Family Leave

Josh Franco

Research

Professor Keenan

Economics 202

24 April 2004

Family Leave

On February 5, 1993, 42nd President of the United States William Jefferson Clinton signed the Family and Medical Leave [FMLA] Act of 1993. Six months later, the federal act would go into full effect, insuring qualified workers across the United States up to twelve weeks of unpaid leave. Then, on September 23, 2002, California Governor Gray Davis signed Senate Bill [SB] 1661, making California the first state to offer a comprehensive paid leave program. The bill is scheduled to go into full effect on July 1, 2004.

What is leave? Before we dive into federal and state policies regarding the matter, a definition must be offered. In order to understand what the federal government provides workers with regards to family leave, an examination into FMLA of 1993 is required. Next, the state of California shall be studied, more specifically SB 1661 or California’s expansion on FMLA and California Family Rights Act [CFRA].

The word leave implies an absence taken from work which is not permanent. “Leave” is when a person leaves work due to family or medical reasons and then returns to work after a specific amount of time without prejudice. Without prejudice means that a person should not be treated unfairly or terminated from their position because of their leave. Consistent with the U.S. Department of Labor or DOL, leave can be taken for the following four reasons: birth, placement for adoption or foster care, family leave, or serious health condition.

The Family and Medical Leave Act of 1993, was “drafted by the National Partnership in 1984 and enacted in 1993, the Family and Medical Leave Act (FMLA) is the first national policy designed to help working people fulfill both their work and family responsibilities” (National Partnership for Women and Families). FMLA does the following: “Covers only certain employers; Affects only those employees eligible for the protections of the law; Involves entitlement to leave; Maintains health benefits during leave; Restores an employee’s job after leave; Sets requirements for notice and certification of the need for leave; Protects employees who request or take leave; and Includes certain employer record keeping requirements” (eLaws).

FMLA allows an “eligible” worker to take up to twelve weeks of unpaid leave in a twelve month period. In order to be considered “eligible,” an employee must have worked for their employer at least 12 months and at least 1,250 hours during that same time. “Employers may select one of four options for determining the 12 month period: 1) the calendar year; 2) any fixed 12-month “leave year” such as a fiscal year, a year required by state law, or a year starting on the employee’s “anniversary” date; 3) the 12-month period measured forward from the date any employee’s first FMLA leave begins; or 4) a “rolling” 12-month period measured backward from the date an employee uses FMLA leave” (eLaws).

Unpaid leave means a person is not paid and not earning an income during the time off. So, if a person is on leave for 8 weeks, then a person loses 8 weeks of income. Therefore, a worker faces an opportunity cost or “the true cost of something is what you give up to get it” (The Economist). In addition to 8 weeks of lost income, the worker also loses 8 weeks of work experience. Furthermore, the location where a worker works must have at least 50 workers within a 75 mile radius in order to receive unpaid leave. For example, Corporation X could have 49 employees at Plant A and 49 employees at Plant B. If Plant B is more than 75 miles away from Plant A, then FMLA does not need to be granted.

“Other economically advanced nations provide paid leave and most have been doing so for a considerable period of time” (Blau, Ferber, and Winkler 358). The authors of The Economics of Women, Men and Work contend that even though FMLA is far behind other countries such as France and Sweden, it is a step in the right direction. Throughout developed nations, “127 have national paid-leave policies” (Milbourn) but not the United States. In Women and Men at Work, the authors believe “part of the reason that the United States lags behind other countries is ideological. Americans, with their high value on individualism, see raising the next generation as a private rather than a public concern” (Padavic and Reskin 167). Moreover, “The Clinton administration had at one time proposed a plan to provide paid family leave using unemployment insurance funds. It never got off the ground, however, and was eventually quashed by the Bush administration” (Valenti).

