Federal Paid Leave Is Still Up in the Air November 16, 2021 By Katarina Niparko, Compliance Counsel After months of negotiations, the White House and Congressional Democrats unveiled an updated framework for the multi-trillion-dollar spending bill. The revised bill would address climate change and expand the nation’s social spending, among other items. This measure has seen multiple iterations throughout the past few weeks, including how a federal paid family and medical leave (PFML) would be presented in the bill. What’s Happened So Far? Initially, President Biden called for 12 weeks of paid leave as part of his American Families Plan and Build Back Better plan. After Democrats tried to reduce the costs of the bill (originally over $3+ trillion) and considered other priorities, the amount of paid leave was reduced to 4 weeks. Despite concessions here and there, and continued budgetary concerns within the Senate to the PFML provisions, it was cut altogether in late October and presumed dead. However, just in time for Halloween, the PFML proposal joined the ranks of the undead and rose from the grave, when yet another 4-week PFML benefit was re-introduced into the reconciliation bill by the House of Representatives. What’s Next? Now that the PFML proposal is back, many may wonder, “What’s next?” The quick answer: It’s tough to say. There are still quite a few hurdles that this bill needs to clear to become law, briefly outlined below: The House has scheduled a vote on the legislation that includes the PFML proposal in mid-November, as legislators are wanting to see a Congressional Budget Office analysis before voting. If the House does pass the bill, it goes to the Senate where the Parliamentarian could force changes to it to comply with Senate rules. Any changes made to the bill would require the House to revote on the changes. Once the bill passes through the Parliamentarian’s gates, if the PFML proposal is still in there, it is unclear whether the Senate will again change or strip out the paid family and medical leave provisions in the bill. This is an important issue for many Americans – currently, nine states and Washington, D.C., have paid family leave programs in place and 79% of workers do not have access to a defined paid caregiving leave policy, while 60% do not have access to paid medical leave. (Source: https://bipartisanpolicy.org/policy-area/paid-family-leave/). Assuming it passes the House in mid-November, it is difficult to predict what will happen once the bill is in front of the Senate – Senators could pass the bill within a week of receiving it or could drag the process out into late December. As you can see, politics are rough waters to navigate, and there is a lot of uncertainty. As for now, the federal PFML (now rebranded as “Universal Comprehensive Paid Leave”) would provide many Americans with paid leave benefits. Here are the highlights. What’s in the Federal Paid Leave Proposal? Qualified Individuals: The qualifications for Americans to receive paid benefits are quite broad. An individual need only: (1) have filed an application; (2) have (or anticipate having) 4 or more hours of qualified caregiving during a week; (3) have any wages or self-employment income within a specified timeframe; and (4) have at least $2,000 in wages during the most recent 8-quarter period. All types of workers are covered for benefits: full-time and part-time workers including gig workers and other self-employed workers, in both the private and public sector (including federal, state, and local government employees), and without regard to employer size or tenure on their current job. Workers will be covered either through a federal benefit, or through a qualifying “legacy state” or a comprehensive employer-sponsored plan for which the state or employer is reimbursed by the federal government. Reasons for Leave, a.k.a. Qualified Caregiving Hours: Qualified caregiving hours are hours spent doing an activity, in lieu of compensated work, for a qualified reason. Qualified Reason: A reason that would qualify for unpaid leave under the Family and Medical Leave Act (FMLA): To address a serious personal or family serious health condition; to care for a newborn, newly adopted child, or new foster child; or because of any qualifying exigency arising out of covered active duty. Covered Family relationships: The federal PFML proposal expands the covered relationship to include: A spouse or domestic partner as recognized by a state; a spouse’s parent; a child and a child’s spouse; a parent and a parent’s spouse; a sibling and a sibling’s spouse; a grandparent, grandchild, or spouse of a grandparent or grandchild; and any other association by blood or affinity that is equivalent to a family relationship. Benefit Amounts: A worker is eligible to receive up to 4 weeks of leave during the 12-month benefit period, with a minimum of 4 caregiving hours per week. Benefits would max out around $800 per week, calculated in the following manner: 90.138 % for those earning less than $290 weekly ($15,080 annually) 73.171 % for those earning between $290 and $659 weekly ($34,248 annually) 53.023 % for those earning between $659 and $1,192 weekly ($62,000 annually) For individuals earning more than $62,000 annually, they could apply for income replacement up to the limit of 53.023 % on $1,192 weekly earnings, but nothing on earnings above that. In addition, the worker must complete a one-week waiting period before benefits can start; they may use employer-provided leave benefits (including sick days, vacation, or other paid time off) during this waiting period. State Administration Option for Legacy States: Legacy states (as specifically defined in the bill) with already-enacted paid family and medical leave laws have the option to continue operating their programs and be reimbursed by the federal government via an annual grant. This grant is maxed out to the total amount of federal comprehensive paid leave benefits (including administrative costs, which for the purposes of this subsection are capped at 7 % of federal benefits paid) that would otherwise have been paid to individuals who received benefits under a state program. Grants are issued annually in arrears for the prior calendar year. Reimbursement Option for Employer-Sponsored Comprehensive Paid Leave Benefits: Beginning in calendar year 2024, the federal government will make grants to eligible employers for each calendar year, with the amount determined under one of two different payment mechanisms for different kinds of employer-sponsored programs. A grant will not exceed an employer’s actual expenditures. Eligibility: To be eligible for a grant, employers must meet several conditions, including that they must have at least one employee who is not in covered employment under the law of a legacy state. They must also provide job and benefits protection, allow for appeals, and not retaliate against employees who exercise their right to paid leave. Additionally, the employer must apply, certify they have a plan that meets all requirements, and pay application and renewal application fees as necessary. Initial application fee: $500 for an employer with 50 or fewer employees; $1,000 for an employer with more than 50 but fewer than 500 employees; and $2,000 for an employer with 500 or more employees Renewal application fee: $200 each calendar year Employers who sponsor a plan that pays family and medical leave benefits through an insurer or a multiemployer plan are reimbursed at the lesser of the two: (1) 90 % of the projected national average cost per individual of the federal comprehensive paid leave program multiplied by the number of employees covered by the plan (prorated for part-time employees); or (2) 90 % of the total premiums paid to the insurer (or contributions paid to the multiemployer plan) by the eligible employer for the coverage of eligible employees. Employers who self-insure and pay family and medical leave benefits directly, whether or not they use a third-party administrator to manage the plan, will be reimbursed for 90 % of the cost of up to 4 weeks of qualified paid leave benefits for eligible employees, or, if lesser, the national average weekly benefit paid in the federal comprehensive paid leave program multiplied by the number of weeks of benefits provided to eligible employees. An employer seeking reimbursement for a self-insured plan must have at least 50 employees who are not covered under a legacy state law and hold a surety bond to guarantee payment. What Employers Should Be Doing Employers and administrators should stay abreast of the federal changes and can do so by signing up to receive ReedGroup’s blog; we are keeping an eye on this legislation and will update our blog readers as needed. As mentioned above, it is unclear whether this will pass the Senate and become law. Under the current version, benefits would begin being paid in January 2024. What ReedGroup Is Doing ReedGroup continuously tracks and analyzes federal and state leave and disability legislation to ensure our products and processes remain compliant and are up to date. Overwhelmed by the ever-changing leave-law landscape? ReedGroup has solutions for you, including comprehensive absence management administration and compliant SaaS products. Check out our offerings here. Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. ReedGroup does not provide legal services. Consult an attorney for legal advice on this or any other topic. 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