Paid Family Leave Could Become a Reality

In his February 28, 2017 Congressional address, President Donald Trump urged Congress to consider a paid family leave bill. Democrats and Republicans have introduced bills in the United States Senate (the “Senate Bills”) addressing paid family leave, but the Senate Bills affect employers in significantly different ways.[1]  This article analyzes the Senate Bills and their potential impact on employers across the country.

The Senate Bills

The Senate Bills offer two different visions for creating paid family leave.  Senator Kristen Gillibrand (D – NY) introduced the Family and Medical Insurance Leave (“FAMILY”) Act,  which requires employers to provide paid family leave and would create a paid family and medical leave insurance program (the “Program”) administered by the Social Security Administration;[2] , all employers—regardless of size—and employees to pay 0.2 percent of the employee’s wages into the Program;[3] employers to allow employees  up to twelve (12) weeks off of work (with job protection upon return) and pay up to 66 percent of their monthly wages.[4]  Employers failing to provide such leave would be liable to the affected employee for lost wages and interest, an equal amount of liquidated damages, and reasonable attorneys’ fees and costs.[5] 

Senator Deb Fischer (R – NE) introduced the Strong Families Act (the “SFA”), , which offers tax incentives to employers that provide full time employees at least two weeks of paid family and medical leave[6] and part-time employees an equivalent amount.  Employers complying with SFA would  receive a 25 percent tax credit for the wages paid to employees taking such leave, up to $3,000.00 per employee.[7] 

Potential Impact on Employers

Given President Trump’s push to Congress to address paid family leave and the fact that both parties introduced such bills, Congress will likely pass some form of paid family leave.  The FAMILY Act would impose significant burdens on employers, including the financial burden of contributing an additional 0.2 percent of each employee’s pay and  many small businesses would struggle to keep  a position open for up to twelve (12) weeks.[8]  The FAMILY Act is largely supported by Democrats, but it is unlikely that a Republican-controlled Congress will pass such legislation.  The SFA, however, has the support of many Republicans in Congress and at this point appears likely to pass.  The SFA would only burden employers who elect to participate, and would also provide a tax credit benefit.  Many employers, particularly those in states that require employers to provide paid family leave,[9] already provide such leave to their employees.  If the SFA is enacted, employers that already have paid family leave policies should consider reviewing those policies to determine if they can take advantage of the SFA’s tax credits.  Employers without paid family leave policies should conduct cost-benefit analyses to determine whether the burdens of implementing such policies are worth the benefits. 

Campbell Litigation will track the Senate Bills and report back when further updates are available.

 

[1] Tyrone Richardson, Trump Urges Congress to Address Paid Family Leave, Bloomberg BNA Daily Labor Report (Mar. 1, 2017).

[2] S. 337, 115th Cong. (2017)

[3] Id.

[4] The Family and Medical Insurance Leave (FAMILY) Act, First Focus Campaign for Children (Feb. 2017) (available at: https://campaignforchildren.org/wp-content/uploads/sites/2/2017/02/The-FAMILY-Act-Fact-Sheet.pdf) (last accessed Mar. 2, 2017). 

[5] S. 337. § 2(h)(2).

[6] S. 344, 115th Cong. (2017).  Under the SFA, “family and medical leave” has the same meaning as leave permitted by the Family and Medical Leave Act of 1993 (“FMLA”). 

[7] S. 344 § 2.

[8] While employers with fifty (50) or more employees must comply with the FMLA’s protections, and potentially permit an employee to take up to twelve (12) weeks off for family and medical leave, the FAMILY Act would apply to employers of all sizes.

[9] The Washington Post, Labor Department is pushing states, including Colorado, to create their own paid family leave programs, The Denver Post (Aug. 14, 2016) (available at: http://www.denverpost.com/2016/08/14/labor-department-is-pushing-states-including-colorado-to-create-their-own-paid-family-leave-programs/) (last accessed Mar. 2, 2017).  Only California, New Jersey, and Rhode Island require employers to provide some form of paid family leave.  On Wednesday, March 1, 2017, Colorado introduced legislation requiring employers to provide paid family leave, but it is expected that the bill will not pass the Republican-controlled State Senate.  See Ed Sealover, Paid family leave, retirement-savings measures are coming back to the Colorado Legislature, Denver Business Journal (Mar. 1, 2017).   

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