Paying for family leave: California was the first to pass a paid family leave law. Now other states are considering following in the Golden State's footsteps.

The United States is a leader in protecting workers' rights. We offer unemployment benefits to the jobless and compensate those injured on the lob. Despite these worker friendly policies, this country is one of only two industrialized nations (the other is Australia) that do not offer paid family and medical leave (FMLA) benefits.

California, however, has become the first state in the nation to pass a paid FMLA law, and other states are beginning to consider it. Is the addition of another social program a byproduct of budget surpluses of the past? Or is paid family and medical leave an issue whose time has come?

MAJOR TRANSITION FOR FAMILIES

The transition of American families from stay-at-home moms and working dads to two working parents creates new pressures. In response, Congress passed the Family and Medical Leave Act of 1993 that provides up to 12 weeks of unpaid leave for working parents. Since 1993, 35 million workers have used unpaid time off to care for sick or injured family members or for the birth or adoption of a new child.

Although millions of families take advantage of this law, many more cannot go 12 weeks without a paycheck. A U.S. Department of Labor study in 2000 indicated that 77 percent of surveyed workers did not take advantage of unpaid family or medical leave because they simply could not afford to.

California passed SB 1661 in September to try to address this issue. The new law, sponsored by Senator Sheila Kuehl, will offer 13 million of the state's 16 million private sector workers up to six weeks of partial pay for family and medical leave. The law goes into effect in 2004. It will be financed through employee contributions and administered by the State Disability Insurance program. The average yearly contribution per worker is estimated to be $36.

Employees will receive up to 55 percent in replacement wages while on leave, up to a maximum of $728 a week. The law will require a one-week waiting period and permits an employer to require employees to use available vacation time before they take the paid leave.

PROS AND CONS 

Supporters believe that paid leave allows workers to balance the demands of home with those of career and that it contributes to higher employee morale, which in turn may reduce turnover. They say unpaid leave does not permit enough workers to spend time with their families.

"When unpaid family leave was passed, I doubted that it would work. Unfortunately, I was right. People can't use it if they can't live without their paycheck. That's why I worked to get paid family and medical leave in California," says Kuehl.

Concerns came from the California business community. Employers are worried that, although they will not be required to pay into the program, they will have to absorb administrative and operational costs due to accounting and reporting changes. Since the new law also requires employers of 50 or more workers to keep jobs open for those on leave, business owners fear that finding temporary replacements may bring additional training costs and possibly reduce productivity. These indirect costs are difficult to quantify, fueling fears that paid leave would be too much of a burden on employers and would cause California businesses to leave the state.

So far, only California has passed this type of legislation, but others are considering it. New Hampshire and Massachusetts created committees to study funding alternatives to provide paid family and medical leave. Hawaii, Maine, Minnesota, New Mexico and Oregon required studies. Alternative ideas for funding a paid leave program include tapping a state's unemployment insurance trust fund, using a state workers' compensation program or creating a disability insurance program similar to California's. California (prior to the current law) and New York, New Jersey, Rhode Island and Hawaii have disability insurance programs that permit wage replacement for an individual unemployed because of sickness, injury or maternity leave.

At least 18 states have introduced measures to use unemployment insurance for paid family and medical leave. None have passed so far. Connecticut proposed allowing employees to accrue unused, paid sick time for family and medical leave. Missouri introduced a bill offering tax breaks to employers if they voluntarily implement a paid maternity leave program.

Is the passage of California's paid leave an indicator of things to come? If so, activists will be gearing up for a busy year. On the other hand, with state budgets in dire straits, the idea could languish.

Justin Marks specializes in employment issues for NCSL.