HR Policy Association

Paid FMLA Tax Credit in Senate Reform Bill As House Holds Hearing on Paid Leave

Published on: December 8, 2017

Authors: D. Mark Wilson

Topics: Employment Law

The Senate-passed tax reform bill includes a two-year tax credit for companies that provide paid family leave benefits, while the House Education and Workforce Committee held a hearing highlighting an HR Policy-supported bill providing a voluntary federal standard for employers.  The tax credit, which mirrors Sen. Deb Fischer’s (R-NE) Strong Families Act (S. 1716), would allow employers to receive a 25 percent nonrefundable tax credit for each hour of paid leave up to $4,000 per year for each qualified employee.  To qualify for the tax credit, which sunsets at the end of 2019, employers would have to provide at least two weeks of paid family leave that replaces at least 50 percent or more of wages and a prorated amount of leave to part-time employees.  Employers would not be able to take the credit for employees who earn over $72,000 per year, and new reporting requirements may be required by the IRS.  Separately, the House Education and the Workforce Committee held a hearing this week on "Workplace Leave Policies: Opportunities and Challenges for Employers and Working Families."  Subcommittee Chairman Tim Walberg (R-MI) gave a hat tip to HR Policy Association and cited our data that “nearly 70 percent of HR Policy Association members find that millennials expect greater flexibility with regard to scheduling and time off.”  Barbara Brickmeier, Vice President for Human Resources and Business Development at IBM, who testified at the hearing, said the maze of state and local paid leave laws "actually discourage companies from voluntarily providing paid sick leave and/or paid family leave to their employees."  The problem would be addressed by HR Policy-backed legislation—the Workflex in the 21st Century Act (H.R. 4219)—which would create a voluntary, preemptive national framework for employers to provide uniform paid leave benefits and flexible work arrangements to their employees along the lines of our Workplace 2020 proposal.

D. Mark Wilson

President and CEO, American Health Policy Institute

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