May 21, 2021
The Association’s Future Workplace Policy Council hosted a call with its paid leave working group to discuss the three major Democratic federal paid family leave proposals: The FAMILY Act (H.R. 804, S. 248), the Building an Economy for Families Act, and President Biden’s American Families Plan.
How each proposal would interact with existing employer plans and state programs was one of the largest issues addressed. None of the three proposals provides relief in the form of preemption from the patchwork of existing state requirements, and only the Building an Economy for Families Act provides any sort of carveout for existing employer plans in the form of reimbursement. The group highlighted the importance of specific coordination between federal and state and employer programs to ensure ease of compliance and limit the potential for abuse.
Funding: One of the discussion's chief concerns was how a federal family leave program would be funded under each of proposal. The FAMILY Act would be funded through a payroll tax on employers and employees, similar to existing state-level programs. In contrast, the Building an Economy for Families Act—and likely President Biden’s American Families Plan—would be funded solely through general revenue, relying on potential increased corporate and income tax rates down the road. The group discussed the difficulties in calculating the cost and risk for employers associated with each approach.
Meanwhile, the Senate Health, Education, Labor & Pensions Committee held a hearing on paid leave in which the Committee examined paid leave access issues for working families as well as available paid leave options. Marianne McManus, Vice President, Health & Benefits, IBM, testifying on behalf of the American Benefits Council, provided a valuable perspective from the employer community, and encouraged “a federal paid leave program that builds on private-sector solutions.” Ms. McManus emphasized the need for administrative uniformity that allows for employers to treat all workers, regardless of location, equitably, as well as compliance simplification. She also noted the importance of ensuring flexibility for employers to design and administer their own innovative paid leave solutions.
Outlook: While the FAMILY Act appears to have lost favor among Democrats, the Building an Economy for Families Act and President Biden’s American Families Plan could begin to see action in the House and Senate relatively soon, with both proposals being candidates for Senate passage through the budget reconciliation process. The Association will continue to elicit feedback from membership on the best approaches to a potential federal paid family leave program and remain engaged with legislative stakeholders while continuing to press for federal preemption of state and local paid leave laws.