Furthermore, the federal legislation is blanket, meaning it covers the entire nation. The United States Federal Government therefore avoids the problem of adverse selection which “occurs if only some but not all firms offer such policies as family leave or health insurance coverage” (Blau, Ferber, and Winkler 359). FMLA was “hotly debated” and opponents of the act believed it would cost a considerable amount of funding. However, according to a 1998 Business-Work Life Study or BLWS of 1,057 employers nationwide discovered that 84% of organizations find that the benefits of providing FMLA leave offset or outweigh the cost. “The mere fact that so many companies provide programmatic assistance and supportive work environments indicates that many company executives are aware that meeting the needs of employees not only helps these employees and their families, but also benefits the bottom line” (Bond and Galinsky).

FMLA does allow for unpaid leave, however Cheryl Walker of Wake Forest University reports the effects of leaving and returning to the workplace are significant: “Although the FMLA guarantees a job upon return from leave, the law cannot control others’ perception of the employee upon his or her return. She suggests that employers should not only implement family friendly policies, but create a culture in which it is acceptable for both men and women to equally participate in and benefit from those policies” (Walker).

Even with FMLA in action, states of the Union are still able to pass their own policies. The Economic Opportunity Institute remarks that California, Hawaii, Massachusetts, New Hampshire, New Jersey, New York, Puerto Rico, Rhode Island, and Washington are in the process or have passed legislation related to family leave. However, California is the first state to approve and enact a comprehensive paid leave program.

The SB 1661 or Paid Family Leave insurance, “beginning July 1, 2004, workers will be allowed to receive up to six weeks of paid leave per year to care for a seriously ill child, spouse, parent or domestic partner or to bond with a new child” (Office of the Governor of California).

It’s important to note that the The California Family Rights Act [CFRA] was established “to ensure secure leave rights for the following: 1) Birth of a child for purposes of bonding; 2) Placement of a child in the employee’s family for adoption or foster care; 3) For the serious health condition of the employee’s child, parent or spouse; 4) For the employee’s own serious health condition” (Department of Fair Employment and Housing of California). CFRA is a law requiring unpaid leave could be considered California’s version of the FMLA. SB 1661 is different from CFRA.

Paid Family Leave insurance includes several provisions such as a one-week waiting period, option for employers to require employees to use up to two weeks of unused vacation time, a cap on payments up to 55% of wages, and small business with less than 50 employees are not required to hold a job open for a person on leave. As a component of the State Disability Insurance [SDI] program, Paid Family Leave insurance is the segment which “compensates workers who suffer a wage loss due to the need to provide care for a seriously ill family member or to bond with a new child” (Employment Development Department of California).

A USA Today article stated: “Supporters hope the bill [SB 1661] will serve as a nationwide model, while business groups denounced it as too costly for employers.” Mark Sappenfield of the Christian Science Monitor reports on California business climate and remarks that “an unprecedented suite of worker-friendly bills” creates a negative business environment leading to a mass exodus of companies from California. However, according to the California Paid Family Leave website, the paid leave program is “100% employee-funded.” Mary Ann Milbourn of the Contra Costa Times reports the following: “Workers will bear the cost through an increase in their contributions to SDI.” It seems the negative impacts to businesses are a bit over exaggerated, but the full impact of SB 1661 is still pending. “Will Companies Stay or Go? Whether or not this new plan will attract or repel companies to California remains to be seen. Economists say bother outcomes could occur” (Valenti).

Marilyn Watkins of the Economic Opportunity Institute reports: “Businesses that provide flexible paid leave profit from lower turnover and training costs, and higher levels of morale, productivity, and customer satisfaction. A 2002 study by University of California and University of Chicago economists estimated that employers in California would save $89 million a year in turnover costs through a paid family leave program” (Watkins). Paid leave allows a worker to not stress as much over missing work due to an ill family member or birth. Reducing the financial impact on an individual leads to less problems within the workplace. If business can save with paid leave, then it’s reasonable to state SB 1661 will have a positive impact.

