Family Leave Insurance allows employees who need to take time off to care for a family member, or following the birth of a child, to continue to earn some compensation during that time off. Despite concerns about imposing additional costs on businesses, this kind of insurance is beneficial because it makes employees more productive and less likely to move to another company, saving money on employee turnover.
While countries all over the world provide workers with guaranteed leave for family issues, many states in the United States do not guarantee a single day off. The US is one of only five countries that does not guarantee paid leave for new mothers on a national level. (The others are Lesotho, Liberia, Papua New Guinea, and Swaziland.)
On a state level, California, New Jersey and Washington state have all passed family leave bills. (Issues with funding have put the Washington state bill in limbo and kept residents from enjoying its benefits.) Rhode Island also passed a bill recently; that will take effect in 2014. In both New Jersey and California, the plans offer partial wage replacement - for example, two-thirds of weekly pay in New Jersey - funded by an employee-paid payroll tax.
What's At Stake:
Far from being a burden for businesses, the fact is that not having a family leave policy poses a number of challenges for business. Companies lose money when their workers are less productive and less satisfied, which they are when not given time to care for sick family members. If and when those workers decide to seek employment elsewhere, businesses have to spend more money to replace those employees and train new hires. This is money they cannot use to expand their business or make needed investments.
States which have fully implemented paid family leave laws, such as New Jersey and California, have seen those laws become immensely popular among voters and businesses, without resulting in higher business costs. Many businesses have reported positive effects on employee turnover and productivity; about 60 percent of California businesses also reported cost savings by coordinating their benefits with the state program.
On Thursday, December 12th, Sen. Kirsten Gillibrand (D-NY) and Rep. Rosa DeLauro (D-CT) announced the introduction of the Family and Medical Insurance Leave Act (FAMILY Act). The bill is based off of the systems already in place in New Jersey and California; it would provide 12 weeks of paid leave, with workers earning benefits equal to 66 percent of their monthly wages, and would be funded by employer and employee contributions of 0.2 percent of wages (two cents of every $10 earned).