The cost of compliance for employers with paid family leave programs

The United States does not have a federal paid leave law. In the absence of national legislation, a growing number of states have stepped in and enacted paid leave insurance programs. Each state law is unique and operates differently, but generally, they all provide partial wage replacement to employees who take parental leave to bond with a newborn child.

The proliferation of a multi-state patchwork of paid leave laws makes it harder for multi-state employers to administer fair and equitable paid leave programs. If employers continue to pay the full salary of employees on bonding leave in states with a paid family leave leave, the state might reduce the amount of its paid family leave insurance payments to the employee. That is an unfortunate result because employees and employers pay taxes to fund those programs and should reap the benefits. 

Conversely, if an employer with a national paid family leave program fails to properly supplement the leave insurance payments an employee receives from a state fund, then the employer will be making a pay equity and fairness misstep: employees in states with paid family leave insurance programs will only receive partial wage replacement from their states, and employees in states without those programs will continue to receive their full salary from their employers.

There is a real cost to not understanding how much pay an employee might receive from their state program. In New York, for example, an employee on bonding leave can receive up to $1,132 per week for 12 weeks, or $13,584. Thus, an employer that continues paying a New York employee their full salary during a bonding leave will pay $13,584 more than it should! If the employer has multiple New York employees take a bonding leave in a given year, the losses are only multiplied. And, employees in other states without paid family leave programs will not enjoy the enhanced benefits of those in states like New York that have such programs.

Accordingly, it is important for employers to stay on top of the growing number of paid family leave laws in various states. Employers can save significant amounts of money and also ensure employees are paid equitably across multiple states by supplementing state benefits properly.

EquiLeave helps employers calculate supplemental leave payments so employees can enjoy fair and equitable family leave. Click the link below for more information.