States, Companies Continue to Expand Paid Leave Benefits Throughout US

States, Companies Continue to Expand Paid Leave Benefits Throughout US

Though the United States is one of just a handful of countries around the world that does not require organizations to grant their employees paid parental leave by law, recent years have seen more US states pursue mandates of their own, while a growing number of large, nationwide employers have voluntarily adopted more robust policies for working mothers and, increasingly, fathers and caregivers as well.

These trends have been driven by the public conversation and advocacy around parental leave, by a growing body of research showing the various benefits of parental leave to working families, and also by business considerations, as organizations struggle to attract and retain workers (particularly women) in a tight and competitive labor market. The latest research into what employees and candidates value, including Gartner’s Global Talent Monitor, shows that flexibility and work-life balance are becoming more and more important to the workforce. As millennials grow up and start families, this massive generational cohort is voicing a clear expectation that employers will support them—both moms and dads—in balancing career and family obligations.

Several developments have taken place in this area over the past month that employers should be aware of, as they illustrate the accelerating pace at which paid leave benefits are transforming from nice-to-have features to essential—and in a growing number of jurisdictions, mandatory—components of the employee value proposition.

Connecticut is set to become the state with the most extensive family leave policy in the country after its legislature passed a bill in early June that Governor Ned Lamont has pledged to sign into law. The bill would give workers in the Nutmeg State 12 weeks of guaranteed paid time off to care for a newborn baby, a seriously ill family member or loved one, or their own illness, as of 2022. Notably, the Connecticut bill would cover up to 95 percent of workers’ pay, with the percentage determined via a sliding scale based on income level, and funded by a 0.5 percent payroll tax that will come into force in 2021. Connecticut also defines loved ones very broadly for the purpose of caregiving leave, as any blood relative or “equivalent of a family member.”

The Connecticut bill envisions a much more generous wage replacement guarantee than other states like New York, whose paid leave bill provided only 50 percent wage replacement when it came into effect and will cap out at two-thirds in 2021. California, however, is weighing an amendment to its family leave law that would give workers in the state 100 percent of their wages when on family leave, as opposed to 60 or 70 percent currently. California law defines family leave broadly to include parental leave within the first year after a child’s birth or adoption, as well as caregiving leave for seriously ill relatives. That measure passed the state Assembly late last month and is currently being considered in the Senate.

Other states recently enacted new paid leave legislation with a focus on sick leave and caregiving. Nevada Governor Steve Sisolak announced on June 4 that he would sign a bill passed by the state legislature in late May that will require private employers in that state with 50 or more employees to grant 40 hours of paid leave each year. This leave may be used for any purpose, but is specifically targeted toward workers with sick children or parents to take care of. Maine Governor Janet Mills signed a similar bill into law last month; that law, which applies to employers with 10 or more workers, requires them to provide one hour of paid leave for every 40 hours worked, up to 40 hours per year. The entitlement, which comes into effect at the start of 2021, will be available to anyone who works for their employer for at least 120 days in a given calendar year, thereby excluding most seasonal workers. Maine’s law is the first in the country to mandate paid leave that can be used for any reason, though it does require workers to give their employers reasonable notice for taking leave in non-emergency situations.

In Texas, new ordinances will soon come into effect in Dallas and San Antonio that will entitle employees in these cities to accrue paid sick leave. The state legislature had intended to preempt these local ordinances but failed to pass a bill banning them before its legislative session ended on May 27. However, Texas lawmakers may still derail the ordinances in a special legislative session, while business groups may challenge them in court as they did a similar law in Austin, but these efforts are unlikely to stop them from coming into effect. Both ordinances take effect on August 1 for all employers with more than five employees—very small organizations have another two years to comply.

New taxes are also coming into effect to fund paid leave benefits in Washington, DC, on July 1 and in Massachusetts on October 1. Massachusetts Governor Charlie Baker and the state legislature agreed to delay the implementation of the payroll tax, which was originally scheduled to go into effect July 1, after businesses raised concerns over their ability to prepare for it. To make up for the delay, however, the tax will be levied at from 0.75 percent of each employee’s wages rather than 0.63 percent.

These changes at the state level come at a time when paid leave, particularly parental leave, is looming larger than ever in national politics. The Democratic party, which advocates paid leave guarantees as part of its overall vision of labor law reform, is touting the new paid leave laws signed by Democratic governors like Lamont, Sisolak, and Mills as victories for the party at the state level. Meanwhile, parental leave policy is shaping up to be as much of an issue on the presidential campaign trail in 2020 as it was in 2016. New York Senator Kirsten Gillibrand, a candidate in the Democratic primary, recently unveiled a piece of proposed legislation called the “Family Bill of Rights” that would guarantee universal paid family leave among other protections for working parents. Other Democratic hopefuls have also embraced a paid parental leave guarantee at the federal level, while Republican lawmakers have proposed alternative legislation that would allow new parents to fund their own paid leave through early withdrawal of their Social Security benefits.

Amid the political gridlock in Washington, the prospect of any federal paid leave mandate still looks remote, but the rising tide of state laws suggests that the wind is blowing in that general direction. With large states like New York and California mandating several months of paid parental leave, some major employers may find that it makes sense to voluntarily adopt a nationwide policy that complies with the strictest state laws. Furthermore, private businesses are increasingly responsive to how their customers and employees feel about social issues and have an interest in adopting policies that reflect those positions. Between the growing demand for it among the talent pool, its proven positive effects on retention and engagement, and the HR-as-PR benefits of providing it, employers are finding a lot to like about paid leave.

A few recent decisions by large companies illustrate this shift in perceptions. On June 10, Target introduced a series of new benefits including paid family leave and emergency child care for both full-time and part-time employees. The retail giant’s new policy, effective at the end of the month, doubles its paid leave benefit from two to four weeks and covers adoption, surrogacy, and foster placement as well as birth parents. In May, Bloomberg announced an expanded parental leave policy, increasing the amount of fully-paid leave it grants primary caregivers (male or female) from 18 to 26 weeks. Secondary caregivers will still receive four weeks of leave at full pay.

Speaking of primary and secondary caregivers, US employers are also under growing pressure to ensure that they are making these benefits equally available to mothers and fathers. Organizations that assume the “primary caregiver” is always a mother may find themselves in hot water if they block their male employees from taking parental leave as primary caregivers. JPMorgan Chase, for example, recently settled a class-action lawsuit brought by the American Civil Liberties Union on behalf of male employees who claimed gender discrimination after they were allegedly discouraged from taking the 16 weeks of paid leave to which the company entitles primary caregivers.

As Washington Post columnist Jena McGregor noted, this is at least the third time since 2015 that a major company has settled a parental leave discrimination suit with working fathers. Given the high profiles of JPMorgan and the ACLU, experts told McGregor they expect this settlement to have a particularly strong impact on how employers design parental leave policies with regard to gender roles. Cynthia Blevins Doll, a labor and employment lawyer for Fisher Phillips, predicted that these lawsuits would encourage employers to abandon the primary/secondary caregiver distinction—though that might result in less extensive leave policies overall.

This post is published for informational purposes only and does not constitute legal advice or an opinion on the legal matters discussed within. Employers should consult their general counsel whenever they have questions pertaining to laws, regulations, or potential liabilities.