in household income for San Francisco employees, which is much needed in an area where the cost of living is ever increasing. Although a broad step in the right direction for the U.S., it’s a modest one by global standards.

The U.S. is the only developed country in the world that doesn’t guarantee paid leave to new parents. The Family and Medical Leave Act only covers 12 weeks of unpaid leave. With New York recently mandating 12 weeks of paid leave for parents at 50% of their income, California is among only 2 other states offering paid family medical leave.

Although 12 weeks of paid leave for fathers ranks fairly well among paternity leave in other countries, the average number of weeks offered for maternity leave in countries around the world is 54. That’s 54 paid weeks for mothers.

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