Paid Bonding Leave for Mothers and Fathers in San Francisco

San Francisco approved a measure earlier this month making it the first place in the nation to require businesses to provide fully paid bonding leave for mothers and fathers to spend time with their new child. Kind of.  The measure does not pay for the entire leave, but it does require an employer with 20 or more employees to supplement the employee’s Paid Family Leave from the Employment Development Department.

The proposal was unanimously approved by the city’s Board of Supervisors, AP reported, though one more formal vote is required before the measure can be sent to Mayor Ed Lee, who is expected to sign it into law.

Paid Bonding Leave

Normally, mothers and fathers can receive Paid Family Leave through the EDD  which pays approximately 55% of the employee’s wages for 6 weeks while a parent bonds with a new child.  San Francisco’s new measure will require some employers to supplement the Paid Family Leave so the employee receives the 100% of the employee’s normal gross weekly wage.

When a Covered Employee receives California Paid Family Leave compensation for the purpose of New Child Bonding, a Covered Employer shall, during the leave period, supplement the California Paid Family Leave weekly benefit amount that the employee is receiving by paying the employee Supplemental Compensation in an amount such that the total of the California Paid Family Leave compensation the employee is receiving and the Supplemental Compensation provides, but does not exceed, 100% of the employee’s current normal gross weekly wage.

Paid bonding leave advocates say the issue is gaining momentum across the country much like the debate over a higher minimum wage.  They say the measure is needed because too many parents can’t afford to lose pay to take time off after a birth or adoption.  Some big companies and government entities already provide such benefits, but smaller businesses argue the action in San Francisco is another expensive mandate they can’t afford.

I foresee a potential issue in that the Paid Family Leave benefits are not subject state taxes.  When someone normally receives Paid Family Leave Benefits through the EDD, the benefits are less than the normal wages, but they are not taxed by the state. The employees will actually net more money under the new measure than they would if they just received their normal salary because the portion paid by the EDD is not taxed by the state.  But then again, I tell people to never take my tax advice.  Perhaps a CPA or tax lawyer can explain the fallacies in my logic.

Here are some things to know about the measure:

WHAT DOES THE PAID BONDING LEAVE MEASURE DO?

The state of California currently allows workers to receive 55 percent of their pay for up to six weeks to bond with a new child. The money comes from a state insurance program funded by workers. Paid Family Leave (PFL) benefits are reportable for federal purposes but not state tax purposes.  The measure in San Francisco requires private employers with at least 20 employees to make up the remainder of a parent’s full pay for six weeks.

WHO IS AFFECTED BY THE PAID BONDING LEAVE?

The benefit applies to new mothers and fathers who work at least eight hours a week and spend at least 40 percent of their work week within San Francisco boundaries.  The regulation will be phased in, starting with businesses that employ 50 workers or more in January 2017 and gradually moving up to businesses with 20 or more employees.

A “covered employer” is (1) commencing with January 1, 2017, 50 or more employees; (2) commencing with July 1, 2017, 35 or more employees; and (3) commencing with January 1, 2018, 20 or more employees.

Businesses with 35 to 49 workers must comply starting in July 2017, and businesses with 20 to 34 workers have until January 2018. The new policy affects mothers and fathers, including same-sex couples, of newborns.

The legislation does not apply to the federal, state or other municipal governments, but people who work for the city and county of San Francisco already receive up to 12 weeks of paid leave.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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