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Study Finds Calif. Paid Family Leave a Success
But business group raises concerns over 'significant administrative burden'

By Roy Maurer  2/3/2011
 

California’s landmark paid family leave program—the first of only two state programs in the country that offer paid leave to workers to care for a new child or sick family member—has produced significant economic, social and health benefits for workers while the downside for employers has been minimal, according to a report released Jan. 11, 2011.

California’s Paid Family Leave law, which went into effect July 1, 2004, allows workers in private industry to take up to six weeks a year off to care for a new child or a sick family member. It supplements the federal Family and Medical Leave Act, which allows up to 12 weeks off, but is unpaid. Payments under the California program replace 55 percent of a worker’s weekly wages up to $987 in 2011. The program is funded through a 1.2 percent payroll tax paid by workers that covers both state disability and paid family leave.

Researchers from the University of California, Los Angeles, the City University of New York and the Washington, D.C.-based Center for Economic and Policy Research, said their study showed initial employer concerns over the costs or potential abuse of California’s Paid Family Leave program were unfounded. In addition, the report found that low-wage workers have gained the most from the program but that they are also the least likely to know about it. The authors call for an expansion of the program and for efforts to promote increased awareness of it across the state.

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Low-wage workers have gained the most from the program
but were the least likely to know about it.
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“Paid family leave has been remarkably successful in California since the state first created it six years ago,” said co-author Ruth Milkman, professor of sociology at the University of California, Los Angeles and the City University of New York. “It has helped hundreds of thousands of workers—especially in low-wage jobs—balance the costs and challenges of tending to family and work, and it has begun to close the gap in access to paid leave benefits,” she said.

The study is based on results from surveys conducted in 2009-10 of 253 employers and 500 individuals across the state about their experiences with the California family leave program. The report found that the program benefits both low-wage workers and those the report categorizes as holding “high-quality” jobs paying $20 or more per hour with health benefits. In the sample of 500 workers, 30 percent (149 respondents) held jobs paying $20 or more per hour and 70 percent (351 respondents) held low-wage jobs.

Business Concerns

Jennifer Barrera, a policy advocate for the California Chamber of Commerce, said in response to the report’s findings that businesses in general were not so concerned about paid family leave by itself but rather the state’s expansion of several leave programs.

“The California Chamber of Commerce believes that the combination of paid family leave, with the myriad of other protected employee leave programs that only California offers, creates a significant administrative burden on employers, increases costs and minimizes the ability of our companies to expand hiring and create new jobs,” Barrera told SHRM Online.

“The chamber is concerned with the uncertainty created for businesses with each new effort to expand protected leaves of absences for employees in our state and the detrimental impact it will have on our economy and job creation,” she added.

Key Findings

In fiscal year 2009-10, California had 180,675 paid family leave claims totaling nearly $469 million, according to state Employment Development Department data.

Specifically, 167,523 Californians filed for paid family leave for bonding with new children and 23,220 filed to provide care for seriously ill family members. The average weekly benefit was $488 and workers stayed on leave an average of 5.37 weeks. About 1.2 million claims have been filed since the program began in 2004.

Moreover, according to the report:

Nearly nine out of 10 employers reported that paid family leave had either a “positive effect” or “no noticeable effect” on productivity (89 percent), profitability/performance (91 percent), turnover (96 percent) and employee morale (99 percent).

Small businesses were less likely than larger organizations (those with more than 100 employees) to report any negative effects.

91 percent of employers said they were not aware of any instances in which employees abused the state Paid Family Leave program.

60 percent of employers reported that they coordinated the state leave program with benefits they already provided, meaning employers saved money when their employees used the state’s plan instead of, or in combination with, employer-provided paid sick leave, vacation or disability benefits.

Disproportionate Access

Access to employer-provided benefits like paid sick leave, vacation, disability and parental leave is greater for some workers than others, the study found. Exempt employees have more access than nonexempt; male employees have more access than female; and those in high-quality jobs have more access than low-wage earners.

Public awareness of paid family leave remains limited. “Workers in our screening survey had all experienced a life event that the program was designed to cover, but more than half of them did not know the program existed,” the report stated. Low-wage workers, immigrants and Latinos were least likely to be aware of the program, the authors found.

Among workers who knew about the law but chose not to use it when they needed family time off, more than one-third said they feared negative consequences for them at work—that their employers would be unhappy or that they would be fired or denied promotion opportunities. Nearly one-third cited financial obstacles, saying the wage replacement provided by the law was too low to enable them to take time off.

New Jersey adopted a paid family leave law in 2009 and is the only other state to have done so. New Jersey replaces two-thirds of a worker’s weekly pay, but caps the benefits. In 2010, the maximum payout was $561 a week.

Roy Maurer is a staff writer for SHRM.

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