Employers Step Up Lobbying as Congress Eyes Federal Paid Leave Program
With congressional Democrats intent on enacting new federal paid leave requirements this year as part of President Biden’s sweeping “human infrastructure” agenda, employers are stepping up efforts to convince Congress to also support their ability to offer paid leave programs.
A federal paid leave program is a top priority in a $3.5 trillion budget plan announced last week by Senate Democratic leaders that is designed to carry out the president’s social and environmental agenda. The plan – or budget “resolution” – sets topline spending targets and doesn’t provide policy details. But if all 50 Senate Democrats can coalesce around a budget resolution within the coming weeks as leaders hope, that may bode well for their ability to stick together to pass detailed legislation later this year under budget “reconciliation” rules without Republican support, as they did in enacting the American Rescue Plan Act in March.
While Republicans have offered more targeted proposals, including legislation to create a voluntary, national paid leave compliance standard for multi-state employers, Democrats favor a broader federal approach.
The president and Democrats have offered multiple proposals, but they are lining up behind draft legislation from House Ways and Means Committee Chair Richard Neal (D-MA), whose panel will draft paid leave legislation under reconciliation instructions. His “Building an Economy for Families Act” would create a new entitlement program guaranteeing up to 12 weeks of paid family and medical leave for all workers, which would be available through either a public program administered by the Department of the Treasury, existing “comprehensive” state paid leave programs, or employers providing “high quality” benefits.
Funding for these benefits would come from general federal revenues, and employers could receive partial reimbursement from the government for paid leave benefits they provide to their workers instead of the benefits their workers could receive from the Treasury program, under certain conditions.
Neal’s draft bill provides a “grandfathering” option for states with already-enacted laws that meet the federal standard and allows those programs to be reimbursed by the Treasury. The legislation does not appear to preclude any new state and local paid leave laws, but such “non-legacy” states would be ineligible for federal reimbursement.
The measure is drafted in a way that keeps the jurisdiction exclusively in the Ways and Means Committee, which may ease some procedural hurdles in the budget reconciliation process, but the requirement that legislation advancing under the process have a direct budgetary impact could leave some unaddressed, such as return-to-work protections and interaction with the Family and Medical Leave Act.
Meanwhile, plan sponsor groups, including the American Benefits Council and the ERISA Industry Committee, and their members – including Mercer – are intensifying lobbying efforts and working to educate lawmakers about the prevalence of employer leave benefits and typical designs. The groups are expressing support for universal paid leave benefits as long as employers can maintain their traditional role in offering these benefits and rely on a nationally uniform compliance standard. Achieving these goals will be a challenge, however, given opposition to a nationwide compliance standard from lawmakers from states with existing paid leave programs.
Mercer remains highly engaged in this effort and we’ll continue to provide updates on developing legislation in the coming months. In light of the extensive work ahead in Congress on paid leave and the larger budget reconciliation package, final votes aren’t likely until late this year.