CAP Report on Paid Leave Acknowledges Potential Damper on Hiring

Employment Law

As President Obama and Democratic presidential candidates continue to press for a federal paid family and medical leave law, the Center for American Progress released a report this week outlining funding options for such a law, but ignored a key component of some of the existing state laws.  The CAP report listed three options:

• An employer-funded program;
• A social insurance program with payroll tax contributions from employers and employees (the FAMILY Act introduced this year and most other countries take this approach); and
• A government-funded program paid for with general revenues.

Interestingly, the report leaves out a fourth option: a payroll tax on employees only.  This omission is important given that this approach is taken by California, New Jersey, and Rhode Island, the three states that have implemented paid leave laws.  Further, D.C. is considering a significant expansion of its current paid leave law that would include a payroll tax on employers only.  CAP notes that a drawback to the employer-funded program could be negative consequences regarding maternity leave.  Employers in other countries have been "less likely to hire, promote, and retain women workers and there's the possibility that employers will seek reasons to terminate pregnant workers in order to avoid paying the benefit."  Another issue with employer-funded programs is that they would exclude self-employed workers and those searching for work.