The Department of Labor recently published guidance to assist employees and employers with protections and relief offered by the Families First Coronavirus Response Act (FFCRA). If you recall, the FFCRA required certain employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The mandatory leave requirement expired on December 31, 2020.
Status of Mandatory Paid Leave in U.S.
The guidance specified that employers are not required to provide paid leave under the FFRCA in 2021, but if they choose to on a voluntary basis, they are eligible for a tax credit. It further explained that if an employee who was eligible for FFCRA leave in 2020 but did not take it for whatever reason, the employer is not required to provide the unused leave in 2021.
While it took a pandemic to cause it, it is noteworthy that for the first time in U.S. history Congress passed a law (FFCRA) requiring all employers with more than 50 and fewer than 500 employees to provide paid leave. Perhaps more importantly, it possibly established a precedent and strong case for more federally-mandated paid leave in the future. The U.S. is among the very few countries that do not yet require employers to provide paid sick leave or some form of similar paid leave. At the onset of the COVID-19 pandemic in March 2020, approximately 93% of the world’s 193 countries had mandatory paid sick leave for employees according to an article by The World, a daily global news program. Congress has attempted to pass mandatory paid leave programs in the past, and nine states (including Maryland) and the District of Columbia have their own mandated paid leave programs. While paid leave is certainly gaining more attention and many employers voluntarily provide paid leave, the fact remains many employees, especially the lowest paid, do not have access to paid leave. For working parents who are also caregivers, a sick child or elderly parent can present a major crisis if the employee doesn’t have access to paid leave.
The COVID-19 pandemic created a renewed sense of urgency. During a June 18, 2020. U.S. Senate Committee on Finance hearing, a bipartisan majority discussed the problems working families were facing in the face of a pandemic causing school and childcare facility closures nationwide. Sen. Ron Wyden (Democrat from Oregon) put a fine point on it by saying, “It seems to me that the coronavirus has hammered home literally and figuratively why paid leave is so urgently needed. What we are hearing from at home and from our colleagues … is that families are being forced to make choices that really don’t come close to meeting their family’s needs.”
Fortunately for U.S. employees, Congress passed FFCRA and employees felt some relief. Employees could stay home if sick or to care for a sick family member. FFCRA leave also slowed the spread of the virus. Researchers at Cornell University and the Swiss Economic Institute showed the mandated leave, “was a highly effective tool to flatten the curve.”
However, there’s a reason (or possibly many) mandated paid leave has received pushback in the U.S. For one, it is expensive, and someone has to pay for it. Most state paid leave plans are financed through some version of a payroll tax, rather than a simple mandate on employers which spreads the cost of providing the leave over employers and all employees. In most states, an approximate 1% tax on payroll has been implemented to fund the leave taken by employees. There are also costs associated with workplace disruptions caused by mandated paid leave. Employers must find alternative ways for on-leave employees’ job duties to be fulfilled.
This may be in the form of temporary workers supplied by a third-party, whose wages employers must pay and whose work product may not be on par with that of the on-leave employee. Staff may need to be cross-trained to successfully fill in for on-leave employees potentially placing a strain on employees expected to assume additional job duties in the absence of co-workers on leave. In some cases, employees on mandated medical leave are covered by employer-provided short-term disability insurance policies resulting in costs for both self-insured employers and those with experience-rated short-term disability policies. Also, mandated leave often results in additional recordkeeping and other administrative burdens for employers. Finally, a federal law would have to be coordinated with existing state and local paid leave laws, potentially creating confusion and additional administrative problems.
While challenges exist in providing federally-mandated paid leave programs, they are not insurmountable. Smart HR expects 2021 to be a year in which the mandated paid leave discussion continues with possible legislation on the horizon. Any federally-mandated paid leave law must be coordinated with existing paid leave laws in Maryland and the District of Columbia. Stay tuned for next week’s blog where we focus on paid leave mandates in Maryland and the District of Columbia.