Senators Chris Dodd (D-CT) and Ted Stevens (R-AK) today introduced landmark legislation that will provide up to 8 weeks of paid leave to workers needing time off due to the birth or adoption of a child, to care for a child, spouse or parent with a serious illness or to care for their own serious illness.  The Family Leave Insurance Act of 2007 will benefit both businesses and their employees by establishing a Family Leave Insurance Fund, through which employees, employers and the federal government share the cost of providing compensation during times of family crisis.

 “No one should have to choose between the job they need and the family they love, and I deeply regret that today many people are forced to make these types of decisions,” said Dodd.  “Our nation’s economy, its production and its competitiveness, benefit when workers are able to meet their demands at home and on the job.  The Family and Medical Leave Act was a major milestone in our nation’s dialogue that acknowledged that families, workforce production and competitiveness are not mutually exclusive.  It was a critically important first step, but the elimination of needed income during times of crisis in family life is something no hard-working American should experience.  Today, I am proud to take the next step in the fight for more comprehensive employee supports by introducing this legislation with Senator Stevens that will provide workers the income needed to care for their families so that they may transition back to their jobs as seamlessly as possible.”

“As the father of six children, I deeply understand the challenges families face following childbirth, in times of sickness, and when loved ones fall ill,” said Senator Stevens. “In Alaska, the majority of parents hold full-time jobs outside the home, which often makes this pressure even more intense.  Those of us in the Senate must do everything we can to help hard-working American families, and this bill represents a significant first step in those efforts. I commend Senator Dodd for his continued leadership on this issue, and look forward to working with my Senate colleagues and leaders in the business community to improve this bill as it moves through the legislative process.”

The Work, Family and Equity Index, released by researchers from Harvard and McGill Universities, shows that the United States lags behind 163 other countries that guarantee paid maternal leave and 45 countries that provide paid paternal leave.  Additionally, 37 countries already ensure paid leave for the care of an ill child.  This legislation would help close that gap, and begin to bring the United States up to par with these nations that have already made great strides towards balancing the competing demands placed on workers by their families and careers.

Senator Dodd is the author of the landmark Family and Medical Leave Act (FMLA), which has allowed more than 50 million workers to take up to 12 weeks of unpaid leave if they are ill or if they need to care for a sick family member or new child.  

The Family Leave Insurance Act of 2007

The Family Leave Insurance Act would provide 8 weeks of paid benefits to people who take time off from work for reasons allowed under the Family and Medical Leave Act. The Act creates a new “Family Leave Insurance Fund” to finance benefit payments, allowing stakeholders to pool risk and lower costs, and funded through small, shared employee/employer premiums.  To reduce administrative burdens for employers and employees, employers will pay leave benefits to employees through their regular payroll, with prompt reimbursement from the Family Leave Insurance Fund.

Benefits

• 8 weeks of paid leave over a 12-month period for workers who need time off for reasons that parallel the Family and Medical Leave Act, which include:

• birth of a child;

• placement of adopted or foster child;

• care for a child, parent or spouse, who have a serious medical condition; or

• because the employee has a serious medical condition that makes it impossible to perform his or her job functions. 

• Benefits will be tiered based on wages:

• 100% of weekly earnings for employees earning up to $20,000

• 75% of weekly earnings for employees earning $20,001 - $30,000

• 55% of weekly earnings for employees earning $30,001 - $60,000

• 40% of weekly earnings for employees earning $60,001 - $97,000

• (Note: The minimum benefit in each income tier will be set so as not to be lower than maximum benefit in next lower tier)

• (Wage levels will be indexed for inflation using the Social Security wage index)

• Employees may use other leave to supplement Paid Leave benefits.

• Benefit payments begin after one week waiting period which will not be counted against the 8 week limit.

• Health insurance continues for employees who have health insurance.

• Job protection is available for all employees eligible for job protection under the FMLA.

Eligible Employees

• Employees must pay insurance premiums for 12 months and have worked for the same employer for 12 months to receive benefits – consistent with FMLA requirements.

• Participation is mandatory for all businesses with more than 50 employees, but companies with materially equivalent or better benefits can choose to self-insure rather than participate in the federal program.

• Businesses with fewer than 50 employees may choose to opt in, with a 50% discount on premium payments. (see financing)

• Self-employed workers can choose to opt in, paying both employer and employee shares of the premium at the 50% discounted rate for small businesses.

Financing

• Costs will be shared by employees, employers, and the federal government.  Both employees and employers must pay a small premium for the insurance, equivalent to 0.2 percent of each employee’s earnings.  Employers with fewer than 50 employees may opt in to the Fund at a 50% discount, with premiums equivalent to 0.1 percent of earnings and the federal government paying administrative costs that are not covered by the Fund.  This financing structure should allow the Insurance Program to pay for itself with little cost to the federal government and taxpayers.

Administration

• The U.S. Department of Labor will administer the program.

Coordination with other paid leave programs

• Allows for development of a framework to allow States with existing Temporary Disability Insurance or paid leave programs to opt out of the Family Leave Insurance Fund, if they provide an equal or greater benefits plan.
• Companies with materially equivalent or better benefits can choose to self-insure rather than participate, or may choose to provide additional employee benefits in conjunction with Family Leave Insurance Fund benefits.