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Paid Family Leave: Next Benefits Frontier or New Battleground?

Effective January 1, 2018 New York becomes the latest state to require that employers provide paid family leave, joining California, New Jersey, and Rhode Island. Also, Washington State adopted a paid family leave act in 2007, that has not been implemented due to a lack of funding, and San Francisco has adopted its own ordinance. The New York law is:

  • Expansive. It covers all private sector employers with at least one employee
  • Generous. When fully implemented in 2021 will provide employees with 67% of weekly pay (capped at 67% of average weekly wages in New York) for up to 12 weeks
  • Complicated. The law covers three different types of leave situations:
    • Caring for a family member of the employee with a serious health condition;
    • Bonding with a child in the 12-month period following birth or placement for adoption or foster care with the employee; and
    • Providing support for a family member who is has been called up for active military duty.
    • And, each category of leave has its own set of eligibility and documentation requirements.
  • Self-Funded (at least in theory). Paid leave under the New York law is provided through the state’s disability insurance law and employers will charge employees for the additional premiums needed to finance this benefit.

The New York law raises a number of issues for employers in New York. Although premiums for the coverage will be paid by employees, the administrative costs of complying will be borne by employers; this means New York employers will have to deal with:

  • Continuing employees’ health care subsidy while on leave
  • Administering the payroll deduction for premiums
  • Providing notices to employees about the new law, including changes to employee handbooks
  • Integrating paid time off with existing time-off programs
  • Completing the employer portion of claims forms
  • Providing detailed information to the insurance carrier regarding employees’ use of paid family leave.

However, the New York law may also have national implications. In addition to the states that now have paid leave laws, paid leave laws have been proposed, or are under consideration, in a number of other states. This means that legislative debates – and political battles – over paid leave will play out in statehouses across the country.

In turn, the proposals in individual states may prompt Congress to consider national legislation; Congress may be tempted to act because:

  • President Trump expressed support for paid leave during the campaign
  • Some members of Congress (especially Democrats) believe the U.S. should have a national paid leave law
  • Some members of Congress (especially Republicans) will grow concerned that a patchwork of state leave laws will be unnecessarily burdensome for employers and a uniform national law may be preferable.

And, here’s where it might get complicated. It is not clear whether Congress is capable of advancing any paid leave law this political environment. And, If Congress does proceed with a national law it will need to determine what a federal law looks like. Currently, Republican and Democratic proposals for paid family leave represent dramatically different visions, with Republicans proposing a tax credit for employers that choose to offer paid leave and Democrats offering a mandatory, insured federal program.

Although I do not anticipate any real progress on a federal law any time soon, employers do need to keep track of state and local initiatives that may affect them. And, who knows, if enough states enact different laws, Congress may conclude that a single national standard is preferable.