As Congress considers multiple federal paid family leave proposals, lawmakers and witnesses sparred over how to best provide the benefit and how to pay for it at a May 18 hearing held by the Senate Health, Education, Labor and Pensions (HELP) Committee titled Paid Leave for Working Families: Examining Access, Options, and Impacts.
IBM Corporation Vice President of Health and Benefits Marianne McManus testified on behalf of the American Benefit Council (ABC), describing the administrative burden imposed by the growing number of state and local paid leave laws that apply to multi-state employers. McManus’ testimony emphasized the need for a voluntary federal compliance standard, as the lack of national uniformity results in high compliance costs for many of these employers, as well as inconsistent benefits for employees depending on the state or municipality in which a person works.
For many employers operating in multiple states or nationwide, the burden of tracking and administering the growing number of state and local paid leave mandates is substantial, McManus emphasized in her testimony. Administrative expenses associated with paid leave compliance typically range from 8% to 20% of total leave costs. Citing data from Mercer’s 2021 Survey of Absence and Disability Management, her written testimony noted that 66% of employers had to devote increased resources within the last five years to track and comply with state and local paid leave requirements.
Committee Chair Patty Murray (D-WA), a longtime advocate for paid leave and cosponsor of Democrats’ perennial FAMILY Act legislation, said while convening the hearing that she will “do everything I can to get the paid leave policy President Biden proposed in the American Families Plan across the finish line."
Broadly similar to the FAMILY Act and recent draft legislation from House Ways and Means Committee Chair Richard Neal (D-MA), the president’s plan calls for a comprehensive national paid family and medical leave program that would give workers up to 12 weeks of partial wage replacement to take time to bond with a new child, heal from their own serious illness or care for a seriously ill family member, deal with a family member’s military deployment, or find safety from sexual assault, stalking, or domestic violence.
While the FAMILY Act would be funded with a payroll tax on both employers and employees, costs for the Neal and Biden proposals would be paid out of general revenue. Neal’s plan would also provide annual grants for existing state programs that meet certain standards – and partially reimburse employers for their paid leave costs based on the generosity of their programs. But employers in states getting federal grants wouldn’t be eligible for reimbursements for their programs.
While these measures offer a federal approach to the issue of paid leave, none as currently drafted would provide a nationally-uniform compliance option for multi-state employers.
HELP Committee Republicans said they agreed in general that more workers should have the option to take paid leave but took issue with mandates and tax increases.
“There are great benefits to providing paid leave,” said Ranking Member Richard Burr (R-NC). “However, there are big questions of disagreement surrounding paid leave. Is it mandated? Who pays for it? Who gets it? And for what reason?”
Rather than create a federal program, Republicans recommended some of their own related proposals, including allowing workers to use future Social Security benefits to fund paid time off after the birth or adoption of a child, extending current-law tax credits available to businesses providing paid leave, and allowing workers to choose to be compensated for overtime with additional time off instead of cash.
A compromise appears unlikely, however, and Democrats will likely try to include a federal paid leave program in major infrastructure legislation they hope to pass this year. But that legislation will probably advance only under budget reconciliation rules that, while avoiding Senate filibusters, will require near-unanimity from Democrats and block inclusion of non-revenue-related provisions.
As the congressional debate intensifies, Mercer will continue working with ABC and others to emphasize the importance of uniform federal standards and private-sector solutions as the best way to promote employer-provided paid leave.