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5 Things You Need to Know About the FAMILY Act

Patrick Ball on March 23, 2015 07:29 PM

The push for paid family leave continues.

Currently, the United States is the only industrialized nation in the world that offers no form of paid leave to new moms. The FAMILY Act – short for Family and Medical Insurance Leave – would change that. And more.

U.S. Sen. Kirsten Gillibrand has reintroduced the legislation, which would create paid family leave – including maternity and paternity leave – for American workers.

Here, we’ll provide a primer on a few things employers and employees should know about the FAMILY Act, including what it covers, what it would cost and why business leaders are supporting the proposal.

  1. The FAMILY Act Would Provide Paid Family Leave for American Workers
    The US has been a pretty easy target when it comes to paid maternity leave – or the lack thereof.  Who can forget President Obama’s “If France can figure this out,” quote from the White House Summit on Working Families last June?

    The FAMILY Act would put a system in place to allow working moms to take maternity leave, new dads to take paternity leave and all employees to take time to care for themselves or ailing family members. The plan calls for a gender-neutral program offering 60 days – or 12 work weeks – of paid family leave to every individual, regardless of the size of their company. 
  1. Really, Most American Workers Have No Access to Paid Leave
    Currently, only about 13 percent of workers in the United States have access to paid family leave of any kind through their employers.  And only 60 percent of employees have access to a paid sick day.

    There’s the Family Medical Leave Act (FMLA), which provides 12 weeks of unpaid job protected leave for new parents or to care for yourself or a seriously ill family member. But FMLA only applies to companies with 50 or more employees, and to only those employees who’ve been with those companies for a year or more and work full time. So, in effect, only about 60 percent of the private sector workforce is covered under FMLA. 

    Three states – California, New Jersey and Rhode Island – have led the way with statewide paid family and medical leave policies, while Massachusetts is about to expand the unpaid job protections available under the state’s existing maternity leave act and FMLA. 
  1. Backing from Business Leaders  
    Executives from Morgan Stanley, VICE Media and YouTube are among the business leaders lining up behind the Gillibrand’s proposal. “When we increased paid maternity leave at Google from 12 to 18 weeks, we discovered it wasn’t just good for mothers, it was good for business, doubling our retention rate amongst mothers,” said YouTube CEO Susan Wojcicki in the press release. 

    In recent years, many prominent companies have had a similar experience to Google’s, finding that family-friendly benefits, such as maternity leave, offer a competitive advantage when it comes to attracting and retaining top talent. Lists of Best Places to Work, which provide more than two-times the stock market returns and experience 65 percent less turnover than peers, are filled with employers that provide generous parental leave policies for new moms and dads. 
  1. What’s This Going to Cost?
    The plan is to create a self-sufficient, independent trust within the Social Security Administration to collect and administer the funds. The trust would be funded through employer and employee contributions, equaling two-tenths of one percent of wages. Employees and employers would each make contributions of just 0.2 percent of wages, or two cents for every $10 earned. This will amount to an average contribution of approximately $2 per week per worker from a worker’s paycheck. 

    Leave would not be paid at 100 percent of an individual’s wages. The benefit levels, modeled after state-supported family leave programs in California and New Jersey, would provide max out at 66 percent of the employee’s typical monthly wage.

    And supporters of the bill point to California’s experience as proof that government-backed family leave won’t hurt businesses. In fact, more than 90 percent of California employers surveyed reported the state’s program had a “positive effect” or “no noticeable effect,” on profitability, according to a report from the Center for Economic and Policy Research. 
  1. Widespread Benefits
    The benefits of family leave cut across all demographics – from the low-income employees forced to leave jobs because they can’t afford child care to the millions of Sandwich Generation employees scaling back at their jobs because of caregiving responsibilities. 

    And research has shown that paid leave pays off in terms of improving the economic standing of our working families and the ability of family caregivers to stay in the workforce. For example:

     -- New moms who take paid leave are far more likely to return to their pre-birth employers, than those without. 
    Nearly 90 percent of fathers surveyed by the Boston College Center for Work and Family indicated paid paternity leave would be a key factor in deciding to take a job.
    -- Senior care responsibilities are forcing millions of employees in their 40s and 50s to make career adjustments, such as passing up promotions or leaving their jobs.
    -- Research suggests that paid parental leave policies can provide health benefits that extend to children, such as higher birth weight and lower infant mortality. And researchers have shown that children of women who receive paid maternity leave earn 5 percent higher wages at age 30.

    When working moms (or dads) are forced to scale back or withdraw from the workforce, they lose out on future job opportunities and limit their earning – and spending – potential. And their employers suffer from lost productivity and the high cost replacing good employees.

    To put it simply: When working families are forced to choose between a paycheck and caring for a loved one, everybody loses.

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