Paid Family Leave Without Worries?

–by Nicole Macris

Citations: Family Medical Leave Act of 1993, 29 U.S.C. § 2601, et seq. (2017); FAMILY Act, S.337, 115th Cong. (2017), https://www.congress.gov/bill/115th-congress/senate-bill/337; Wendy McElroy, The FAMILY Act is Smart Politics, but Bad for Business, The Hill (Oct. 14, 2014, 6:00 AM), http://thehill.com/blogs/pundits-blog/healthcare/219766-the-family-act-is-smart-politics-but-bad-for-the-economy; Claire Zillman, Kirsten Gillibrand is Giving Her Paid Family Leave Proposal its First Trump-Era Test, Fortune (Feb. 7, 2017), http://fortune.com/2017/02/07/trump-paid-family-leave-gillibrand/.

Abstract: United States Senator Kirsten Gillibrand (D-NY) introduced a bill that would revise the paid-leave system developed under the Family Medical Leave Act. It establishes an insurance-based program for paid-leave. There are concerns regarding how this legislation, if enacted, would affect employees, employers, and the federal government.

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Enacting the Family Medical Leave Act (“FMLA”) in 1993 provided up to 12 weeks of unpaid leave to those in need of an excused leave of absence. However, under FMLA, many employees were unable to afford leave without pay, and unable to take the full leave. The FAMILY Act will work in conjunction with FMLA to construct an affordable safety net for employees who need to care for themselves or family members.

United States Senator Kirsten Gillibrand (D-NY) introduced multiple bills to revise the FMLA. Her latest attempt began by introducing the FAMILY Act, her first try during the Trump Administration and 115th Congress in Senate Bill 337, on February 7, 2017. The FAMILY Act is modeled after the paid family leave statutes in California, New Jersey, and Rhode Island, which increased the number of people in the workforce who were eligible for paid leave insurance based on a particular set of standards. Senator Gillibrand’s bill sets forth eight objectives:

  1. centralize the policies within FMLA to the federal government and, subsequently, establish a new division within the Social Security Administration (“SSA”): Office of Paid Family and Medical Leave, to oversee the entirety of the insurance program;
  2. set forth the criteria by which individuals are eligible for benefits of the program, prohibitions, and violations;
  3. entitle individuals to the insurance if the person (a) is insured for disability insurance under SSA when the application is filed, (b) earned twelve (12) months of income from employment, (c) filed an insurance application pursuant to the bill, and (d) is engaged in either caring for or anticipates to be engaged during a 90-day period, either before filing the application or within 30 days of filing;
  4. create a formulaic determination of the benefit which the individual will receive monthly, including the maximum and minimum amounts per month;
  5. coordinate the Family and Medical Leave Insurance benefits with any benefits received from other insurance programs via state law, local government, or disability insurance or family leave insurance programs;
  6. create a fund, from which the payments will be made;
  7. protect SSA from the insurance being paid from other programs within the agency; and
  8. amend the Internal Revenue Code to finance the program by imposing taxes on individuals, employers, the self-employed, and all railroad employees, railroad representatives, and railroad employers.

Thus, the FAMILY Act develops a system similar to an unemployment insurance program, but on a federal level, which gives employees a fallback plan when they need to take on the role of caregiver.

There are concerns as to how this legislation will affect individuals, employers, and the government. Individuals will have to pay into the system; the amendments to the Internal Revenue Code will impose taxes on individuals in order to fund the program. This safeguard has both negative and positive effects. The amount taken from paychecks will increase, but, on the other hand, there is a safeguard set in place for those eligible for the program, and in need of assistance. Employers will also incur a tax expenditure, but will be held to minimum FMLA standards, and may actually benefit from the insurance program established by the FAMILY Act. However, the effects facing the government could be substantial. The FAMILY Act will require the federal government to allocate resources to the program, which, in turn, removes resources from other federally funded programs or agencies. Programs such as this also place further obligations on the federal government to protect the American people.

The objectives of the bill, and insurance program, are wonderful in theory. Having a safety net is comforting, especially for those with aging parents, sickly family members, etc., especially when financial security is of concern when determining how to care for family members. Previous bills, with little to no amendments between introductions, have been killed in Congress several times already. Furthermore, it is unlikely that a new office within the SSA will be established while there is a hiring freeze. There must be revisions to the bill in order to facilitate a smooth transition from the current to proposed programs, along with provisions as to how resources will be properly allocated.

Posted in Employment Law, Legal Pulse