Paid Family and Medical Leave Study — Secretary of Commerce and Trade (September 2020)
Summary
A Paid Family and Medical Leave Study from the Offices of the Secretary of Commerce and Trade and the Chief Workforce Development Advisor, dated September 2020, on the development, implementation and costs of a statewide paid family and medical leave program for all employers. The Executive Summary says the study was directed by the Appropriations Act approved during the 2020 Session of the General Assembly and that a public comment survey received nearly 5,500 responses. It estimates that financing the program would result in a contribution rate of 0.5 percent of wages, split between employees and employers; for an employee earning annual wages of $60,000, .25 percent equals approximately $2.89 per week. The study also states that the total estimated amount needed for the trust is approximately $1.2 billion.
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Paid Family and Medical Leave Study
Offices of the Secretary of Commerce and Trade
and the
Chief Workforce Development Advisor
September 2020
1
Executive Summary
Pursuant to the Appropriations Act approved during the 2020 Session of the General Assembly,
the Secretary of Commerce and Trade and the Chief Workforce Development Advisor were
directed to study the development, implementation, and costs of a statewide paid family and
medical leave program for all employers. This report contains the findings of this study across
five main areas as required by the authorizing budget language:
1. Research regarding paid family and medical leave programs that have been
established in other states across the country;
2. An assessment and quantification of the economic impact on businesses and workers
if a paid family and medical leave program were implemented;
3. An operating plan which includes a designated agency or entity, staffing needs,
technology requirements, implementation timeline, and business practices;
4. An identification of what resources are necessary to implement a statewide program;
and
5. Research regarding start up loans for paid leave programs in other states and loan
payback.
Additionally, the Appropriations Act required that the Secretary of Commerce and Trade and the
Chief Workforce Development Advisor—in completing their required study—convene a
workgroup of industry stakeholders. As the Secretary and the Chief Workforce Development
Advisor conducted their study, they engaged with the participants of the industry stakeholder
workgroup to understand their unique perspective on the potential impacts of a paid family and
medical leave program. The insights garnered from discussions with these participants have
informed the study and shaped this report.
The Secretary and the Chief Workforce Development Advisor also sought to collect public
comment through a survey that received nearly 5,500 responses. This survey was shared with
businesses, employees, and associations across the Commonwealth. A summary of the responses
is provided in the Appendix C.
Findings on the impacts of a paid family and medical leave program are divided into distinct
sections around benefits and costs. In general, research indicates that paid family and medical
leave programs are associated with economic benefits including improved employee retention,
increased employee productivity, and greater labor force attachment for women. Published
research on this issue also indicates that such programs are associated with possible benefits to
health outcomes. Paid family and medical leave programs also result in costs to businesses and
workers, which can include an increased tax burden on employers and workers, administrative
costs to employers, and potential business disruptions. As will be described later in this report,
this study estimates that financing this program would result in a contribution rate of 0.5 percent
of wages that would be split between employees and employers. For example, an employee
2
earning annual wages of $60,000 would be required to contribute .25 percent of wages, which
equals approximately $2.89 per week. Likewise, the employer for that covered employee would
also be required to contribute $2.89 per week. While the administrative costs and the cost of
potential business disruptions are indeterminate, this study offers a general estimation of costs to
employers and employees in the form of premiums paid into the program. The estimated startup
cost to implement this program during Year 1 and Year 2 are $55,600,000, with estimated
ongoing annual costs of $43,500,000.
In addition to studying the laws and programs implemented in other states with paid family and
medical leave programs, the Secretary of Commerce and Trade and the Chief Workforce
Development Advisor engaged in numerous conversations with staff and stakeholders in other
states, including Washington, Massachusetts, Rhode Island, Connecticut, Oregon, and the
District of Columbia. Based on an examination of the policies implemented and considered by
other states, it is clear that there is no singular model for paid family and medical leave. There
are numerous policy differences across the states in their approaches to structure, benefits,
financing, eligibility requirements, and implementation plans. These differences have varying
effects on the workers and businesses covered under each respective program. This variety
makes evident that if a paid family and medical leave program is a public policy that the
Commonwealth seeks to pursue, there is room to craft this policy in a way that fits Virginia’s
unique needs and provides the most benefit to working Virginians and the economy while also
limiting the impacts of costs.
