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10.21.2021

When it Comes to Paid Leave Policies, Consider Your Options

At the start of the COVID-19 pandemic, the U.S. government scrambled to write and pass temporary laws that would provide aid to as many of the country’s 333.5 million citizens as possible. With so many people sick, paid sick leave and paid emergency family and medical leave became a priority.

New federal laws such as the Families First Coronavirus Response Act (FFCRA), the CARES Act, the Consolidated Appropriations Act, and the American Rescue Plan Act passed emergency paid leave laws and tax incentives that helped alleviate some of the financial burden on American workers and employers. But where there are gaps, state governments are stepping forward to pass their own leave laws, largely due to pressure from their constituents.

A September 2021 survey from the Bipartisan Policy Center and Morning Consult reports that 79% of workers don’t have access to a paid parental or family caregiving leave benefit and 60% are lacking access to medical leave. The pandemic caused many of these workers to leave their jobs to care for or protect their family members.

More than one-third (37%) of unemployed Americans—45% of whom are unemployed caregivers—said they would return to work sooner if their employer offered paid family leave.

That’s why businesses—and the federal government—are now considering beefing up paid-leave policies with an end goal to entice these workers back.

"79% of workers don’t have access to a paid parental or family caregiving leave benefit."

— Bipartisan Policy Center, "Morning Consult Poll: The Value of Paid Family Leave"

Where the U.S. Government Currently Sits on Paid Leave

In late April 2021, President Joe Biden proposed a $1.8 trillion package of new and expanded benefits. If passed intact, “The American Families Plan,” which requires congressional approval, would eventually make it possible for all workers to take up to 12 weeks of paid family leave totaling as much as $4,000 per month. The new law would provide paid leave for mothers and fathers alike, and individuals needing to care for themselves or a loved one would also have access to paid-leave funds.

Right now, Congress is debating policy, among other things, that will govern the paid leave benefit if it remains intact in the bill.

“Policy design matters a lot, experts say, because depending on the choices made, paid leave could be inaccessible to those who need it, or even end up backfiring by penalizing people who take it,” writes Claire Cain Miller in her article, “How to build a paid family leave plan that doesn’t backfire,” published in The New York Times on September 29, 2021. “Also, lawmakers may not get a second chance anytime soon. When Congress passed 12 weeks of unpaid leave in 1993 [as part of the Family and Medical Leave Act (FMLA)], proponents hoped it was a first step toward a paid benefit. But little has changed in 28 years.”

Considerations for a Companywide Paid-Leave Program

Regardless of what federal and state requirements might exist, G&A Partners HR Project and Training Manager Dave Berndt says employers can always offer voluntary paid parental and/or paid family leave to make themselves more attractive to new talent coming to the company.

According to a Harvard Business Review article on “How small companies can offer great paid-leave programs,” author and career coach Joan Michaelson reports that only 21% of the civilian workforce (typically white-collar workers at larger firms) had access to employer-provided leave before the pandemic hit and emergency legislation was passed.

“The United States is the only industrialized country without a national paid maternity leave policy. That leaves U.S. firms to decide whether to provide paid leave to their employees who need time to care for themselves, new children, or loved ones."

— Career Coach Joan Michaelson for the Harvard Business Review, "How Small Companies Can Offer Great Paid-leave Programs"

“The United States is the only industrialized country without a national paid maternity leave policy,” Michaelson says. “That leaves U.S. firms to decide whether to provide paid leave to their employees who need time to care for themselves, new children, or loved ones.”

Most of the U.S.-based companies currently providing paid leave to their employees are larger and typically have global operations. The U.S. Department of Labor (DOL) reports that only 15% of workers at companies with 99 or fewer employees have access to employer-provided paid leave, compared to nearly one-third of workers at larger companies. But Small Business Majority (SBM) and Main Street Alliance—two small-business advocate organizations—are building a coalition of small businesses in the U.S. to help call for a public paid-leave policy, Michaelson reports.

“SBM’s polling found that 70% of small businesses support a national policy,” she writes. “Another survey in October [2020] of 600 small business owners found widespread bipartisan support for a national public policy.”

