Paid leave: How do the new proposals stack up?
Employers and their advocates say businesses are generally open to paid leave, but can't cope with a patchwork of requirements. Stakeholders are searching for a middle ground.
While the Family and Medical Leave Act (FMLA) provides job protection for employees needing time off, state and local governments are increasingly adopting their own laws to provide one thing the 1993 law doesn't: pay.
The result, for employers, has been a patchwork of varying laws that has proved particularly complicated for those operating in multiple jurisdictions. But stakeholders have some ideas.
The paid leave patchwork
There are currently 10 states and more than 30 localities guaranteeing workers some type of paid sick leave, according to Lisa Horn, director of congressional affairs at the Society for Human Resource Management (SHRM). "All are different in terms of duration, reporting, accrual and what leave can be used for," she said, resulting in a serious compliance challenge.
"It’s often challenging for some clients even to identify all of the laws that might apply to them, since some local laws are based on employees performing work within a city or county, rather than being based there," Daniel Pyne, a shareholder at Hopkins & Carley, told HR Dive via email. "The requirements of many of the laws are similar but not identical, so compliance essentially requires covered employers to provide employees with the most generous elements of each of the local laws that apply to them."
Employers and their advocates say businesses are generally open to paid leave, but can't cope with a patchwork of requirements. Paid family leave was a top issue at SHRM's annual conference in June, according to Annie Sartor, workplace program director of PL+US: Paid Leave for the United States: “I heard it mentioned at nearly every session I attended. People who work in HR see the need [for paid family leave] and are figuring out how to fill it using their own workplace policies." Still, Sator said she believes it would be easier to have a strong federal policy.
Horn concurred that SHRM members are taking action on paid parental leave. "SHRM just came out with its 2018 benefits survey. The percentage of SHRM members reporting that they provide paid parental leave has shown a significant increase, from 26% in 2016 to 35% in 2018, across the different parental leaves (paternity, adoption, foster, surrogacy)," she said. "Employers are voluntarily moving in this direction, and hopefully the trend will continue."
To find a middle ground, however, stakeholders have floated several proposals.
Workflex in the 21st Century Act
H.R. 4219, the Workflex in the 21st Century Act, is "meant to be a solution to the patchwork of state sick-leave mandates," Horn said. SHRM was involved in designing the program and, according to Horn, "fully supports this act."
The law would amend the Employee Retirement Income Security Act (ERISA), allowing employers to opt out of compliance with otherwise-applicable laws in exchange for offering a minimum threshold of paid leave for every employee, both full-time and part-time, and a flexible work arrangement. The exact benefit would depend on the size of the employer and the tenure of the employee.
S. 337, The FAMILY Act, takes a different approach. "A good policy of social insurance is the way we’ll win with paid family leave," said Annie Sartor, workplace program director of PL+US: Paid Leave for the United States.
The bill would establish an Office of Paid Family and Medical Leave within the Social Security Administration. Qualifying employees would receive benefits for up to 60 days over a 12-month period, funded by a payroll tax.
Economic Security for New Parents Act
S. 3345, the Economic Security for New Parents Act, is the most recent proposal. Introduced by Sen. Marco Rubio (R-FL) Aug. 1, the bill has the support of Ivanka Trump.
According to a summary from Rubio's office, allows new parents to pull forward a portion of their Social Security to use for paid parental leave after the birth or adoption of a child.
"It seems odd and out of step that SHRM, rather than supporting the FAMILY Act, has been putting the full weight of their advocacy efforts behind [the Workflex Act]," Sartor said. "In SHRM’s materials, in talking about solutions to paid family leave, they have dismissed out of hand a solution like the FAMILY Act — if they also endorsed the FAMILY Act, that would be a step in the right direction."
SHRM has not taken an official position on the FAMILY Act, said Horn. "These two laws cover totally different buckets of leave; they are not in competition with each other." The Workflex Act provides a "guaranteed level of paid leave [and] guaranteed access to a flexible work arrangement," while the FAMILY Act is focused on things like paid parental leave, she said.
Horn does see some potential problems with logistics and funding for the FAMILY Act, however: “It creates a new paid family leave insurance fund under the Social Security Act — a new entitlement program [that is] funded by both the employer and employee portions of the payroll tax."
"Proponents say this tax is minimal," Horn said. "That may be true, but look at the Social Security solvency issue. There’s a probability that the tax would need to be increased, perhaps significantly, to keep the fund solvent." Additionally, she noted, "how would it work with the five states plus D.C. that already have paid FMLA laws? Are you looking at six different paid FMLA laws?"
There is also an issue of demand. Horn mentioned a recent conversation she had with a SHRM member, a manufacturer in Maryland: "The company’s employees are predominantly men over the age of 45. Nobody wants paid parental leave — they want a higher 401k match, phased retirement and telecommuting. I have concerns about a one-size-fits-all mandate when workforces are very different."
And while Rubio's full plan remains to be seen, critics have said it amounts to forcing parents to choose between their children and their own retirement.
“Businesses are working to fill the need [for paid family leave] and SHRM would do well to get behind a policy that solves this problem,” Sartor said. But Horn said she believes a voluntary program is good for workers, too: "If you have a federal minimum [for paid family leave], will some companies currently offering more generous policies scale back to the federal minimum?” Prior to the passage of the Affordable Care Act (ACA), many employers were offering healthcare benefits to part-time employees — "and many dropped this coverage after the ACA mandate went into effect," she said.
“Employers have a finite pool of resources to devote to total compensation and rewards,” Horn continued; “When faced with a mandate, they tend to scale back in another benefits area.”
Pyne seems to agree. “The benefits provided by the plan are relatively modest ... so employers might see it as preferable to the FAMILY Act, which creates a new form of paid family/medical leave for employees in addition to any other benefits available to them under other existing laws."
"Given the current composition of Congress," he said, "I suspect that the Workflex Act is more likely to pass and be enacted than the FAMILY Act."