Are you ready for paid family leave?

Workforce,  Jan, 2003  by Douglas P. Shuit

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California has passed the nation's first paid family leave law, hailed as family-friendly by some and jeered as a "job killer" and a bureaucratic nightmare by others. Will other states follow?

Taking paid time away from work for baby bonding or to care for a sick parent might delight your pediatrician or preacher, but the very concept makes members of the business community crabby and colicky. How about calling it what it is, they grumble: job killer.

Legislators in California have given the nation its first paid family leave law, a controversial antidote to the mushrooming problem that workers face in juggling family and workplace responsibilities. If the idea spreads, top management and HR executives will be dealing with issues such as: Replacing more workers on temporary leave; higher administrative costs; privacy issues; threats of lawsuits, and increased future costs as the benefit is increased.

Under California's new law, 13 million workers will be eligible to receive half pay for six weeks for a variety of personal reasons, from tending to a newborn infant to moving a parent into a nursing home. Payments will come from a payroll tax, but employers are up in arms because they face significant new legal and administrative costs and must pay and train replacement workers. As for HR professionals in other states, the problem may not be yours--yet. The coalition of labor unions, family advocates, and others that worked hard in California for the family bill has efforts under way in nearly 30 other states.

You might call the new family-friendly leave plan--known as Family Temporary Disability Insurance--FMLA on steroids. Once implemented in 2004, the FTDI legislation promises to come on with a vengeance, critics say. Moreover, with a big win in California, the national coalition that supports paid leave for workers who take time away from their jobs to care for ill parents or family members might gain traction in other states.

Supporters of the measure--labor unions, advocates for children and seniors, church groups, and numerous other organizations--provided the political muscle needed to get the legislation through a divided legislature. They argue that paid family leave is necessary to keep pace with a changing workforce. The reality of the American family today is that both moms and dads commonly work, there are large numbers of single parents, and working-age adults are helping to care for ever-increasing numbers of older parents.

In signing the bill in September, Governor Gray Davis declared, "Californians should never have to make the choice between being good workers and being good parents. This bill will make it easier for Californians to help their loved ones through a health crisis without going broke in the process."

The bill was enacted over the opposition of the California Chamber of Commerce, the California Manufacturers and Technology Association, and other business groups that portrayed the family leave legislation as a "job killer" because it will create an even more inhospitable business climate, which is often blamed for the flight of manufacturing jobs out of the state. California business leaders predict the family leave program will become a full-employment act for lawyers and a major headache for HR professionals. They contend that it will multiply the legal problems they are already experiencing under the federal FMLA. They also fear that it will place a tremendous burden on employers with fewer than 50 employees, which have been exempted from FMLA but now are included in the California program.

Workers have already shown that they are willing to take time off without pay under FMLA, and it is feared that the added incentive of replacing 55 percent of their pay will open the floodgates. "This bill will cause a significant problem for employers," says Gino DiCaro, spokesman for the California Manufacturers and Technology Association. "Absenteeism already is one of the larger costs a manufacturer can incur. It's a certainty that a large portion of the workforce will take advantage of it, especially when they are paying for it."

The law builds on FMLA in a number of significant ways. FMLA provides for 12 weeks of unpaid leave, and it's up to the worker to cobble together enough disability insurance, when applicable, vacation, sick time, and savings to get by. California's FTDI will make up more than half of a worker's wages for six weeks. The payments will be free of taxes. FMLA limits coverage to businesses with 50 or more employees; FTDI includes businesses of all sizes. Eligibility for FMLA requires a year on the job and 1,250 hours in the previous 12 months; eligibility for FTDI begins immediately upon employment, after a seven-day waiting period.

Workers are expected to take advantage of the new program in far greater numbers. Although 35 million Americans have taken leaves under FMLA, one federal study estimated that 20 percent of those eligible for leave did not take it because they couldn't afford losing a paycheck.