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Paid Leave Coverage, Rollout Risks Diverge in Maryland, Delaware

May 16, 2022, 9:35 AM

Delaware and Maryland just enacted paid family and medical leave programs, picking up where Democrats in Congress left off in last year’s failed attempt at creating a nationwide version.

With their newly enacted laws, the neighboring states became the 10th and 11th—plus the District of Columbia—to guarantee paid family and medical leave to private-sector workers.

But differing political climates in Maryland and Delaware could mean big variations in how much of their workforces can access the paid time off, the impact on employers, and how effectively the programs get rolled out.

Access to paid time off from work in the US remains mostly dependent on the benefits that employers provide voluntarily. Just under a quarter of private-sector workers have paid family leave benefits at work, according to the latest Bureau of Labor Statistics estimate, and low-income workers are the least likely to have those benefits.

“Each state is passing kind of the best they can do in their particular context, given their state politics and the various lobbying groups,” said Vicki Shabo, senior fellow on paid leave policy at the New America think tank.

Power Divided

In Maryland, the Democratic-majority legislature is partially reliant on the state Department of Labor to help implement the program, under the oversight of Republican Gov. Larry Hogan whose veto of the paid leave measure Democrats overrode in April—raising questions about how devoted the department might be to implementing the program as its legislative backers envisioned it.

In his April 8 veto message, Hogan blasted the measure as election-year politics and an “irresponsibly crafted, rushed piece of legislation” that will hurt small businesses.

In Delaware, Democrats hold a majority in both chambers of the legislature plus the governor’s office. But the state constitution requires a three-fifths vote to pass a bill that creates a new tax, as the paid leave measure does. Democrats barely topped that threshold this year, and with new election maps for November following this year’s redistricting, there’s no guarantee they’ll still have a three-fifths supermajority next January.

Those dynamics forced Delaware lawmakers to spend a year revising their paid leave proposal to exempt some small employers—leaving their workers without the benefits—and adopt narrower coverage and eligibility rules than other recently enacted state programs.

The 2022 legislative session “was a critical window to get the foundation of a program established,” said Delaware state Sen. Sarah McBride (D), who sponsored that state’s paid leave bill, adding there could be chances to expand the program in the future.

Same, But Different

Both states will set up government-run programs to ensure paid time off for workers to tend to a new child, their own medical needs, or a family member’s serious illness or military deployment, with benefits funded by a payroll tax.

The Maryland program, enacted by veto override on April 9, will start paying benefits in 2025. In Delaware, where Gov. John Carney (D) signed the measure into law May 10, benefits will begin in 2026.

Maryland’s program is set up to be more generous to workers than Delaware’s in many ways. In a state of 6 million people vs. just under 1 million in Delaware, Maryland will provide more weeks of benefits in some cases, a higher wage replacement rate for low-income workers in line with other recently enacted state programs, more types of family members for whom workers can take caregiving leave, and no exemption for employees who work for small businesses (although some small businesses can avoid paying the employer share of the payroll tax).

The final Delaware legislation, though, ended up winning tentative support from the Delaware State Chamber of Commerce, which called it a good balance between employer and employee needs—likely helping the bill’s case with moderate Democrats in the state legislature.

“We did have to make some compromises,” McBride said. Primarily, this meant matching the measure’s eligibility rules and coverage to the federal Family and Medical Leave Act.

Eligibility Requirements

“The Democratic party in Delaware is a big tent,” she said. “We had to work across different perspectives, experiences, and that’s obviously what we were able to do in getting it across the finish line.”

The federal FMLA, which guarantees workers up to 12 weeks of unpaid time off, is estimated to cover only 56% of the US workforce, according to a US Labor Department survey from 2018. To be eligible, workers must have worked for the same employer for the past 12 months, working at least 1,250 hours, and employers with fewer than 50 employees are exempt.

The Delaware law matches the 12-month and 1,250-hour rules, but its small business exemptions are narrower. Employers with 25 or more workers must participate fully, and those with 10 to 24 workers must participate only in parental leave benefits.

The percent of Delaware workers who will be left out isn’t known yet, McBride said.

But she predicted a majority of them will be eligible for the benefits and “well more than a majority” should eventually become eligible if they stay with the same employer for a year.

Rollout Risks

In Maryland, the reluctance to create a large, state-run benefits program funded by a new payroll tax lies more in the executive branch rather than the legislature.

Hogan vetoed Democrats’ paid leave bill, which punted the work of calculating the appropriate tax rate to the state Department of Labor. The new law gives the department until December to conduct an actuarial study determining the proper rate and how it should be split between employer and employee. The governor criticized the measure for including no cap on the payroll tax amount or annual increases, as most state-run paid leave programs do.

The labor department didn’t respond to a request for comment on the timeline or priority level of the paid leave study and implementation.

The Maryland Department of Labor won’t necessarily be tasked with administering the program—adding to the uncertainty about how it will operate. Besides the rate study, the new law also calls for the Department of Legislative Services to hire a consultant to study whether the labor department can handle administering paid leave and, if so, what additional staff or funding it might need and report its finding to the legislature by October.

There’s reason for paid leave supporters to monitor the labor department’s work, but not to be overly concerned, said Clinton Macsherry, director of public policy at the Maryland Family Network, a long-time advocate for paid leave policy in the state.

Because the legislation requires an actuarial study, “that terminology makes it pretty clear there should be objective data involved in this,” he said. “I am confident the Department of Labor will act in good faith on this.”

And if not, the Democratic-majority legislature has time to revisit the paid leave law next session before payroll deductions begin in October 2023, he added.

“That’s one layer of, shall we say, oversight or protection,” Macsherry said. “We have a lot of time to get this right, and we’re all committed to making sure we get it right.”

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

To contact the editor responsible for this story: Andrew Harris at aharris@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com