According to Nancy Cleeland of the Los Angeles Times she proclaims that several studies call “for the better treatment of workers.” She goes onto elaborate: “For example, by analyzing data from a 2002 survey of 40,000 households, the Urban Institute documented that 41% of all parents earning as much as twice the federal poverty level didn’t receive paid sick leave, vacation days or other forms of compensated leave. Of those with higher earnings, 84% had some form of paid leave, the Urban Institute found” (Cleeland). Furthermore, workers are unable to take leave because of financial constraints, this problem is apparent in low-income or single-income earning households. SB 1661 allows for up to six weeks of compensation, reducing the strain of finances.

With an in depth look into FMLA and SB 1661, family leave policies are being implement and will continue to be a major issue in the United States. As exhibited in California, the full impacts of paid leave remain to be experienced, but FMLA seems to be fairing well. 12 weeks of unpaid leave through the nation, and in California, 6 of those weeks could be paid. Questions do come forth from the investigation of federal and state family leave policies. However, an the umbrella stigma is best put in the following statement: “Workplace culture can create informal barriers to workers taking advantage of unpaid and paid family leave policies” (Padavic and Reskin 170).

Works Cited

“About Paid Family Leave Insurance Program.” Employment Development Department of California. < http://www.edd.ca.gov/direp/pflind.asp>

Blau, Francine D., Ferber, Marianne A., & Winkler, Anne E. The Economics of Women, Men, and Work. 4th Ed. Upper Saddle River: Prentice Hall, 2002.

Bond, James T., and Galinsky, Ellen. The 1998 Business Work-Life Study. Families & Work Institute, 1998.

“California Family Rights Act.” Department of Fair Employment and Housing of California. < http://www.dfeh.ca.gov/Statutes/cfra.asp>

California Paid Family Leave. < http://www.paidfamilyleave.org/>

“California first state to offer paid family leave.” USA Today 23 September 2002. < http://www.usatoday.com/news/nation/2002-09-23-family-leave_x.htm>

Cleeland, Nancy. “Study Calls for Better Treatment of Workers.” Los Angeles Times 23 April 2004. < http://www.latimes.com/business/la-fi-lowwage23apr23,1,1287745.story?coll=la-headlines-business>

“Economics A-Z.” The Economist. < http://www.economist.com/research/Economics/>

“eLaws – Family and Medical Leave Act Advisor.” U.S. Department of Labor. < http://www.dol.gov/elaws/fmla.htm>

“Governor Davis Signs Historic Family Leave Bill 9/23/2002.” Office of the Governor of California 23 September 2002. < http://ca.gov/state/govsite/gov_htmldisplay.jsp?sFilePath=/govsite/press_release/2002_09/20020923_L02165_Family_leave.html&sCatTitle=Press%20Release&iOID=36404&sTitle=Press%20Release%20%20%20%20-%202002/09/23&BV_SessionID=@@@@1205318299.1083130620@@@@&BV_EngineID=ccccadclfkgddkjcfngcfkmdffidfog.0>

Milbourn, Mary Ann. “How family leave program works.” Contra Costa Times 4 January 2004. < http://www.contracostatimes.com/mld/cctimes/business/7630854.htm>

National Partnership for Women and Families. < http://www.nationalpartnership.org/index.cfm>

Padavic, Irene, and Reskin, Barbara. Women and Men at Work. 2nd Ed. Thousand Oaks: Pine Forge Press, 2002.

Sappenfield, Mark. “Next test for California: fixing business climate.” Christian Science Monitor 15 April 2004. < http://www.csmonitor.com/2004/0415/p02s01-uspo.html>

Valenti, Catherine. “Paid Leave for All?” ABC News 9 October 2003. < http://abcnews.go.com/sections/business/US/paidleave_031009.html>

Walker, Cheryl. “Men who take family leave viewed negatively in workplace, says new WFU study.” Wake Forest University 27 October 2003. < http://www.wfu.edu/wfunews/2003/102703w.html>

Watkins, Marilyn. “Policy: Family Leave.” Economic Opportunity Institute. < http://www.econop.org/Policy-FamilyLeave.htm>