Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On January 20, 2023, San Francisco, California’s mayor signed the Military Leave Pay Protection Act (MLPPA), which will require employers with 100 or more employees to supplement the pay of covered employees during a qualifying military leave for up to 30 days in a calendar year. The MLPPA takes effect February 19, 2023—30 days after enactment.
This is San Francisco’s second “supplemental compensation” ordinance; the first was the Paid Parental Leave Ordinance (PPLO) that requires employers with 20 or more employees to supplement the wage replacement benefits an employee receives from California for new child bonding purposes for up to eight weeks. The MLPPA adds to an already notable list of San Francisco ordinances requiring pay for employees when they are not working, which, in addition to the PPLO, includes the Paid Sick Leave Ordinance (all employers) and the Public Health Emergency Leave Ordinance (employers with 100 or more employees). The ordinance presents a compliance challenge for employers generally as it relates to navigating San Francisco employment laws, and the challenge might increase because employers must also navigate the federal Uniformed Services Employment and Reemployment Rights Act (USERRA).
Covered Employers & Employees
The ordinance applies to employers with 100 or more employees, regardless of where they work.
For the ordinance to apply, an employee must work in San Francisco, be a member of the reserve corps of the United States Armed Forces, National Guard, or other U.S. uniformed service organization, and be absent from work for “military duty,” which the ordinance broadly defines as:
[A]ctive military service in response to the September 11, 2001 terrorist attacks, international terrorism, the conflict in Iraq, or related extraordinary circumstances, or military service to provide medical or logistical support to federal, state, or local government responses to the COVID-19 pandemic, natural disasters, or engagement in military duty ordered for the purposes of military training, drills, encampment, naval cruises, special exercises, Emergency State Active Duty, or like activity.
The ordinance applies to part-time and temporary employees, but not to employees covered by a bona fide collective bargaining agreement that expressly waives the ordinance’s requirements in clear and unambiguous terms.
While covered employees are on leave for military duty – which the ordinance allows to be taken in daily increments of one or more days at a time – for up to 30 days in any calendar year, their employers must provide supplemental compensation representing the difference between the employee’s gross military pay and gross pay the employee would have received had they worked their regular work schedule (excluding overtime unless overtime is regularly scheduled as part of the employee’s regular work schedule). Employers, however, can offset their supplemental compensation obligation by any amount that they pay the employee per any other law or company policy that applies during the leave.
The MLPPA does not establish a detailed framework for requesting, calculating, processing, or paying supplemental compensation like the PPLO did when it was enacted; nor does it give San Francisco’s Office of Labor Standards Enforcement (OLSE) much time to create one via FAQs or rules before the ordinance takes effect.
Military Compensation Generally
One challenge employers may face in complying with the law is that employers might not know their employees’ gross military pay. While employers can access military pay calculators online, military salaries are dependent on rank, years of military service, and dependency status, among other factors. Depending on the type of military duty that the employee is performing, they may receive additional compensation, such as hazardous duty incentive pay, hostile fire pay, or imminent danger pay. A Defense Finance and Accounting Service website states: “[t]here are more than 60 special and incentive [military] pays.”
Most employers lack detailed information about their employees’ military service, which makes it difficult to accurately calculate gross military pay without reviewing their employees’ official leave and earnings statement (LES). Employers might possess an old LES provided by the employee from prior military service, but that gross military salary may no longer be accurate as the employee could have received a promotion, demotion, had a change in dependency status, or stopped or started receiving special or incentive pay.
As a result, employers may want to be prepared to ask employees for a copy of their current or most recent LES to ensure they can calculate the supplemental pay appropriately.1
If an employee receives supplemental compensation, is fit for employment in their previous position upon release from military duty, but does not return to their position within 60 days of release, the ordinance allows the employer to treat already-provided supplemental compensation as a loan payable with interest. Both the interest, and loan repayment obligation, can begin 90 days after the employee’s release from military duty or return to fitness for employment, whichever is later. The loan is to be repaid in equal monthly installments over a period not to exceed five years. Employers should proceed cautiously in seeking the repayment of supplemental compensation from employees under the ordinance, however. Under USERRA, for example, if an employee has been on miliary leave for 180 days or more, the employee has 90 days to timely request reemployment. Thus, scenarios exist where employees are not legally required to request reemployment within 60 days.
Enforcement, Penalties & Damages
Employees who believe their employer did not comply with the ordinance can file administrative complaints with the San Francisco OLSE. Alternatively, an employee or a person or entity acting on the public’s behalf under state law can file a civil lawsuit against the employer if, first, they provide written notice to OLSE and the City Attorney of their intent to sue, which must include a statement explaining their contention that a violation occurred. A lawsuit could not go forward, however, if within 90 days after the notice was served the city files a lawsuit or OLSE informs the person or entity in writing that it found probable cause to believe a violation occurred and intends to initiate administrative enforcement or it has determined that no violation occurred. But, if the city does not file a lawsuit or OLSE does not provide notice during this 90-day period, the person or entity can file suit. Moreover, the statute of limitations would be tolled during the 90-day period.2
The ordinance provides for appropriate legal or equitable relief, including but not limited to payment of any unlawfully withheld supplemental compensation, interest, and liquidated damages in the amount of $50 to each individual whose rights were violated for each day or portion thereof that the violation occurred or continued. Relief could also include the amount of unlawfully withheld supplemental compensation multiplied by three or $250, whichever is greater. Finally, a plaintiff could receive their reasonable attorneys’ fees and costs. Note, however, that for lawsuits filed on the public’s behalf, the party suing could only receive equitable, injunctive or restitutionary relief, and their reasonable attorneys’ fees and costs; no liquidated or treble damages could be awarded.
It is hoped San Francisco OLSE will issue guidelines or rules soon, so employers should monitor its website. Because the MLPPA does not establish a framework for processing requests for supplemental compensation or calculating supplemental compensation, and the ordinance takes effect very soon, employers might consider starting discussions with HR, payroll, and legal about how to effectively manage military duty absences and their supplemental compensation obligations.
1 If an employee is regularly getting paid by the military, they should have an LES available every month. If they perform intermittent duty, it may take longer to receive an LES. OPM’s guidance on calculating military differential pay, which requires a review of the monthly military LES, can be found here: Reservist Differential (opm.gov).
2 Notably, the ordinance does not include a statute of limitations.