Leave Management, Policy, and Compliance

New Hampshire Employers, Are You Ready for Potential Paid Family Leave Law?

When the federal Family and Medical Leave Act (FMLA) was first proposed in 1990, President George H. W. Bush vetoed it because he questioned the need for a formal leave requirement, claiming that many employers already offered some form of paid and unpaid leave to employees. That “thousand points of light” argument didn’t convince Congress, and one of the first bills President Bill Clinton signed into law was the FMLA in 1993.family

Since then, the American workforce has evolved, and many employers have responded to demands for greater workplace flexibility by creating benefit policies that permit time off for more reasons than the FMLA and various state leave laws. Still, many employers simply provide what the law requires. Beyond the question of eligibility for leave programs is the issue of affordability.

The FMLA provides up to 12 weeks of unpaid leave per year. Although many employers require employees to use accrued but unused paid leave during FMLA leave, all or most FMLA leave is unpaid. That presents a challenge for employees who need time off to attend to medical issues and other family matters but can’t afford to be without a paycheck.

State Leave Laws Spring Up

In recent years, advocacy groups have lobbied Congress and state legislatures for paid family leave benefits. Until recently, those efforts were rebuffed because of the expense involved and questions of how paid leave would be integrated with other employer leave policies.

Over the last 2 years, several states have adopted various paid leave laws—e.g., laws providing mandatory paid sick leave or parental leave. The laws were passed largely in response to the changing face and needs of the 21st century workforce—for example, working parents, telecommuting, job-sharing, aging workers, and the integration of disabled workers.

A New Federal Leave Law?

Although several attempts to expand the FMLA in Congress have stalled or died in committee over the last 10 to 15 years (if they made it that far), there has been momentum in Congress to change the FMLA lately.

In a novel approach to expand the FMLA and address changes in the workforce (as well as address employers’ reluctance to embrace more leave policies when they are already struggling to comply with existing state and federal laws), Representative Mimi Waters (R-California) has proposed the Workflex in the 21st Century Act (House Resolution 4219).

If passed and signed into law, the bill would give employers the choice of opting in to a federal program that guarantees full- and part-time employees a minimum level of paid leave and flexible work options (e.g., compressed work schedules, telecommuting, and job-sharing).

In exchange, employers—especially those with operations in more than one state—would gain predictability in following a federal standard for paid leave and workplace flexibility because they would be exempt from a patchwork of applicable state and local leave laws.

It is too soon to predict how the bill will fare in Congress and whether it could withstand legal challenges, especially from states with generous leave laws. But it is worth noting that the bill has support from both sides of the aisle—at least for now.

New Hampshire Paid Leave Bill

In the meantime, several states, including nearby Vermont and Massachusetts, have adopted new paid leave laws, continuing the recent trend of states stepping up because of stalemates in Congress. Likewise, bills to provide mandatory minimum sick leave benefits, require payout of accrued vacation time, and expand maternity leave protections have been introduced in the New Hampshire Legislature’s current session. The prospects of passage remain uncertain.

Another bill that would create a paid family leave program under New Hampshire law has surprising support in a legislature where both houses have Republican majorities. On February 8, the New Hampshire House of Representatives passed (by a narrow five-vote margin) House Bill 628, which would create a voluntary family and medical leave insurance (FMLI) program.

The bill would set up a trust fund with the New Hampshire Department of Employment Security into which employees (not employers) could pay a small portion of their wages. Employees would then be eligible to apply for funds to cover 60% of their pay when they are on FMLA leave.

There are already concerns about the program’s sustainability. An earlier version of the bill passed the House Labor, Industrial and Rehabilitation Services Committee but failed to pass the House Commerce Committee because of those and other concerns. The concerns were addressed in amendments to the bill.

The version of the bill that passed shortened FMLI benefits from 12 to 6 weeks and increased the premium from .5% to 1% of employees’ pay. The program is subject to further review regarding its financial viability. As of March 29, the bill was before the House Finance Committee, which is looking at the structure of the law, how the program would be funded and administered, and the likely impact on employers and employees.

Bottom Line

For the first time, there is real support and momentum behind the FMLI bill or at least the concept of providing paid family leave, something that was unheard of a few years ago. However, at the same time, there is a growing challenge from HR professionals and business leaders who believe the bill, if passed, could be more of a burden on employers and less of a benefit to employees than originally intended.

Some of the concerns employers and HR professionals have raised about the bill are:

  • The requirement for all employers to provide short-term disability insurance to employees;
  • The need to withhold employee premium contributions for FMLI and account for withholdings before they are turned over to the state; and
  • The need to manage the program in addition to employers’ existing leave and benefit programs.

There likely will be more developments soon. Stay tuned!

Jim Reidy is a partner at Sheehan Phinney Bass & Green PA in Manchester and an editor of New Hampshire Employment Law Letter. He can be reached at jreidy@sheehan.com.