October 06, 2017
The Washington Post, October 6, 2017
Employers should be pleased with the D.C. paid family and medical leave plan. Instead, they are trying to undermine it. Business lobbyists are pushing a “replacement” that gets rid of the best parts of the plan and places heavy burdens on the very employers they presumably are trying to help.
In response to broad public support among business owners and residents for paid family and medical leave, the D.C. Council passed legislation in December to ensure that no private-sector D.C. employee would have to choose between a paycheck and providing necessary care for themselves or their families. The Universal Paid Leave Act became law on April 7, with benefits beginning in 2020. The business lobby, primarily representing very large employers, objected to this law before it passed. Now it is trying to gut it.
Opposition to paid leave legislation by business lobbyists is not new, and neither are the objections they raise. Prior to the passage of California’s first-in-the-nation paid family leave law nearly 15 years ago, the business lobby strongly denounced the measure, claiming it would be a great burden for employers (especially small businesses), lead to abuse by workers and cause economic harm as a job killer. The same objections are raised today here, but experience with paid leave in California, New Jersey and Rhode Island refutes these false claims.
Five years into the California program, Ruth Milkman and I carried out research on employers’ experiences with that state’s paid family leave law that found virtually no abuse by workers and minimal impact on business operations and, thus, no reason to reduce employment. Even better, the data showed that the program saved money for businesses, primarily through reduced turnover, with even more savings for companies with generous paid leave benefits via coordination with the state’s program. Nearly 89 percent of California employers, including those with fewer than 50 employees, reported no effect or a positive effect on productivity, and 91 percent reported no effect or a positive effect on profitability or performance. The District’s program is modeled on California’s.
The D.C. program creates a fair system for the District’s private-sector employees and businesses, setting a basic standard that levels the playing field for the small- and medium-sized companies that make up 99 percent of District employers. Every employer pays a modest tax into one fund that, in turn, pays out benefits when an employee needs leave. In contrast, the business lobby and large employers want to require each company to pay their own employees’ family and medical leaves. These out-of-pocket expenses might be viable for very large employers, but they would impose crushing costs and administrative burdens on small- and medium-size companies.
Employers would need to set up individual insurance funds that were actuarially sound and could cover the cost of their employees’ leaves. While employers’ contributions to cover the cost of leaves is relatively low when spread over D.C.’s entire private-sector workforce through a social insurance fund, they loom large when individual employers must cover the costs of paid leaves for their own employees. The costs to cover these leaves are likely to be economically damaging for all but the largest employers. Requiring employers with 50 or even 100 employees to cover the costs of their own employees’ leaves directly, or to buy equivalent private insurance if such an insurance product becomes available, would saddle many of them with unrealistic financial burdens.
When employers cover the costs of paid leaves for their own workers, these employees must file benefit claims with their employer rather than a government agency. This places new, large administrative requirements and cost burdens on employers, something most would prefer to avoid. Under the business lobby’s proposal, employees are eligible for paid leave based not on their tenure with their current employer but based on past work experience. That means an employee could get in a car accident in their first week of a new job and their new employer would be required to review their employment history, ascertain their eligibility for paid leave, and then pay the full costs of the leave.
The current law, which covers all private-sector D.C. workers through a social insurance fund administered by a government agency, is less costly for most employers, relieves businesses of the bookkeeping burden and added costs of administering the benefit, streamlines compliance and eliminates monitoring by enforcement agencies. It creates a basic standard for paid leave that employers of all sizes can meet or exceed and provides a fair paid leave program for employees.
The District’s Universal Paid Leave Act is the best deal for employers, especially small- and medium-size companies. If the D.C. Council cares about local business interests, it should reject efforts to repeal and replace it.
Eileen Appelbaum is a senior economist at the Center for Economic and Policy Research.