July 31, 2018

Paid family and medical leave is trending in the U.S. – here’s what you need to know

Demand for paid time off is increasing with the ever-changing roles of men and women and home and work. It’s also an attractive benefit to attract and retain talent in a tight labor market. Compliance Counsel Kelly Dougherty dives into the topic, including why it’s trending and where it’s happening.

An increasing number of U.S. states have been creating mandatory paid family and medical leave programs. These programs provide workers with a portion of their wages during time off so they can bond with a new child, care for a family member with a serious health condition, and is sometimes used to take time off for a family member’s active military service.

These programs are structured as state-administered wage replacement benefits that are typically funded by employee or employer contributions. We’ve seen two main formats for funding these programs:

1) employee payroll contributions or premium assessments that are used to pay premiums for employers to have insurance policies

2) employee payroll tax deductions that fund the program

Eligible employees who make claims for benefits generally can receive between four to 18 weeks of partial wage replacement benefits per year, depending on the specific program. Some paid family and medical leave programs also phase in benefits over the course of several years.

Why is paid family and medical leave trending?

There is no federal mandate for employers to provide paid family or medical leave. Although the federal Family and Medical Leave Act generally requires companies with more than 50 employees to provide 12 weeks of unpaid leave for new parents, it does not require paid leave. Some employers offer paid leave by choice, but many workers in the U.S. are employed at smaller companies that are not required to offer any protected leave at all.

With the ever-changing roles between men and women at home, and with more women stepping into professional careers with increased responsibilities, the demand for paid time off to care for new children and ill family members is increasing.

Further, small businesses may favor the creation of state administered paid leave programs because these programs make the benefit affordable, reduce business costs, and increase their competitiveness. In addition, employee retention can increase with the offering of attractive paid leave benefits by employers.

Where is this trend happening?

California was an early adopter of this type of program in 2002, with New Jersey and Rhode Island following the lead in 2008 and 2013, respectively. In the past couple of years, we’ve seen four additional states/cities pass paid family and medical leave laws as well: New YorkWashington, the District of Columbia, and Massachusetts. 

Although more states have started enacting laws to create paid family and medical leave programs, the effort and resources involved in planning and organizing a state-administered paid leave program is a big job and takes a lot of time. For this reason, we are seeing laws pass to create these programs several years prior to when employee benefits will actually be available to claim.

What does this mean for employers?

Employers will want to keep an eye on these new paid family and medical leave requirements. They should review their existing paid family and medical leave requirements, if any, and revise them if necessary.

To help stay ahead of these trends, you can check in periodically with the state legislature activity for locations where you have employees to see if new bills are introduced for these types of programs.

Further, employers can consider getting involved with industry groups to get an inside scoop on these new laws. Some states even welcome employer input for the specific requirements for these programs during the development period, including the Washington Employment Security Department. You can learn more here.

Want to learn more about paid leave laws, and strategies to help manage their requirements? Join Kelly on August 14 for a special webinar, “What you need to know about U.S. and Canadian paid leave laws.” Register now.

Learn more from our compliance team about hot and trending compliance and legislation topics at INSIGHTS 2018.

Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.

Kelly Dougherty

Kelly Dougherty is Senior Compliance Counsel at Ceridian with years of employment law counseling and litigation experience. At Ceridian, Kelly enjoys tackling employment-related compliance issues in the HCM world and working to help develop cutting edge products.

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