Paid leave benefit for workers raises key question: Who pays?

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STATE HOUSE — Though supporters of legislation that would establish a paid family and medical leave requirement in Massachusetts hope to see a version of the bill signed into law this session, key details of the proposed policy — including who would pay for it — are still up for discussion.

“I think there are nuances to the bill that have to be worked out,” Sen. Daniel Wolf, Senate chair of the Joint Committee on Labor and Workforce Development, said during a press conference on Thursday. “Is it employee paid or is it employer paid? What does the benefit actually represent and for whom?”

Legislation filed by Senate Ways and Means Committee Chairwoman Karen Spilka and Rep. Ken Gordon (S 1718, H 1718) and a similar bill (H 809) from Rep. Antonio Cabral would allow Massachusetts workers up to 12 weeks a year to care for a sick relative or new baby or adopted child. The bills differ in the amount of benefits the employee would receive but each would fund the program through employer contributions.

Under Cabral’s bill, workers could receive 66 percent of their weekly wages up to $1,000. Spilka and Gordon’s bills set the benefit level on a scale based on area median income.

The three bills are before the Labor and Workforce Development Committee, where Wolf said lawmakers are looking at what is done in other countries and states with family leave policies.

Spilka said the United States was one of three industrialized countries in the world without a paid leave standard.

On Thursday, Spilka, Gordon and the labor committee held a panel discussion with representatives from businesses that do offer family leave and U.S. Deputy Labor Secretary Chris Lu.

Lu said afterwards that the policy is in line with the Obama administration’s goal of “doing right by our workers.”

“Frankly, to me, it is unconscionable that in the richest nation in the world we don’t have a national paid leave policy, and the president has been vigorous in advocating for Congress to take action on that issue,” Lu said. “But in the absence of Congress acting, we are traveling around the country giving lift to initiatives at both the state and city level like what is happening here in Massachusetts.”

Lu and the lawmakers planned to meet with Gov. Charlie Baker after their press conference.

“To tell you the truth, I didn’t know that much about the bill walking in, and I used it mostly as a session for inquiry” Baker told reporters later Thursday. “I certainly think we have some homework to do on it and I want to spend some time talking to not just folks in the legislature, but also folks in the employer community and elsewhere.”

California, Rhode Island, Washington, and New Jersey have all passed their own laws. In each state, the leave program is funded through employee payroll deductions or insurance contributions, a significant difference from the employer-funded proposals in Massachusetts.

“On the one hand, you have the bill, which calls for employer contribution,” Wolf said. “On the other hand, we have some real-life situations where the employees are making it, such as California. I think what you’re going to see here is a good conversation about whether it should be a hybrid, about whether it should be employee or employer, but I think that’s all fair game for discussion now.”

Burlington Area Chamber of Commerce President Rick Parker said he attended Thursday’s discussion as a “fact-finder” for the business community, noting that paid family leave policies could help some of the small tech startups in his region compete on more even footing with larger, better-resourced companies.

“Certainly from a top down perspective, it all sounds very promising, but what it comes down to, inevitably, is who pays for it, what are the costs, and those will be the questions that are asked from the business community,” Parker told the News Service.

Massachusetts business groups have started raising questions and concerns about costs, and the differences between the pending legislation in the Bay State and enacted policies elsewhere.

The Associated Industries of Massachusetts has sent five letters to lawmakers — most recently on Tuesday, when Rep. Cabral’s family leave bill came up for a hearing — asking a series of questions the group says remain unanswered. The information the group is seeking includes the estimated total costs incurred by employers and the state and whether the treasurer’s office is properly staffed to take on operational duties associated with the family leave funds.

Jon Hurst, president of the Retailers Association of Massachusetts, said that the state “cannot afford to become a test case on this very costly proposal.” Hurst said it’s still uncertain what the proposal would cost businesses.

“We’ve been trying to talk to some big insurers,” he said. “The reality is what most employers would do to comply is to buy an insurance policy. We’ve asked a few national insurers what it would cost and they’re just kind of shrugging.”

Hurst said he plans to survey his members to see how prevalent paid family leave policies are on an individual company basis. His guess, he said, is that “a lot of particularly maybe our larger companies” would offer it for full-time employees but that none would for part-time.

Wolf said the path to passing the bill will be “smoother” if the legislation has support of business groups.

“All of those organizations which very often are spring-loaded to be against bills like this, I’m really hoping they take a good look at the business case that you heard made today and advocate for it from a business perspective, but also because it’s the right thing to do for the employee,” Wolf said.

— Written by Katie Lannan

Copyright State House News Service