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SUBJECT
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The Executive Budget proposes a new mandate that employers provide up to 12-weeks of paid family leave. Eligible purposes would include: to participate in or provide care for a family member with a serious health condition; to bond with a child in the first 12 months after birth or adoption; or for other a qualifying exigency (as defined in the federal Family Medical Leave Act, or FMLA) related to a family members serving in the armed forces.
The Business Council opposes the proposal. We base our opposition on the following:
Applies to all employers regardless of size
The Governor’s bill would apply to employers of one or more. Congress, when contemplating the FMLA, gave great consideration to the burdens such a law would put on small employers. The reinstatement provisions alone – holding a job for up to 12 weeks – were deemed too burdensome for small employers. Congress wisely settled on a 50-employee threshold. Small employer operations would certainly be severely disrupted by providing the leave mandated in this bill.
Conflict with the federal Family and Medical Leave Act
Definitions provided in the bill are not consistent with those in the FMLA. For example, the proposed definitions regarding “family member” and “serious health condition” The Governor’s definition of family member is broader than the FMLA – including grandparents, siblings and domestic partners. The Governor’s definition of “serious health condition” includes the phrase “requiring assistance to perform the activities of daily living” – a definition not found in the FMLA that would appear to add a whole new category of protected leave. These conflicting definitions would require an employer of 50 or more to, in a sense, manage multiple programs with different rules in order to remain in compliance.
Provides reinstatement rights to the same or comparable position
Upon return from FMLA leave, an employee must be restored to his or her original job, or to an "equivalent" job, which means virtually identical to the original job in terms of pay, benefits, and other employment terms and conditions. Again, the Governor’s proposal of reinstatement to a “same or comparable” position may conflict with long-established FMLA definitions and result in duplicative administrative burdens. For employers of 50 or more, the conflicting definitions will need to be resolved through litigation and regulation. New York employers with less than 50 employees generally have not had to deal with such restrictive reinstatement rights. This reinstatement burden on small employers is something Congress consciously avoided in crafting the FMLA - recognizing the challenge this poses to small business owners.
The cost of family leave should be funded 100% by employee payroll contribution
The Governor proposes that the paid leave “should’ be funded by employee payroll contributions. The proposal, however, gives great discretion to the “chair, department of financial services” to determine the type and cost of insurance coverages available and the employee contribution to the cost. There is no guarantee there will not be future employer costs for providing this benefit.
Eligible after four weeks of employment
Employee’s eligible for the Governor’s proposed paid family leave would only be required to be employed for a period of just four weeks. Again, Congress – in considering the FMLA – identified that a longer period of employment should be required to demonstrate employee commitment to the job and the employer, and adopted a one-year (1,250 hour) employment requirement. The extremely short employment requirement proposed in the budget could open the system to abuse by those who seek employment exclusively for the purposes of taking 12 weeks of paid leave, while never intending to demonstrate commitment to the job or the employer.
Significant weekly benefit invites abuse
Under the Governor’s proposal, the weekly benefit would be significant - with some employees earning up to $633.22/week in the first year alone.
- January 1, 2018; 50% of the employee’s average weekly wage to a maximum of 50% of the state average weekly wage (2014 AWW = $1,266.44 = $633.22).
- January 1, 2019; 55% of the employee’s average weekly wage to a maximum of 55% of the AWW
- January 1, 2020; 60% of the employee’s average weekly wage to a maximum of 60% of the AWW
- January 1 of each succeeding year; 67% of the employee’s average weekly wage to a maximum of 67% of the AWW.
This benefit amount is significantly higher than the current short term disability payment in disability law – currently capped at $170 per week. Significant increases will surely lead to increased utilization and possibly abuse. This combination of benefit costs and employee replacement costs will prove to be a significant burden on most employers.
For these reasons, The Business Council OPPOSES paid family leave as proposed in S.6405/A.9005.