After researching many other states’ development and implementation plans, convening a
workgroup for guidance, and receiving over 5,500 survey responses, if there is a desire to pursue
a paid family and medical leave program in Virginia, the following considerations are offered:
1. The Virginia Employment Commission would be the most appropriate agency to
have oversight of the Paid Family and Medical Leave Program because of the
similarity of technology and process in collection of unemployment insurance
premiums, relationship with the business community, enforcement and familiarity
with fraud and adjudication processes.
2. For additional oversight of the program, a Paid Family and Medical Leave Board
should be formed to advise the Commissioner. This Board would include small and
large business owners, business organizations, members of the General Assembly,
government officials, labor, and citizen members. Members of this Board would be
appointed by the Governor and General Assembly.
3. An Office of the Paid Family and Medical Leave Ombuds should be created and
physically located at the Virginia Employment Commission. The Ombuds would be
appointed by the Governor and serve as an independent third party to investigate,
report, and help settle complaints from employers and employees.
3
4. A full, independent actuarial study should be conducted within the first six months
after the bill has passed to ensure that the authority has sufficient time to project the
necessary funds for a solvent trust and determine the payroll tax rate necessary to
achieve such an amount.
5. Both covered employees and employers should jointly fund the program.
6. Premiums should be paid into the Paid Family and Medical Leave Trust at least one
year in advance of awarding benefits.
7. The Commonwealth should consider a grant fund that supports small businesses’
administrative, technology, and personnel replacement costs needed to implement
Paid Family and Medical Leave.
8. The Commonwealth should consider an exemption for small businesses from
contributing to the program; however, employees who pay into the program at such
exempted business should still be eligible for benefits.
9. The Commonwealth should consider exemptions for businesses who currently have
equal or more generous paid leave policies.
10. Regulations and guidelines should align as closely as possible to the federal Family
Medical Leave Act to eliminate confusion of eligibility, leave time and
administration. Using the same terminology, forms, technology, and reporting will
help employers navigate the new program.
11. An outreach and public education campaign is essential to ensure all employers and
employees are aware of the new program’s contribution and benefits structures as
well as the requirements and responsibilities of the program.
12. Future deliberations regarding a statewide paid family and medical leave proposal
should consider how such a program would interact with existing state policies and
benefits offered to state employees. State agencies should not be exempted from full
benefits, but there should be discussion around how existing state benefits may fit
into the policy.
13. As more states begin enacting statewide paid family and medical leave programs,
further discussions should include input on how this affects attracting economic
development projects to the Commonwealth of Virginia.
4
Background
Given the similarities and differences between various leave programs implemented across the
country, it is important to define the scope of what is considered paid family and medical leave.
Paid Family and Medical Leave
Paid family and medical leave is a type of benefit program that typically provides leave for an
employee’s serious illness or medical condition, the need to care for a family member, or the
need to care for a new child. While there is no national policy, several states have implemented
or are in the process of implementing some form of a paid family and medical leave program.
There is no single format for such a program and—as will be detailed in the following section
entitled “An Overview of Programs Implemented in Other States”—the existing programs are
diverse in terms of each program’s structure, benefits, eligibility requirements, and funding
mechanisms. Paid family and medical leave programs often take the form of insurance programs,
whereby workers and/or employers pay into a trust fund from which the benefit—typically a
partial wage replacement—is drawn when an employee goes on leave following a qualifying
event.
In Virginia, proposals seeking to establish a paid family and medical leave program were
introduced during the 2020 Session of the General Assembly by Senator Jennifer Boysko (Senate
Bill 770) and Delegate Jennifer Carroll Foy (House Bill 825). Both proposals were passed by
indefinitely, but with letters sent requesting that the issue be studied by the Secretary of
Commerce and Trade and the Chief Workforce Development Advisor.
It is important to note that paid family and medical leave is separate and distinct from two other
commonly discussed benefit programs: the Family and Medical Leave Act (FMLA) and earned
paid sick leave.
