Big, Federal Government changes to Paid Family and Medical Leave proposed: What’s next?

While many private employers have stepped up to provide their workers with paid leave benefits for family and medical reasons, the United States is behind other developed countries when it comes to paid leave. America has never had a federal program that replaces income for employees needing time away from work for their own health condition, to bond with a new child, or to care for an ill family member. Currently, only a handful of states have some type of income replacement program (California, Connecticut (2022), Colorado (2024), Hawaii, Massachusetts, New Jersey, New York, Oregon (2023), Puerto Rico, Washington State and Washington D.C.). The Act would allow all employees in the U.S. to have access to a minimum benefit threshold, regardless of which state they work in or what their employer provides.

• Up to 12 weeks of paid family and medical leave for all employees who need to miss work due to their own health condition, to care for a new child or ill family member, or due to circumstances arising from the military deployment of a family member
• Benefits paid at approximately 2/3 of wages with higher benefits for lower-wage earners
• Reimbursements for employers already providing comparable paid family and medical leave benefits

• Alignment with the FMLA: Many of the relationship and eligibility provisions in the Act do not coincide with those listed in the FMLA. Additionally, the Act does not currently speak to job protection or restoration, which could create risk for employees taking time away for paid leave.
• Interaction with ‘Legacy States’: Employers, insurers and administrators are left wondering how exactly the Act will coordinate with benefits being paid by states with already in-force PFML programs.
• Funding scheme: How will the U.S. Department of the Treasury (Treasury) be funding this program? Will there be contributions from employees and/or employers?
• Opting out: How will the Treasury certify which employers’ plans are equivalent, enabling them to opt out of the federal program?

Right on the heels of the House Ways and Means Committee’s proposal, the Executive branch released its companion proposal, The American Families Plan (Families Plan) on Wednesday April 28. The Families Plan proposes national comprehensive paid family and medical leave with partial wage replacement of up to $4,000/month for the following reasons:

• Employee’s serious illness
• Bereavement
• Child bonding
• Caring for an ill loved one
• Circumstances arising from a loved one’s military deployment
• Finding safety from sexual assault, domestic violence, or stalking

The proposal guarantees 12 weeks of paid benefits by year 10 of the program for parental, family, and personal illness/safe leave and 3 days of bereavement leave starting in year one. It would also require employers to provide a minimum of 7 days’ paid sick leave for all workers via the Healthy Families Act.

Although these proposals have yet to become law, it’s clear paid family and medical leave is a hot topic, and not just to leave management practitioners. People across the nation stand by to see what the Senate will respond with and how these proposals ultimately could result in shaping the country into one whose workforce may no longer have to choose between working and taking care of themselves or loved ones.

Employers should review the proposals to understand potential impacts to current benefit and wage replacement programs. Employers with existing paid family and/or medical leave programs should start contemplating whether those programs might allow them to opt out of a future federal program. Employers without existing similar programs might consider whether now is the time to make a policy change.

Employers should continue to provide feedback to Congress to advocate for the best outcome for their business and workers. Lastly, employers should review the proposals’ potential interaction with PFML leave benefits already offered in ‘Legacy States.’

Guardian is working with its compliance and legal partners to track these proposals and provide industry feedback where possible. We are also analyzing what the proposals would mean to our current products and services to ensure we continue to provide the most comprehensive and compliant leave management and paid benefit solutions.