Paid Leave is Trending as a Business Incentive

Competition for talent is fierce post-pandemic. Smaller businesses, in particular, have struggled mightily to stay afloat as they ride out the “Turnover Tsunami” and “The Great Resignation” caused by a mass exodus of workers in the late summer/early fall of 2021.

In fact, the U.S. Bureau of Labor Statistics (BLS) reported that more than 25 million people voluntarily left their jobs during this period—in August alone, the BLS reports that 4.3 million Americans, or 2.9% of the entire workforce—quit their jobs.

The high cost of employees exiting the workforce is not something smaller employers may be able to afford at this time, so efforts to minimize the loss of talent have been prioritized. This has resulted in an employee’s market, so Berndt says offering a voluntary leave benefit should be worth considering, especially as the younger generations begin to fill the open roles.

“As you look at the demographics of Millennials, you’ll see they’re having children and caring for their aging baby-boomer parents—so these types of leave can be very attractive,” he says.

Berndt adds that those U.S. firms that choose to provide paid leave typically have a more engaging culture and are branded as employee-friendly and a great place to work.

“We also see other types of leave benefits emerging,” he says. “Employers are increasingly offering benefits to employees that can help reduce the need for leave and shorten leave durations. For example, they are providing emergency childcare and elder care services, onsite childcare services, subsidies for childcare and eldercare, telecommuting and remote work arrangements, flex time, and pay for transport of breast milk for nursing mothers.

“All these types of programs are popping up with employers and while we’re starting to see most of these at your extremely large employers, we anticipate that these types of leave and benefits will start to trickle down to smaller and smaller employers as they become more prevalent.”

Paid Leave for States, Municipalities

State-managed paid leave policies are also trending—Investopedia reports that the number of participating states has more than doubled since 2016, from four to nine states. And experts believe this trend will only continue to spread to more states depending on what occurs at the federal level.

“The FMLA gives you job protection, but there’s no income replacement,” Berndt says, adding that paid sick leave provides income replacement and job protection, but for a much shorter time frame—three to eight days out of the year, instead of weeks.

“So now you have states like Washington and Massachusetts that have recently passed paid family and medical leave plans that provide for a certain number of weeks paid leave—Washington is 12 weeks and Massachusetts is 20—for the employee’s own serious health condition,” he adds. “There’s also 12 weeks of paid family leave, which includes bonding with a new child, caring for a family member with a serious health condition, and qualifying military exigencies—for a combined total in Washington of 16 weeks paid leave and 26 weeks in Massachusetts.”

State leave policies are typically portable, Berndt says, meaning that if you change jobs your available leave allowance or at least part of it can follow you, whereas employer-funded programs are not portable.

The Language of Leave

Another leave trend in state legislatures is the change in language from what has been called “a requirement of disability” to be labeled instead as “a serious health condition.”

“You’re going to see more states expanding what leave coverage is for,” Berndt says. “A comprehensive insured paid-leave solution for medical, family, and other reasons, rather than income-protection benefits for disabled conditions. This means short-term disability could be replaced by paid family and medical leave.”

He says employers debating their leave benefits in states that offer paid leave options have been questioning the value of carrying and providing short-term disability insurance for their employees.

“Often, your paid medical leave laws have a gap,” Berndt says. “So, they don’t take effect until, let’s say, a week of leave has taken place. For example, if an employee needs to have been out of work for up to five workdays, short-term disability insurance can come in to cover that gap. There might also be some time waiting for the state agency to start paying benefits, and again that can be provided and covered by a short-term disability policy.

“We at G&A Partners recommend that employers still offer that option to employees, even if it’s not paid for by the company but instead is elected by the employee as a payroll deduction.”

Employers already have a lot to consider when it comes to employment laws these days. As more states and the federal government continue to amend laws and the political landscape continues to evolve, Berndt says more employers are turning to third-party HR administrators such as G&A Partners to assist with the company’s paid time-off policies, tracking employee leave, paying benefits, offering accommodations to those in need, and more.

How G&A Can Help

A licensed provider of outsourced human resources solutions, G&A Partners acts as a valuable resource and ally for businesses caught in the confusing web of regulatory compliance. G&A’s experienced human resources professionals understand the nuances of federal and state labor laws and can help you expertly plan and execute procedural tasks surrounding government compliance.