Employment & Labor Group

What CHROs Need to Know About The FAMILY Act

Published on: February 20, 2020

Authors: D. Mark Wilson

Topics: Employment Law



Leading Democratic Paid Leave Measure Would Establish a Federal Paid Leave Benefit  While Employees are on Leave Under the Existing Family & Medical Leave Act

Sen. Kirsten Gillibrand (D-NY) and Rep. Rosa DeLauro (D-CT) have introduced the Family and Medical Insurance Leave Act (S. 463 and H.R. 1185), which would establish a national paid family and medical leave insurance program that would be funded with a payroll tax on both employers and employees.  Employers would continue to be required to provide FMLA leave as under current law.  The bill addresses how employees would receive the paid leave benefit.  The House bill has 203 cosponsors including one Republican and the Senate bill has 31 cosponsors.  

CBO Summary:  The FAMILY Act would provide family and medical leave benefits for eligible people paid for by a 0.4 percent payroll tax that would be split evenly between employers and employees.  The Congressional Budget Office (CBO) estimates the new payroll tax raise a total of $361 billion over the 2020-2030 period, but that amount would be insufficient to cover the cost of benefits to all eligible individuals.[1]  While revenue would exceed spending in the first three years, spending would exceed revenues in all out years unless the payroll tax rate is increased.  Over a ten-year period, the federal deficit would increase by $228 billion.

Bill Summary:  Beginning 18 months after enactment, the federal government would provide payments for up to three months at a time to eligible people who take leave from work for one of four reasons:

  • They have a serious health condition;
  • They are caring for an immediate family member with a serious health condition;
  • They have experienced the birth or adoption of a child; or
  • They face a “qualifying exigency” arising from the foreign deployment of a family member in the armed forces.

Individuals are eligible for 60 payable caregiving days (12 weeks) in a calendar year, and no more than 20 payable caregiving days (i.e., workdays) in any one month.  In all cases, an employee must attest that they have notified their employer of the intent to take family or medical leave.  Individuals would file a monthly benefit claim to the federal government for the number of caregiving days they took that month.  Individuals can claim zero to 20 caregiving days per month.

To qualify for benefits, a person must have had earnings in the preceding 12 months at the time they apply for benefits and meet certain other work history requirements.[2]  This eligibility standard makes it easier for younger, part-time and low-wage workers to be eligible for benefits.  Current recipients of Social Security Disability Insurance benefits or Supplemental Security Income would be ineligible for benefits under the Act.

Benefits:  The paid leave benefits would equal about two-thirds of an individual’s highest earnings over the preceding three years, with a minimum benefit of $580 per month and a maximum of $4,000 per month the first year the bill is enacted.  After the first year, the minimum and maximum benefit amounts would be indexed to wage growth.  The FAMILY Act also includes a five-day waiting period before benefits start.  Benefits would also be reduced by the amount a recipient was receiving in workers’ compensation or unemployment benefits.

Payroll Tax:  The payroll tax would take effect 120 days after enactment.   The 0.4 percent tax would apply to earnings subject to the Social Security tax, which is applied on earnings up to $137,700 in 2020, and adjusted annually based on the national average wage index.  Payment of the 0.4 percent tax would be split evenly between employers and employees.   Self-employed workers would pay the full amount on the basis of net income.

Administration:  The bill establishes an Office of Paid Family and Medical Leave within the Social Security Administration to run the program and establishes a Federal Family and Medical Leave Trust Fund, from which benefits and associated administrative expenses would be paid.

No Preemption But Coordination with Certain State Benefits:  The FAMILY Act does NOT preempt state and local laws that provide greater benefits.   If an individual lives in a state with a state temporary disability or family leave insurance program, their FAMILY Act benefits will be coordinated with the benefits received from the state program by published regulations.

Coordination with Employer Benefits:  Employers already providing a paid leave benefit to their employees would still have to make payroll tax payments for themselves and their employees with no offset for any benefits they provide.  Nor does the bill diminish the obligation of an employer to comply with any contract, collective bargaining agreement, or any employment benefit program or plan that provides greater paid leave or other leave rights to employees.   However, absent some other legal requirement, the bill would allow employers to reduce or eliminate paid leave benefits to their employees in response to the new federal benefit.

Prohibited Acts and Enforcement:  It would be unlawful for an employer to discharge or discriminate in any other against an individual who has applied for, indicated intent to apply for or received family and medical leave insurance benefits.   Class action suits may be brought by or on behalf of the aggrieved individual and other individuals similarly situated.

[1] Congressional Budget Office, Budgetary Effects of H.R. 1185, the FAMILY Act, February 13, 2020.

[2] The other work history requirements are the same as those for Social Security Disability Insurance.  Generally, beneficiaries over age 30 must have worked during one-quarter of the years since the age of 21 and during 5 of the preceding 10 years.   Younger workers are subject to slightly different rules.


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