Paid Leave: How a Patchwork of State Policies is Threatening Millions of Employees’ Benefits

COVID-19 highlighted the importance of paid leave policies and the critical role they play in the lives of employees and their families. However, a growing patchwork of state and local mandates is threatening paid leave programs of large, multistate employers.

Large employers’ paid leave plans are the gold standard, often exceeding the national private-sector averages and frequently equaling or surpassing the leave provided by state-mandated paid leave programs. With employees living and working across the country, these employers want to offer employee benefit parity – equitable, generous benefits to all of their employees regardless of where they live or work. Additionally, the benefit is used as a recruitment and retention tool and increases productivity. From a logistical standpoint, having consistent paid leave rules increases the value of employee transferability between different locations when an opportunity for promotion or transfer becomes available or when an employee wants to relocate due to personal reasons.

Currently, nine states have established paid family and medical leave insurance programs, while 14 states and 22 cities and counties require paid sick leave as of late last year. And, last year alone, 40 states considered more than 340 bills related to paid leave.

A survey of ERIC member companies, the nation’s largest employers across all industries, found that 86 percent of respondents provide a nationwide paid leave benefit to employees in 40 or more states, with 65 percent providing paid family leave to care for a family member with a serious medical illness. These companies are forced to manage their employee benefit programs to comply with the specific contribution, administration, reporting, and other requirements of all existing state paid family and medical leave programs. Not one state set of rules. Or even two. But a different set of rules for every location they have employees.

To stay on top of the tracking, administrative, and compliance requirements of all these state and local paid leave ordinances, employers have had to hire third-party administrators. But, relying on third-party vendors means that critical employer databases are often unable to exchange information smoothly, leading to burdensome and inefficient administration of workforce benefits across the country. These systems must be maintained separately from one another, without data-sharing capabilities. This incompatibility causes the management of vast corporate structures to become increasingly fragmented, inefficient, and expensive – all without supporting or enhancing the paid leave benefits ultimately received by employees.

ERIC supports expanding paid leave benefits, but it must be done so that it does not negatively impact those benefits already being offered by large employers.

For more on how state programs are having counterproductive effects on the level of benefits that multistate employers offer their employees, read ERIC’s white paper, Paying the Way: Large Employers and the State Paid Leave Patchwork.