In Focus: Trump's Budget to Include Paid Family Leave Benefit

States and employers have been ramping up paid parental leave

By Stephen Miller, CEBS May 19, 2017
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President Donald Trump's federal budget proposal, set to be released May 23, will include a program that grants mothers and fathers up to six weeks of paid leave after the birth or adoption of a child, with the states playing a key role in funding and administering the program. Democrats in Congress want to see a more generous benefit. Meanwhile, several companies expanded their paid parental leave benefits this year, and a growing number of states are mandating that employers provide paid leave to new parents.

Six Weeks Paid Leave for Mothers and Fathers

President Trump's budget proposal will seek to create a program to grant mothers and fathers six weeks of paid leave after the birth or adoption of a child, White House budget officials said May 18. The details of the program will be worked out through negotiation with Congress. The program will not have an income limit, but high earners would see their benefit capped, the officials said.
(The Washington Post)

States Would Play a Leading Role

Under the Trump plan for paid parental leave, states would be required to provide leave payments through existing unemployment insurance programs and would have to identify cuts or tax hikes, as needed, to cover the costs, officials said. The administration would provide support to state governments to help them determine how to fund the program. States could opt out if they created a different paid leave system.
(Associated Press via ABC News)  

Paid-Parental-Leave Plan Could Strain UI Resources

Funding the Trump administration's proposed parental-leave program from building up state unemployment insurance (UI) reserves could poses major challenges, say some benefit advisors. UI employer contribution rates are experience-rated, meaning that employers who draw more heavily on the fund—typically because they have high rates of terminating workers—face higher UI premiums/Federal Unemployment Tax Act (FUTA) payroll taxes. Employers that have more new parents taking leave could also face higher premiums to cover the new baby bonding benefit, some say.
(SHRM Online)

Democrats Have Their Own Ideas

Democrats in Congress have proposed the Family and Medical Insurance Leave Act, which would create a fund to provide for up to 12 weeks of paid leave per year. The Healthy Families Act, another Democratic plan, would allow workers to earn up to seven days of paid sick leave per year.
(Business Management Daily)

Corporations Expand Paid Parental Leave Programs

American Express expanded its paid parental leave policy to 20 weeks for all of its U.S.-based salaried employees—mothers and fathers—beginning Jan. 1. Furniture retailer Ikea US also began providing 16 weeks of paid parental leave for employees this year, while tech company Etsy made its employees eligible for 26 weeks of fully paid leave when they become a parent. Accounting and professional services firm Ernst & Young increased paid parental leave to 16 weeks.
(SHRM Online)

State Benefits Outpace Trump Plan

New York passed the most generous state-backed family-leave policy to date in 2016. The law allows for up to 12 weeks of paid time off for new parents to bond with their child (including an adopted or foster child) and permits the same leave to anyone who needs to care for a family member with a serious medical condition or to handle responsibilities for a spouse, child or parent called to active military service. California, Minnesota, New Jersey, and Rhode Island have paid-family-leave policies as well.
(SHRM Online)

 

[SHRM members-only guide: How to Develop and Administer Paid Leave Programs]

 

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