New Developments in Parental Leave

Paid parental leave has been a hot topic over the last several years as a growing number of employers have added or enhanced their parental leave benefits.

The topic made headlines again last month when the National Defense Authorization Act for Fiscal Year 2020 was signed by President Trump on December 20, 2019 and included a new paid parental leave benefit for federal workers.

New Developments in Parental Leave

What are the details of the new paid parental leave for federal workers?

  • What is offered? 12 weeks fully paid time off for birth, adoption or fostering
  • Who gets it? All federal government workers who are covered by the Family and Medical Leave Act (FMLA). There are around two million workers on the payroll. It’s unclear how many would use parental leave.
  • What is the cost? The Congressional Budget Office estimates it could cost about $8.1 billion over the next ten years, assuming parents would use paid leave in situations where they are currently using unpaid leave.
  • When? Parents who need leave in connection with births and adoption or fostering placements on October 1, 2020 or after
  • Why the delay? The U.S. Office of Personnel Management (OPM), which serves as the chief human resources agency for the federal government, needs time to issue policies on how paid parental leave will work for federal employees who use it.

Is this a big deal?

Many say yes because the United States is the only industrialized country without a nationwide guarantee of paid parental leave.

This is a generous length of paid time off—and a generous wage replacement—compared with what is voluntarily offered by private employers. The International Foundation survey of employers on paid time off practices found that 40% of respondents offered a standalone paid parental leave plan. Of those, 63% offer full wages during the entire leave duration.

The U.S. Bureau of Labor Statistics reports that as of March 2019, 18% of all workers have access to paid family leave while 35% of the highest wage earners have access. Only 8% of part-time workers have access. Workers at larger organizations (e.g., 500+ employees) and workers in certain industries (e.g., finance, information, insurance, professional services) are more likely to have access to paid family leave.

What kind of leave do most workers have access to?

An estimated 60% of workers have access to leave under FMLA which requires unpaid time off. The focus of FMLA is on job protection, not income replacement. Generally, employees who work for small businesses or work part-time schedules do not have access to FMLA. New employees who have been on the job for less than one year also do not have access.

What’s the difference between parental leave and FMLA leave? [Watch Now]

Could this lead to momentum on paid parental leave for private industry workers?

It seems the Trump administration hopes businesses will follow the government’s lead and offer paid parental leave voluntarily. Ivanka Trump, who has focused on paid family leave as a senior advisor to the president explained to CBS, “We can’t tell the private sector to step up and to offer these critical benefits to their employees and not be willing to do it ourselves.” President Trump wrote in a letter to the federal workforce, “as the chief executive of the country’s largest workforce, I am proud to say that our government is leading by example in changing the culture of how we support working families.”

Meredith Bodgas, editor of Working Mother magazine, told news website Axios that private employers “now have to compete with the [government] and up their own games to attract and retain the best talent.”

In contrast, Jack Kelly, a CEO and executive recruiter, wrote in Forbes, “Wide adoption is questionable as many small-to-midsize organizations don’t have the financial and personnel resources to offer such a program—even if they wanted to.” This could lead to smaller companies losing talent to bigger companies and the federal government. A coalition called Small Business for Paid Family & Medical Leave launched in December 2019 to advance the case for a national program.

HBCE

What do proponents of paid leave mandates say?

Proponents believe people working outside the federal government should have a similar paid parental leave policy. “The new agreement should be a guiding light for the private sector,” Dr. C. Nicole Mason, president and CEO of the Institute for Women’s Policy Research, said in a statement.

The defense bill limits the paid leave to new parents bonding with a child. Federal government workers do not receive paid leave while caring for a sick family member or while recovering from a serious illness. Advocates for paid leave call for paid family and medical leave that would cover time off for illness and caregiving.

What do opponents of paid leave mandates say?

From a total compensation perspective, opponents believe guaranteed paid family leave could lead to unintended consequences such as lower wages or reduced employee benefits.

They suggest that private employers should voluntarily create their own policies. “A one-size-fits-all federal program simply cannot meet workers’ and employers’ needs as efficiently as employer-provided policies can,” Rachel Greszler, an economist with the Heritage Foundation, testified before Congress. Opponents are also concerned that a nationwide law would redistribute costs of leave and grow the role of the government, and employers would still have to deal with the impact of absences.

[Register Now! Certificate in Strategic Benefits Management | March 2-7, 2020 | Austin, Texas]

What about state-level paid leave laws?

Over two dozen states introduced paid leave bills in 2019. Jessica Mason, senior policy analyst and engagement manager for workplace programs at the National Partnership for Women & Families, told Genevieve Douglas, Bloomberg Law reporter, that federal-level pressure can go either way. “On the one hand, having more momentum federally and an increasing number of more moderate and conservative members talking about the issue normalizes it and makes it safer” to support, Mason said. On the other hand, Mason pointed out that if there is a clear path forward on national paid leave, then state action could stall.

What do opponents of state-level action say?

It seems that the patchwork of state- and local-level paid leave laws is leading to momentum on federal action. According to the Business Roundtable, an association of CEOs of U.S. companies, that patchwork of laws serves neither employees nor employers well.

Ginni Rometty, CEO of IBM, sent President Trump a letter sharing that Business Roundtable CEOs urge Congress to enact federal law creating paid family and medical leave benefits for as many workers as possible while adhering to the standards of FMLA. Rometty wrote that the law should give employers flexibility in managing paid family and medical leave benefits, including allowing employers to maintain their own plans if they self-finance and administer benefits differently for different types of employees, provided all minimum requirements are met.

What is the outlook on federal action?

The U.S. House Committee on Oversight and Reform examined the need for comprehensive national paid family and medical leave during a hearing in December 2019. Below is a high-level overview of some of the bills under consideration. The big difference among the bills is who pays for the leave.

  • Family and Medical Insurance Leave (FAMILY) Act (HR 1185)(companion bill S 463)
    • Includes family and medical leave
    • Workers and employers pay a payroll tax, and those funds are pooled and managed within the Social Security Administration.
  • Advancing Support for Working Families Act (S 2976)(companion bill HR 5296)
    • Includes parental leave only
    • Workers are funded through early access to their future child tax credits.
  • Child Rearing and Development Leave Empowerment (CRADLE) Act (proposal only and not yet introduced in the 116th Congress)
    • Includes parental leave only
    • Workers are funded through early access to their future Social Security benefits and delaying the age they begin receiving Social Security retirement benefits.

The International Foundation will continue to monitor and keep you up to date on paid parental leave.

Jenny Lucey, CEBS
Manager, Reference/Research Services at the International Foundation

Health Care Management Conferenc

The latest from Word on Benefits: