A Federal Solution to the Paid Leave Compliance Maze?

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A Federal Solution to the Paid Leave Compliance Maze?
Calendar04 December 2017

As many multi-state employers struggle to keep up with the growing patchwork of state and local paid sick leave requirements, Congresswoman Mimi Walters (R-CA) is sponsoring legislation that would exempt employers subject to ERISA from these rules if they adopt a voluntary, national standard for paid leave and flexible workplace arrangements. The proposed law would amend ERISA to preempt state and local laws that relate to employers’ “compensable leave and flexible workplace arrangements” that meet or exceed the bill’s requirements. The proposal would also make these leave and flexwork arrangements ERISA welfare plans – subject to ERISA’s various disclosure, claims procedure and other requirements.

Paid Leave Safe Harbor Requirements
Under the “Workforce in the 21st Century Act,” employers would need to offer paid leave to both full- and part- time employees (part-time workers would receive a proportional share of paid leave) to be exempt from state and local rules. The minimum amount of leave proposed would be based on employer size and the employee’s years of service. An employer could count up to six paid holidays toward the leave minimums. The bill defines “compensable leave” as PTO, sick, personal or vacation leave.



The minimum paid sick leave standards in the bill closely align with the median number of paid time off (PTO) days offered by employers (from Mercer’s Absence and Disability Management Survey) – 15 days after one year of service, 20 after five years, and 25 after 10 years. The number of PTO days reported by employers typically do not include paid holidays, and in some cases do not include paid sick days. Since the bill allows employers to count paid holidays and sick leave toward its minimum standards, it appears that most employer plans would qualify for the federal safe harbor.

Flexible Workplace Arrangements
In addition to the paid leave requirements, the bill’s available safe harbor would require employers to offer each employee at least one of the following flexible working arrangements:

  • Biweekly work program
  • Compressed work schedule program
  • Telework program
  • Job sharing program
  • Flexible scheduling program
  • Predictable scheduling

Bill Joins Growing List of Proposals
The legislation comes as the debate over paid family and medical leave is heating up, with the Trump administration pushing a plan to provide paid parental leave and the Senate Republicans’ tax reform bill proposing a temporary tax credit for employers offering paid FMLA leave. Walters’ bill has been referred to the House Committee on Education and the Workforce, where it could see action next year.

In the meantime, multi-state employers that don’t currently outsource the leave administration to a top-notch administrator that can track and manage all leaves should consider it -- it’s not cheap but in most cases it’s the best way to stay abreast of the various laws. Do-it-yourselfers with employees in just a couple of states might consider leasing software to better track leaves in-house and stay on top of the laws they’re administering.

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