Federal Paid Leave Policy (March 13)

Update 337 — Federal Paid Leave Policy:
Unreformed Since America was Great Again

The last major federal legislation on family and medical leave — the Family and Medical Leave Act (FMLA) — was in 1993 under President Bill Clinton. A big step forward for families and workers, FMLA nevertheless excludes from coverage over 40 percent of the workforce and offers only unpaid leave, which many workers just cannot afford to take.

Recently, the issue has moved back into the limelight as lawmakers on both sides of the aisle and presidential candidates have put forth proposals to address this deficiency.  Below, we look at Sen. Gillibrand’s FAMILY Act, Sen. Rubio’s Economic Security for New Parents Act, and other leading proposals, instead of Trump’s DOA budget.

Best,

Dana

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Congress has not passed any new legislation expanding or enhancing FMLA, making the U.S. the only developed country in the world to not provide paid family and medical leave.

As early as 2000, with more women entering the workforce and earning higher salaries, attitudes in the U.S. on paid family and medical leave began to shift. Rep. Carolyn Maloney introduced her Federal Employees Paid Parental Leave Act in the 106th Congress to provide up to 12 weeks of paid leave to federal employees. The bill was reintroduced in the next three sessions of Congress, with companion bills in the Senate, but never passed both chambers.

As large companies began offering their own leave programs, they found that paid leave was less onerous than expected. President Obama signed an executive order in 2016 that mandated paid leave for some workers under federal contracts. The issue of paid leave was also featured several times in the 2016 presidential election debates, and both Hillary Clinton and Donald Trump had paid leave proposals as part of their campaign platforms.

Existing Policy

Family and medical leave is comprised of:

• parental leave, including paternity and maternity leave; to care for a child after birth or adoption
• family care, care for a family member (usually immediate) with a serious health condition
• medical, to attend to one’s serious health condition

The FMLA provides workers with 12 weeks of unpaid job-protected leave for the three types of situations described above if they, and their employer, meet certain criteria. In order to qualify for FMLA, a worker must have been with his or her employer for the last 12 months and must have worked 1,250 hours in the last year.

In 2012, only 59 percent of workers were eligible. An employer is also exempt if they have fewer than 50 employees within 75 miles of the workplace. This bill does not mandate any sort of paid leave and neglects a large portion of American workers.

The FAMILY Act

Last month, Sen. Kirsten Gillibrand and Rep.Rosa DeLauro re-introduced the Family and Medical Insurance Leave (FAMILY) Act, H.R. 1185/S. 463 — the fourth time Senator Gillibrand has introduced the paid family leave legislation to provide:

• 12 weeks of paid time off to cover all family leave situations, including taking care of a medical condition, a sick loved one, or a new child
• two thirds (66 percent) of recipients’ regular monthly wages, up to a capped amount, ensuring that the benefit is larger for low- and middle-income earners

The proposal would be funded through a small employee and employer tax equivalent to 0.2 percent on wages earned by employees, and 0.2 percent on wages paid by employers, or 0.4 percent on self-employment income. Gillibrand’s bill is cosponsored by many of her fellow Senate presidential challengers, including Sens. Booker, Harris, Klobuchar, Sanders, and Warren.

Republican Proposals

Republicans have offered their own proposals on paid family leave. Last Congress, Sen. Rubio introduced S. 3345, the Economic Security Act for New Parents, a bill supported by White House adviser Ivanka Trump. Under the plan, parents would have to dip into their social security benefits to cover part of the cost of work leave, delaying retirement benefits. Employers and the federal government would contribute nothing. Notably, this would only be available to new parents and would not apply to other types of paid leave.

This past week, Sens. Joni Ernst and Mike Lee introduced a similar measure, the CRADLE Act.

States leading the way

A number of states have taken a leading role in the formulation of paid leave policy, with six states and DC passing comprehensive paid family and medical leave legislation in recent years.

Some policies of note include:

• California provides six weeks of paid leave for parental and family care leave. If an individual’s highest quarterly earnings are less than $929, then the weekly benefit amount (WBA) is $50. If an individual’s highest quarterly earnings are between $929 and $5,230, then the WBA is approximately 70 percent of their earnings. If an individual’s highest quarterly earnings exceed $5,230, then the WBA is approximately 60 percent of their earnings. It is funded through an employee payroll tax.

• New York provides 10 weeks for parental and family care in 2019, extending to 12 weeks in 2021. For parental and family care leave, the benefit amount is a 55 percent replacement rate (capped at 55 percent of statewide average weekly wage of $1,357) in 2019; this increases to 60 percent in 2020 and 67 percent in 2021. For medical leave, the replacement rate is 50 percent, up to $170 per week. The NY program is financed in three different ways, an employee payroll tax, an employee contribution and an employer mandate for temporary disability insure (TDI).

• District of Columbia provides eight weeks for parental leave and six weeks for family care leave. The benefit amount is 90 percent wage replacement on income up to 150 percent of the minimum wage multiplied by 40 plus 50 percent wage replacement on remaining income, up to $1,000 per week. DC’s program is funded through an employer payroll tax of 0.62 percent.

These states and DC all provide between six and 12 weeks off for parental and family care, and some have also increased time off for medical leave – up to a year in some cases. DC’s paid leave policy is considered the most worker-friendly. Its PFL program is modeled on other states’ programs, and goes further in some areas. The policy increases support for low-income families by providing a higher rate of wage replacement. Those who earn less than about $47,000 per year will receive 90 percent of their regular pay while on leave.

While progressive states and localities have led the way, some states with Democratic legislatures and Republican governors are currently considering implementing their own paid family leave programs. New Hampshire and Vermont are adopting more experimental approaches that give more power to the employers while allowing for both paid and unpaid leave benefits.

Conclusion

This important issue is likely to get increasing attention in the 116th Congress and the 2020 presidential election policy debate. Models of paid leave and funding mechanisms to choose from abound. Both parties agree that the lack of a paid leave policy needs to be addressed, but there is less agreement on how to go about addressing it i.e. how to pay for it and which model to use. It is essential that whatever legislation passes does not force working families to reach into their own savings during their time out of work — essentially robbing themselves to pay themselves.