Starting on February 20, 2023, San Francisco employers with 100+ employees will be required to pay differential (or “supplemental”) pay to employees who are called to active military. This is the new requirement under San Francisco’s latest Ordinance, known as the Military Leave Pay Protection Act (“MLPPA”). The MLPPA essentially requires employers to supplement an employee’s military pay and keep employees whole while they are on military leave.

The MLPPA only applies to employees who (1) work in the City and County of San Francisco and (2) are members of the reserve corps of the United States Armed Forces, National Guard, or other U.S. uniformed service organization. Notably, the MLPAA also applies to employees covered by a collective bargaining agreement (CBA) unless the CBA includes an explicit waiver of the MLPPA requirements.

Under the MLPPA, covered employees may take up to 30 days of military leave per calendar year. For these 30 days, employers are required to pay an employee the difference between (1) their gross military pay and (2) the gross pay they 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 may only offset these differential payments if employers have an existing paid military leave policy already in place.

The MLPPA was passed recently and we expect San Francisco’s Office of Labor Standards Enforcement (OLSE) to post guidance on their website, including how employers may calculate these payments and what documentation employers can require be required. For now, employers should prepare their payroll systems and policies to ensure they can provide this differential pay to employees seeking to take military leave.