On January 20, 2023, San Francisco became the first jurisdiction in the nation to require private employers to provide differential pay to employees who are called to active military. Addressing disparities between public and private-sector income protections for military reservists and National Guard personnel, San Francisco’s Military Leave Pay Protection Act (“MLPPA”) requires that employers with 100 or more employees provide 30 days per calendar year of differential pay to bridge the gap between their military pay and what they would have otherwise earned from their civilian employer. The MLPPA becomes effective February 19, 2023. The MLPPA expands upon the protections already available under the federal Uniformed Services Employment and Reemployment Rights Act (“USERRA”) and California law.
The MLPPA specifically covers employees who work within the geographic boundaries of the City and County of San Francisco, including part-time and temporary employees. The San Francisco Office of Labor Standards and Enforcement (“OLSE”) has been directed to promulgate regulations pursuant to the MLPPA, and it is anticipated that employees who work from home (within San Francisco) will also be covered. The MLPPA includes an exception for employees covered by a Collective Bargaining Agreement, so long as the qualifying CBA includes an express, clear and unambiguous waiver of the MLPPA.
The MLPPA defines the differential pay as “the difference between the amount of the Employee’s gross military pay and the amount of gross pay the Employee would have received from the Employer, had the Employee worked the Employee’s regular work schedule (excluding overtime unless regularly scheduled as part of the Employee’s regular work schedule).” The differential must be used in daily increments of one or more days at a time, and is available to employees engaged in any active military service, including training, drills, and natural disaster relief.
Recognizing that some private employers already provide additional income protection for employees called to active service (including training and drills), the MLPPA permits employers to offset any obligation under the MLPPA by any other military leave benefits paid pursuant to any other law or employer policy. The MLPPA also provides employers with the option to recoup the differential pay (with interest) if the servicemember employee does not return to work within 60 days after release from active military service.
Failure to comply with the MLPPA may result in fines and penalties of (i) three times the amount of differential pay withheld or $250, whichever is greater; and (ii) up to $50 per day to employees for each day the compensation was withheld. The OLSE can also request revocation of an employers’ certificates, permits, or licenses held until the employer complies, and can assess additional penalties of up to $50 per day to cover the costs of enforcement. The MLPPA also includes a private right of action, whereby an employee may bring a civil action to recover wages and penalties, as well as attorneys’ fees.
We anticipate that a number of other jurisdictions within (and perhaps outside) California will follow suit, and the State of California may itself take the lead on the issue.
