San Francisco Passes Ordinance Requiring Differential Pay for Military Leave
On February 19, 2023, the City of San Francisco’s new ordinance, the Military Leave Pay Protection Act (“MLPPA”), went into effect, which requires private San Francisco employers who have at least 100 employees worldwide, to provide supplemental compensation to their employees that are called to active military duty. These employers must pay their employees the difference between their gross military pay and their gross pay as employees, for up to 30 days in a calendar year. Additionally, the ordinance requires these employers to create procedures for implementation and enforcement of this requirement. Under the ordinance, “military duty” for which supplemental pay is required is defined as those under active military service in response to terrorist attacks, international terrorism, or related extraordinary circumstances, such as military services to provide medical or logistical support to federal, state, or local governments in response to natural disasters, national emergencies, and national health crises.
Almost 20 years ago, Congress enacted the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”) to address some of the challenges that civilians face when they are called to perform military duties or services, particularly with respect to income and employment security. The USERRA protects persons who are “absent from a position of employment by reason of service in the uniformed services” to the same “rights and benefits not determined by seniority” as non-military employees who take leave. Additionally, the State of California enacted Government Code Sections 19775 and 19775.1, which gives State employees paid leave for the first 30 calendar days of active military duty. California Military and Veterans Code Sections 395.01, 395.02, and 395.03 grant other public employees up to 30 calendar days of pay while on military leave. While paid leave has clearly been imposed on public and state employers by state statutes and the USERRA, the San Francisco Ordinance is the first of its kind to require private employers to provide paid military leave.
The issue of whether leave under USERRA should be compensated similarly to other forms of short-term civilian leave (like jury duty or bereavement leave) has hit the courtrooms. In Clarkson v. Alaska Airlines, the Ninth Circuit reversed the lower court’s order granting summary judgment to Alaska Airlines and its affiliate Horizon Air Industries and remanded the case with instructions that the jury should decide whether military service should be considered similar to other forms of short-term paid leave. The Ninth Circuit found the trial court improperly determined as a matter of law that military leave is not comparable to other forms of leave. Instead, it reasoned that military leave could be comparable to other civilian leaves, such as jury duty, because it provides a public benefit, i.e., to maintain safety and protect national security. Due to this reasoning, the Court determined that military leave should be treated the same and paid out if the employer’s policy provides for other types of short-term paid leave. It’s important to note that this case only provides for short-term paid leave of no more than 30 days in a calendar year. Thus, this does not require employers to pay out supplemental income to their employees on long-term active military duty.
Furthermore, the San Francisco Office of Labor Standards Enforcement (OLSE) published some helpful FAQs on the application of this new ordinance. Of note, the FAQ addresses who is responsible for differential pay when the worker is hired through a staffing agency. The OLSE states, "the person or business that employs or exercises control over the wages, hours, or working conditions of the worker is responsible for providing the supplemental compensation." Additionally, the FAQ emphasizes that an employer is only responsible for the differential pay for the days an employee would have been working in San Francisco, and not outside the city.
San Francisco employers who qualify under the ordinance should immediately create and implement procedures to comply with the new MLPPA ordinance and may wish to consult with the author, or one of the other San Francisco-based CDF attorneys to help ensure compliance. Our San Francisco office number is 415.981.3233.