While the 1993 enactment of the federal Family and Medical Leave Act provided a great first step in helping individuals balance work and home demands, many Americans do not qualify for coverage or cannot afford unpaid time off from work. Legislators and advocates have explored options that would provide more than the FMLA and offer paid family leave benefits to workers who need time off to recover from a serious illness, around the birth, adoption, or foster placement of a child, or to care for sick family members. While there are various routes to creating and implementing a paid family leave program, three states – California, New Jersey, and Rhode Island – have expanded their longstanding TDI programs to provide paid family leave insurance.
By building on top of existing TDI structures, California, New Jersey, and Rhode Island have been able to implement paid family leave more efficiently and with fewer costs. In these three states, the same administering agencies that process TDI claims and administer disability insurance benefits are now processing paid family leave claims and administering those benefits. Using already experienced staff has reduced recruitment and training costs.
Additionally, the same financing structure (payroll taxes) used to cover the cost of administering TDI programs and pay out benefits has been altered to also provide funding for paid family leave programs. However, while a combination of employee and employer provided payroll deductions fund TDI programs in some states, only employee payroll deductions are used to cover paid family leave programs, and employers have no direct costs in terms of funding. The cost to workers and the resulting benefits they receive in California, New Jersey, and Rhode Island are included in the table below.
As you can see, we are talking about a relatively low cost to provide a significant benefit to workers and our broader economy. While 45 states do not have TDI programs, this model offers one viable way to finance and implement paid family leave programs. Finally, because California, New Jersey, and Rhode Island built off of their existing TDI programs, workers in all three states now have access to both paid medical and paid family leave benefits.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.