The District of Columbia is proposing a drastic expansion of paid family leave which may serve as a harbinger of similar provisions in other jurisdictions. The law before the D.C. City Council would provide 16 weeks of fully paid leave for all new mothers and fathers and will have enormous implications for employers. The proposal goes well beyond the requirements of the federal Family and Medical Leave Act (FMLA), which provides 12 weeks of unpaid leave for employers with 50 or more employees for a variety of reasons, including the birth of a child or to care or recuperate from a serious health condition. Employees are eligible for FMLA leave if they have worked at least 12 months and logged at least 1,250 hours over the past 12 months.
Supporters of the measure argue that the U.S. is one of the few industrialized nations not to offer paid leave for new parents. Germany provides 14 weeks of paid leave, Bangladesh provides 16, and Cuba provides 18 weeks. An expanding number of companies are offering paid parental leave as part of their benefits, while other employers provide no paid leave.
Members of the City Council contend that the law will promote an employer’s ability to attract and retain good employees who will come to work happy and ultimately be more productive. Backers of the bill have a website to garner support at www.dcpaidfamilyleave.org. The Obama administration is said to “enthusiastically support” the proposal, which would apply to virtually all employees in the district including federal government employees.
Despite altruistic motives, the costs and implications on employers would be enormous. The bill would require all employers to pay a certain percentage of each of their employees’ salaries into a fund governed by the city. For example, employers could pay up to 1% of the salary for higher paid employees, and as little as 0.2% for lower paid employees, with the money eventually being paid out to those on leave.
“Our concern is that this would go further than any other type of legislation in the nation, and in a bad way,” said Harry Wingo of the D.C. Chamber of Commerce. “The burden would be completely on employers. So this would be employer funded, and in fact, employees would not be contributing as they do in other systems.” The D.C. Council has implemented mandatory paid sick leave and higher minimum wage laws in the past, making life increasingly difficult for business owners in the district. “In theory, we all want better lives for our workers – at least I do. But you have to also take into consideration we still have to make money,” said trash hauling company owner Barney Shapiro.
The bill appears to have majority support on the Council, but would still need to be signed by the mayor. Similar proposals could surface in other states. Currently, only California and New Jersey have paid family leave on the books. New Jersey offers six weeks of paid leave through either a state insurance plan or private plan with equal benefits. California provides partial payments in a similar fashion to disability benefits, for those workers who elect to pay into the state disability insurance program, with funding coming from worker contributions to the state disability insurance program. Early this year, Representative Rosa DeLauro and Senator Kirsten Gillibrand introduced legislation in Congress that would call for up to 12 weeks of leave at 66 percent of the employee’s pay up to a maximum of $1,500 per week. The key difference with the congressional legislation is that the cost would be borne by tax payers rather than employers.
While the FMLA provides the opportunity for new parents to be away from work with the security of being able to ultimately return to their jobs, four months of paid leave would mark a new level of employee benefits to the detriment of employers. Once the benefits are promulgated they are unlikely to ever be reconsidered or curtailed. It is one thing for a private company to decide to offer generous leave packages as a means to attract and retain talented employees, but mandating such an expansive (and expensive) benefit across the board for private sector employers could have dire repercussions. Time will tell whether mandatory paid leave laws gain momentum in other states and with federal lawmakers.