The Pew Charitable Trusts

From Vermont to Hawaii, states are hopping on the paid family leave bandwagon, with California leading the way.

The Golden State in September created a sweeping new program that will pay workers half their salaries when they take time off to care for sick family members or newborns. California's program is the first of its kind in the country and is entirely funded by workers through a payroll tax.

Advocates of paid family leave hope California's novel approach will be replicated across the country, but opponents say such a plan will burden employers with more regulations at a time when some firms are simply trying to stay in business.

Nearly 30 states had paid family leave bills pending in 2001-02 and 20 held or scheduled hearings on the topic, according to the National Partnership for Women & Families," a Washington, D.C., based group that in 1999 began a nationwide campaign to expand family leave at the state level.

The changing face of today's workforce is one reason family leave is so popular. Advocates say today's workers --both male and female want help juggling their work and home responsibilities. Baby Boomers, in particular, feel squeezed taking care of their children and their aging parents while working fulltime.

The federal government already requires that businesses with at least 50 employees provide workers with 12 weeks of family leave --but the leave is unpaid. A 2000 Labor Department study found that nearly 80 percent of workers said the reason they didn't take leave under the federal Family and Medical Leave Act was because they couldn't afford it. A 01 Census survey found that while paid leave helps with worker retention among working mothers, unpaid doesn't.

The problem is figuring out to pay for paid family leave. Several states Hawaii, Maine, Minnesota, New Mexico and Oregon - passed legislation in 2001-02 that requires their legislatures to look into the cost question.

The Clinton administration gave the states the green light to experiment with using the unemployment insurance fund as a way to provide paid leave.

In 2001 and 2002, Arizona, Florida, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Nebraska, New Mexico, New Jersey, Oregon, Pennsylvania, Texas and Vermont had measures in their hoppers that would extend UI benefits to new parents during leave. But with the economic downturn and more workers tapping into the UI system, that idea is looking less promising.

Now states will be watching California. The original proposal in California would have had employers chip in half the costs, but that was dropped to mute business opposition. Under the California legislation that Gov. Gray Davis signed last month, workers will get 55 percent of their normal paychecks for up to six weeks to care for a seriously ill child, parent or domestic partner or to bond with a new child. Workers will start paying into the fund Jan. 04 and can start using it July '04.

Most workers will pay about $50 a year to fund the California program, according to Netsy Firestein, director of the Labor Project for Working Families at the University of California in Berkeley. The California Chamber of Commerce, however, says that figure should be at least doubled.

"The signing of this bill makes California the first state in the U.S. to mandate paid time off for family reasons," according to Susan Kemp, senior labor law advisor for the California Chamber of Commerce.

AFL-CIO President John Sweeney called the California leave law "a tremendous victory for working men and women" and said organized labor will continue to press at the state and federal levels for more expansive paid leave policies.

New York and Massachusetts have already expressed interest in the California program. "We expect the California measure to lead to advances across the country," says Judith L. Lichtman, president of the National Partnership for Women & Families, which was a driving force in seeing federal leave legislation enacted in 93.

The employer community is not so sure. "The rhetoric that the California law will spread like wildfire is overstated," says Deanna R. Gelak, executive director of the National FMLA Technical Corrections Coalition, a group of employers working to change FMLA requirements. She says California's big brother approach is bureaucratic, cumbersome and may actually drive business out of the state.

Even if states don't pass legislation akin to the California plan in the next session, it's a good bet that several will give a close look to creating or expanding "temporary disability insurance" programs to pay for family leave. These programs are funded through an employee/employer shared payroll tax.

Prior to enacting its new leave law last month, California was one of five states that had temporary disability insurance programs that pay women a portion of their salaries while they are out on leave because of pregnancy or childbirth. The other four are: New York, New Jersey, Rhode Island and Hawaii

New Jersey and New York were already considering expanding their temporary disability insurance systems to cover some types of family leave even before California acted. Hawaii, Massachusetts, New Hampshire and Washington also in 2001-02 eyed creating new temporary disability family leave systems to pay for family benefits.

Here are some other proposals that state lawmakers considered in '01 and '02 that will likely resurface:

• Create tax credits for employers who provide paid leave (Colorado, Hawaii, Massachusetts and Missouri)
• Allow workers to use their sick leave to care for a sick child or family member (Arizona, Connecticut, Hawaii and Illinois) or to adopt a child (Connecticut, Delaware and Iowa) or for their children's school activities (Colorado and New Jersey)
• Allow workers to contribute accrued sick or annual leave to coworkers taking family and medical leave (Oklahoma)
• Study the costs and benefits of paid leave (Hawaii, Maine, Minnesota, New Hampshire, New Mexico and Oregon)