Paid Family Leave: A Growing National Trend?

When covered employees need to take an extended period of time off from work because of a health condition or to care for a newborn or an ill family member, in most cases, they can file for an unpaid extended leave of up to 12 weeks as stipulated by the Family Medical Leave Act of 1993 (FMLA). However, many cannot afford to take such long periods of time away from work without pay, and therefore never take advantage of the benefit. Because of this, growing public support has prompted more companies to evaluate paid leave policies – and the government is taking a more active role in ensuring employees have access to them.

In recent years, paid family leave has become a hot topic for employers who are looking for new ways to retain and reward key employees. Proponents feel it is a necessity because most children have parents who work outside the home. In addition, as the baby boomer generation ages, growing numbers of workers will need to care for aging parents. The advocates of paid family leave feel that providing financial security for workers who need to take time away from work to care for an ill family member or newborn, not only strengthens families but also improves worker morale and productivity.

But concerns over cost have slowed paid leave policy adoption among U.S. employers. According to the Bureau of Labor Statistics only 8 percent of private sector employees have access to paid family leave. In addition, only one-third of the participating employers in the 2008 Benefit Study conducted by Society for Human Resource Management responded that they offer some form the benefit.

In order to address employer concerns and alleviate public demands, various states have begun enacting laws that mandate paid family leave benefits. In May of this year, New Jersey became the third state in the country to pass a paid leave law in addition to California (2002) and Washington (2007). Like California, the New Jersey law (which goes into effect January 1, 2009) stipulates that the leave will be funded by employees through a mandatory payroll tax. The increasing popularity of this legislation has several other states following suit, with proposed legislation in Massachusetts, Arizona, New York, Pennsylvania, and Minnesota already moving through the system. In addition, there are at least two bills circulating in Congress that would mandate U.S. employers to offer up to 12 weeks of paid family leave.

While advocates of paid leave laws see the federal legislation and state leave laws as a positive move, opponents are concerned about potential abuse by employees that could eventually disrupt workflow and create staffing problems. Concerned groups feel that, although there may be no direct costs to employers, the expected extended absences could generate substantial indirect employer costs.

So, would the potential costs of work disruptions outweigh the costs of employee retention or the value of employee loyalty? That is a question that many employers and legislators are asking as the trend of paid family leave continues to grow in popularity and more bills are introduced across the country. Certainly, with this being an election year, it will be interesting to see how this saga unfolds.

For more information, please visit the following links:

Cheers and Doubts for Paid-Leave Law

Paid Family Leave Becomes Hot Workplace Issue

New Jersey Becomes Latest State to Provide Paid Family Leave

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July 18, 2008

Hill, Chesson & Woody strives to keep our clients' group decision makers abreast of trends influencing the employee benefits market. Look for Eyes on Benefits to bring you news and information affecting you and your employees.

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