A U.S. Senate committee recently heard testimony on proposals for a nationwide paid-leave program. While supporters said a federal program would benefit families and workers at all income levels, opponents said a national mandate would raise significant challenges for small businesses.
Sen. Patty Murray, D-Wash., supports the Healthy Families Act, which would require employers with at least 15 employees to provide workers with seven days of paid-sick-leave accruals each year. Workers could use the leave to care for their own illness or that of a covered relative, as well as for preventive care.
Additionally, President Joe Biden has proposed requiring employers to provide 12 weeks of paid family and medical leave through a new federally funded program.
During a May 18 Senate committee hearing, Murray said paid leave should be "a right for all, not a privilege for some." She added that "people are still forced to choose between a paycheck … and taking time to care for themselves or their families."
Sen. Richard Burr, R-N.C., said he understands the need to "balance family life with the workplace" and he supports the idea of paid leave for workers. He raised concerns, however, about how to pay for the proposal. He said a "costly new mandate imposing a one-size-fits-all policy … on small businesses … could force businesses to cut jobs."
He noted that private-sector businesses have come up with "creative ideas" for providing paid leave, such as paid-time-off purchase plans that "allow workers who want more leave to purchase additional paid time off either through employer flex credits or salary reductions with pretax dollars." And some employers offer short-term disability insurance plans that provide employees income security when they need time off.
"There are big questions of disagreement surrounding paid leave," Burr said. Will it be mandated? Who will pay for it? Who will be eligible to receive benefits and for what reasons?
Worker Advocates Say Pandemic Highlights Need for Leave
Early in the COVID-19 pandemic, Congress passed the Families First Coronavirus Response Act (FFCRA). Under the act, employers with fewer than 500 employees had to provide paid sick leave and paid family leave for certain COVID-19-related reasons through the end of 2020. The FFCRA provided refundable tax credits to eligible employers to reimburse them for the paid-leave wages.
The American Rescue Plan Act of 2021, however, did not mandate continued COVID-19-related paid leave. Rather, the act extended the FFCRA tax credits to employers that voluntarily offer such leave through Sept. 30.
"The need for COVID paid sick leave will be with us for a while longer, and all the reasons workers needed paid sick time prior to the pandemic remain," said Vicki Shabo, a senior fellow for the Better Life Lab at New America, a nonprofit think tank in Washington, D.C. She testified before the Senate Committee on Health, Education, Labor and Pensions at the May 18 hearing.
Shabo thinks the Healthy Families Act "is a key solution."
She noted that many workers do not have any paid-sick-leave benefits. "These are disproportionately workers in food service, retail, janitorial services—many of the same workers who are on the front lines of this pandemic as essential workers." She said a few days away from work could mean that they can't pay their monthly bills.
Marianne McManus, IBM's vice president of health and benefits, testified on behalf of the American Benefits Council. The council supports federal paid-leave legislation "so that all workers in the United States have access to robust paid family, sick and medical leave benefits," she said.
The pandemic demonstrated how important it is for employees to have access to paid time off, according to McManus. "IBM and our fellow council member companies all agree that we are most successful in recruiting and retaining top talent when our employees do not have to choose between their careers and caring for their health and their families."
She noted that the current patchwork of state and local mandates make compliance difficult for employers. A single set of standards nationwide would advance employee fairness while eliminating confusion and simplifying administration, she testified.
The Society for Human Resource Management (SHRM) has also called for a voluntary, national paid-leave program to provide certainty and predictability rather than a fragmented patchwork of state and local laws.
Flexibility and Cost Are Concerns for Small Businesses
"Job creators want talented workers and want to provide benefits for those workers," Burr said. "Flexibility for the employer and the worker makes it work for all involved."
Elizabeth Milito, an attorney with the National Federation of Independent Business (NFIB) Small Business Legal Center noted that many private-sector workers are employed by small businesses, such as neighborhood pizza parlors, auto shops and hair salons. "When small businesses succeed, communities and local economies succeed," she said.
Milito recognized "the good intentions behind various proposals to mandate leave," but said the NFIB opposes leave requirements for two reasons: inflexibility and cost. Many NFIB members have five to 10 employees, and the business owner or a spouse often handles HR matters, she said, noting that more than half take care of payroll administration in-house.
"To the extent that they can, small businesses provide paid leave voluntarily to remain competitive and attract talent," she said. But some small businesses can't afford to offer such benefits. "Not all employers can absorb the cost."
A paid-leave mandate might make less money available for pay raises, health insurance and hiring more workers, she said.
Burr supports the employer credit under the Tax Cuts and Jobs Act, which has been extended through 2025. The act offers a federal tax credit to employers that provide paid family and medical leave to their employees.
"We should make sure we give business a lot of flexibility to help employers make paid leave work," Burr said.