Washington, DC – President Biden’s proposed paid leave plan ignores a critical issue. A survey of large, multistate employers by The ERISA Industry Committee (ERIC) found that the ever-expanding patchwork of state and local mandates is threatening employer paid leave programs and must be addressed now.
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. Additionally, in 2020 alone, 40 states considered more than 340 bills related to paid leave.
To better understand the impact this patchwork is having on current paid leave benefits voluntarily offered by multistate employers, the problems posed by compliance with inconsistent state programs, and the unintended impact that the current state patchwork has on workers’ paid leave benefits, ERIC surveyed its member companies, the nation’s largest employers across all industries, for its white paper, Paying the Way: Large Employers and the State Paid Leave Patchwork.
“Employers, like ERIC’s member companies that operate across the country with employees who live or work in different cities and states, experience a greater compliance burden when forced to keep up with the many and varying jurisdictional requirements,” said Aliya Robinson, Senior Vice President of Retirement and Compensation, ERIC. “Multistate employers must continually adapt their expansive paid leave programs, which are financed solely by the employer, to incorporate the recordkeeping and other compliance mandates established by different state laws, regardless of how generous their established benefit programs are. The ultimate goal of these state paid leave policies should be to provide valuable benefits to employees, not micromanage employers’ benefit administration,” said Aliya Robinson, Senior Vice President of Retirement and Compensation, ERIC.
ERIC’s survey found that:
- 86% of respondents provide a nationwide benefit to employees in 40 or more states and, therefore, must 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
- 100% of respondents provide access to both short-term and long-term disability leave to address a serious personal medical incapacity
- 90% provide paid parental leave to care for or bond with a newly-born or adopted child
- 65% provide paid family leave to care for a family member with a serious medical illness
Of critical concern, ERIC’s survey identified that many state programs had counterproductive effects on the level of benefits that multistate employers offer their employees. Despite operating in a wide range of industry sectors and managing independent and voluntary employee benefits programs, the multistate employers that ERIC interviewed reported several common concerns significant to the federal paid leave conversation:
- The challenges posed by inconsistent state paid leave laws ultimately drain resources that could be used to provide more valuable paid leave benefits
- The current patchwork of one-size-fits-all state program standards often creates inefficient and costly administration processes
- Rigid state paid leave programs remove large employers’ flexibility to tailor their paid leave programs to the unique needs of their workforce
- Expansive state paid leave legal standards expose employers to liability and specious litigation
- State paid leave policies do not effectively consider their impact on multistate employers already providing valuable, generous, and consistent benefits on a nationwide basis
Many employers have had to hire third-party administrators to stay on top of the tracking, administrative, and compliance requirements of state and local paid leave ordinances. 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. One ERIC member company shared that it must maintain differently structured digital recordkeeping systems solely due to different paid family and medical leave requirements in California and New York. 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.
“Large, multistate employers want to offer employee benefit parity – equitable, generous benefits to all of their employees regardless of where they live or work – but the patchwork of differing state and local programs and the compliance burdens associated with them is threatening employers’ ability to do so. It is only going to get worse as emerging regulations, and updates to state programs continue to undermine the ability of these employers to design and provide the very paid leave benefits that these state programs are intended to encourage.”