This week, San Francisco became the first city in the country to require fully-paid time off for new parents. The move has a range of implications for the city's startups, many of which already offer generous policies

Under the new policy, all new-parent employees are eligible for six weeks of fully paid time off. California workers already receive 55 percent of pay for up to six weeks, which is covered by public disability insurance. The city measure puts the burden of the remaining 45 percent on employers. 

Jackie Breslin, director of human capital services at professional employer organization TriNet, says the policy will have mixed impact on startups that will differ from the impact on small businesses in the city. TriNet says it handles HR, payroll, and benefits services for a number of San Francisco startups among its 12,000 clients.

"There will be clients and companies that need to change their policies," says Breslin. "I think that even clients that are doing something for parental leave will have to increase something." 

She says San Francisco startups should implement formal parental leave policies even if they have unlimited time off policies already in place.

Startups that don't have provisions covering parental leave may have to divert resources for other benefits toward resources for the newly required benefit. "That will be a true budgetary impact," she says. 

At some companies, this could mean scaling back on perks like free lunches and massages or offering less reimbursement for continuing education, says Breslin. 

What's interesting for startups now required to follow the new policy is that many may not have been around enough to have grappled with parental leave yet, says Breslin. "It just takes one employee, right? And you have to respond to this." And paying for time off isn't the only part of the process of course -- there's also the impact of the policy on other benefits like health care as children are added. 

For a number of San Francisco startups, particularly bigger and longer-established ones, however, the impact will be minimal, as they already offer such policies or similar policies. Twitter recently announced it was offering new parents a 20 weeks of fully-paid leave. 

Professional services startup Thumbtack tells Inc. the parental leave police it implemented in mid-2015 exceeds the city's requirements. That policy offers six weeks of fully paid time off to secondary care givers, and 16 to primary caregivers. 

Smart thermometer maker Kinsa, which has 30 employees, already offers six weeks of fully paid leave according to marketing and community manager Nita Nehru. However, the company -- a client of TriNet -- will have to now formalize that policy, she says. 

Though not headquartered in the city of San Francisco, tech companies including Facebook, Netflix, and eBay are known for offering generous parental leave policies

Outside the world of venture-backed startups, the decision by San Francisco's Board of Supervisors carries more controversy. Considered a coup for employees, the move has small local businesses in the area concerned they can't shoulder the costs. 

"They don't necessarily have the resources, they can't absorb the increases in cost, and they feel like it's kind of relentless, it's one thing after the next,"  San Francisco Chamber of Commerce vice president of public policy Dee Dee Workman told the Associated Press.

Published on: Apr 7, 2016