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Biden Paid Leave Plan Aims for Low-Income Worker Accessibility

April 28, 2021, 9:01 AM

Most American workers would have access for the first time to paid family and medical leave under a proposal released Wednesday by President Joe Biden, but full benefits wouldn’t be available for 10 years.

The proposal, which is part of Biden’s broader American Families Plan, would create a federally run program that pays workers who take time off to care for seriously ill family members, bond with a newborn or newly adopted child, or tend to the workers’ own serious health problems. The program would phase in gradually at a projected cost of $225 billion over a decade, with the maximum 12 weeks of benefits becoming available in year 10, according to the White House.

“The United States has fallen behind our economic competitors in the number of women participating in the labor force,” Biden administration staff said in a summary of his proposal, adding that the problem was made worse by the pandemic and caused partly by the country’s lack of a paid leave policy.

While not getting far into the details of how the program would be implemented, the White House indicated the president’s support for several key ideas that paid leave advocates have endorsed.

Among them: a sliding-scale benefit amount aimed at making it affordable for lower-wage workers to take paid leave, plus a broader list of situations that qualify for leave than the coverage provided under the Family and Medical Leave Act of 1993, which requires certain employers to grant unpaid leave and job protections. Unlike the FMLA, Biden’s proposal calls for providing paid leave for reasons related to military deployment or to seek safety from sexual assault or domestic violence.

Biden’s proposed federal paid leave program also would provide three days of bereavement leave annually.

Advocates say the U.S. is long overdue to enact a nationwide paid leave program, as the only wealthy nation without one, and the Covid-19 pandemic exacerbated and highlighted the needs that people routinely face.

“In the past year, families across the country have experienced personal health, caregiving, and financial challenges, which have really underscored the need for paid family and medical leave,” said Corinne Roller, legislative director at the advocacy group PL+US, Paid Leave for the United States.

For it to become law, the plan will need to overcome various sticking points around cost, whether and how to raise taxes to pay for it, and how to protect employers from compliance burdens. To get the plan through the Senate, Democrats will need either to convince 10 Republicans to support it or pass it under budget-reconciliation rules.

Separately, Biden’s proposal also calls on Congress to pass the Healthy Families Act, which would require employers to let workers accrue seven paid sick days per year—a benefit that could face stiffer business-community opposition as it would be funded directly by employers.

President Joe Biden speaks on his administration’s response to the economic crisis in the State Dining Room of the White House on Jan. 22, 2021.
Photographer: Ken Cedeno/CNP/Bloomberg

Lessons from State Plans

Nine states plus the District of Columbia have enacted their own versions of paid family and medical leave. Six of those states and the district have begun paying benefits, while the other three states are still setting up their programs.

The early state programs—the first being California, which launched in 2004—suffered from design flaws that made it difficult for low-income workers to use the benefits, disproportionately leaving out workers of color and women who dominate low-paying service jobs, said Sharon Terman, senior staff attorney and director of the work and family program at Legal Aid at Work, based in California.

“We have learned in our experience in California the critical components that are necessary for paid leave policy to be truly equitable and accessible,” Terman said.

These include a sliding wage replacement rate that makes taking time off more realistic for low-wage workers. California first launched its program with a flat-rate benefit, paying 55% of any worker’s wages during their paid leave, and the state found that very few low-wage workers ended up using paid leave, she said.

Biden’s proposal calls for paying workers at least two-thirds of their wages while on leave, with the replacement rate increasing to 80% for the lowest-income workers, up to a maximum benefit of $4,000 per month.

An accessible paid leave program also needs broader eligibility criteria than those in the federal FMLA, which excludes about 40% of the U.S. workforce, according to Roller. The federal law exempts employers with fewer than 50 employees and also requires workers to have held their current job for at least 12 months and to have worked at least 1,250 hours for that employer in the past year.

Advocates would like to see employer-size thresholds and hours-worked requirements left out of the federal paid leave plan. The paid leave plan also would need to reiterate the job protections provided under FMLA—another element missing from the original version of California’s paid family leave program—so that workers who aren’t eligible for FMLA can be confident of taking leave without risking the loss of their jobs, Terman said.

Tentative Business Support

Biden’s plan release was largely silent on a key concern for large, multistate employers—how the requirements of a federal paid leave plan will interact with existing paid leave requirements in the states that have implemented their own programs.

The position of business groups such as the U.S. Chamber of Commerce has evolved in recent years, moving from opposition to a mandatory paid leave policy to tentative support depending on how the program is designed.

“In order to be supportive, there have to be certain features of it that would be helpful to employers,” said Marc Freedman, vice president of employment policy at the U.S. Chamber. “In particular, what we’re looking for is a paid family leave approach that allows companies that are operating nationwide or in multiple states to be able to maintain one program across these different states.”

A separate proposal unveiled Tuesday by Rep. Richard E. Neal (D-Mass.), who chairs the House Ways and Means Committee, would address the interaction between state and federal paid leave requirements by letting existing state programs continue to operate if they’re at least as generous as the federal program. It also would provide grants to partially reimburse state programs and voluntary employer benefits that match or exceed the federal benefits.

The Chamber also is resisting expanding the eligibility criteria much beyond what’s contained in the current FMLA, Freedman said, especially noting the employer-size threshold is important for protecting small businesses.

Paying for It

How to fund a nationwide paid leave program is likely to be a major sticking point in trying to win the support of congressional Republicans. The latest iterations of a nearly decade-old paid leave bill in Congress—the FAMILY Act, H.R. 804 in the House and S.248 in the Senate—have no Republicans among their dozens of cosponsors.

Some Republicans want to see the federal effort limited to a tax credit for employers that provide paid leave. Another previous GOP plan called for letting people borrow from their future Social Security benefits to access paid family or medical leave.

The state programs generally are funded through a payroll tax with employer and employee contributions required. Freedman said the Chamber supports funding the federal program through a payroll tax on employees.

But subject to negotiations in Congress, Biden’s plan looks set on funding the program through general budget appropriations, afforded by tax increases on the wealthy.

The payroll tax option looks unlikely, since Biden has pledged not to raise taxes on people earning less than $400,000 per year, said Vicki Shabo, a senior fellow on paid leave policy at the New America think tank.

“The critical thing here is that the benefits be adequate, funding be sustainable, and that employers, employees and gig workers know that paid leave is there when there’s a serious family or medical need,” she said.

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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