If you’re an employer who enjoys navigating the endless disputes, hearings and paperwork of state bureaucracies – think the unemployment system – then you’ll love the proposal now before the Massachusetts Legislature to mandate paid family leave in the commonwealth.
That’s because the paid leave proposal, which will be the subject of a State House hearing tomorrow, would create a new office Department of Family and Medical Leave within the Executive Office of Labor to administer the new leave program. No one on Beacon Hill will say publicly how much it will cost to run the department, but AIM projects that employer-paid family leave will require an operation similar in size to the state Department of Unemployment Assistance, which operates with a budget of $70 million.
And that doesn’t account for the cost to employers of the new leave program itself. AIM estimates that the likely cost per week per employee to fund the program will exceed $520 per employee yearly, more than the average $508 per employee that companies now pay for the $1.3 billion Massachusetts Unemployment Insurance program.
The Senate paid leave bill creates a new Massachusetts law establishing the right for employees to receive job protected paid family and paid medical leave under certain circumstances. Benefits include up to 16 weeks of paid family leave, and 26 weeks of paid medical leave. Weekly benefits initially are 50 percent of the employee’s weekly wage and capped at $1,000 per week.
But benefit costs would accelerate quickly if the bill becomes law. The 50 percent salary replacement level required at implementation in January 2019 would increase to 90 percent by January of 2021.
Furthermore, the average weekly wage would then be tied to the Consumer Price Index for the Boston-Cambridge-Quincy consolidated metropolitan statistical area. This an extraordinarily high rate of compensation that would focus the wage rate on the area of the commonwealth with the most expensive cost of living. The result will distort the economic complexity of different areas in Massachusetts, placing an undue burden on employers and employees living in less costly areas.
Senate President Stan Rosenberg said recently that the paid family leave issue will go to the statewide election ballot in 2018 if the Legislature does not approve it.
“I am hopeful that the legislature will take this question up during this term and get it to the Governor's desk," Rosenberg wrote during a question-and-answer session on Facebook. "If we fail to do so, I expect there will be a ballot question putting this matter into the hands of voters. It would be far better to do it in the legislature than the ballot. Everyone concerned about this should contact their State Representative, their State Senator, and the Governor."
Associated Industries of Massachusetts opposes the bill and will testify against it on Tuesday. John Regan, Executive Vice President of AIM, said that the last thing employers need is another regulatory bureaucracy to divert time, energy and resources from business growth.
“We agree with the proponents of these bills that Massachusetts’ citizens need to balance the needs of work and family. We do not agree, and do not believe, that this legislation is a reasonable, manageable, or affordable approach in addressing those needs, either from an employee or employer perspective,” Regan said.
Many AIM member employers already provide paid leave through disability insurance.
According to the 2016 AIM Benefits Survey, 87 percent of member companies offer short-term disability to their employees with benefits ranging from 51 to 70 percent of salary replacement. Seventy-nine percent offer long term disability insurance and 59 percent have a leave of absence policy.
AIM believes a mandated paid leave law will prompt many of those companies to discontinue their current policies and direct all employee leaves through the state program.
The leave bill provides that family leave is leave taken by an employee to provide care for a family member. Family is defined as spouse, domestic partner, child, parent, parent of a spouse or domestic partner, an individual who stood in loco parentis to the employee when the employee was a minor child, grandchild, grandparent, or a sibling of the employee.
Leave may be for any of the following reasons: to bond with the employee's child during the first 12 months after the child's birth or the first 12 months after the placement of the child for adoption or foster care with the employee; for a serious health condition of a family member; or because of a qualifying exigency pursuant to the Family and Medical Leave Act, 29 U.S.C. 2612(a)(1)(e), arising out of a family member of the employee being on active duty in the armed forces of the United States.
Medical leave is leave taken by an employee from employment due to a serious health condition of the employee that renders the employee unable to perform the functions of the employee’s position.
AIM will conduct a complimentary Brown Bag Webinar at noon on June 27 to review the details of the paid family leave proposal. Bring your lunch and your questions.