Family and Medical Leave Act
Under the federal Family and Medical Leave Act (FMLA), eligible employees of certain
employers can receive unpaid leave due to family and serious medical reasons. This unpaid
leave is job-protected, meaning that an employer cannot terminate an individual’s employment
as long as the employee returns to work after their leave is exhausted. To be eligible, employees
must be employed by a private sector employer with 50 or more employees, a public agency, or a
K-12 school. 1
1
United States Department of Labor, "The Employee's Guide to the Family and Medical Leave Act," United States
Department of Labor, June 2015, https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/employeeguide.pdf.
5
FMLA provides eligible employees with twelve weeks of unpaid leave in a twelve-month period
for a number of eligible reasons. Pursuant to §2612 of 29 USC Ch. 28, eligible reasons for leave
under FMLA include:
1. The birth of a child of the employee and in order to care for such child;
2. The placement of a child with the employee for adoption or foster care;
3. In order to care for the spouse, child, or parent of the employee, if such person has a
serious health condition;
4. A serious health condition that makes the employee unable to perform the functions
of the position of such employee;
5. Any qualifying exigency (as covered by regulation) arising out of the fact that the
spouse, child or parent of the employee is on covered active duty in the Armed
Forces.
While leave taken under FMLA is unpaid, employers must continue an employee’s health
insurance. 2 Additionally, employers are permitted to require that an employee taking leave under
FMLA substitute any accrued leave that the employee has saved up (i.e. personal, vacation, or
sick leave). In those instances when an employee uses such accrued leave that would have
qualified as paid leave, the employee will receive such pay as typically provided under such
leave programs. Employees may also elect to utilize such accrued leave for this purpose. 3
Earned Paid Sick Leave
Earned paid sick leave—often referred to as paid sick days or sick pay—is a type of paid leave
program under which employees can accrue paid sick leave hours to be used typically for short
time illnesses. There is no permanent national policy and only fourteen states and the District of
Columbia have implemented such a law (Arizona, California, Colorado, Connecticut, Maryland,
Massachusetts, Maine, Michigan, Nevada, New Jersey, Oregon, Rhode Island, Vermont,
Washington, and Washington, D.C.). However, in the states that have adopted an earn sick leave
policy, such laws often allow workers to accrue between 24 and 72 hours of paid leave. State
policies differ in terms of what purposes such leave can be taken, which employees are eligible
to accrue such leave, and the rate by which eligible employees accrue leave. Through the
CARES Act, Congress temporarily enacted paid sick leave policy to address issues caused by the
COVID-19 pandemic. California, Connecticut, Massachusetts, New Jersey, Oregon, Rhode
Island, Washington, and the District of Columbia have both paid sick leave requirements and
paid family and medical leave programs. 4
2
United States Department of Labor, "The Employee's Guide to the Family and Medical Leave Act," United States
Department of Labor, June 2015, https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/employeeguide.pdf.
3
Family and Medical Leave Act, 29 U.S.C. Ch. 28 §2612,
https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter28&edition=prelim.
4
National Conference of State Legislatures, “Paid Sick Leave,” July 2020, https://www.ncsl.org/research/labor-and-
employment/paid-sick-leave.aspx.
6
In Virginia, variations of earned paid sick leave have been introduced in recent sessions of the
General Assembly. In the 2020 Session of the General Assembly, Senator Favola and Delegate
Guzman introduced Senate Bill 481 and House Bill 898, respectively. Neither of these legislative
proposals passed the General Assembly during the regular session, and proposals specific to
COVID-19 were passed by indefinitely during the 2020 Special Session I.
7
An Overview of Programs Implemented in Other States
Currently, eight states plus the District of Columbia offer some form of paid family and medical
leave program. Six of these nine programs are fully implemented (California, the District of
Columbia, New Jersey, Rhode Island, New York, and Washington), while three programs have
been enacted, yet not fully implemented (Massachusetts, Connecticut, and Oregon). These
programs vary in many aspects. Included in this section is research specific to each of these nine
programs, which details the programs’ structures, eligibility requirements, durations and types of
leave, benefits, and financing models. 5
An important distinction across the states that have––or are––implementing paid family and
medical leave programs is whether or not that state previously offered any sort of temporary
disability insurance (TDI). Rhode Island was the first to implement a TDI program in 1942, and
four other states followed suit: California in 1946, New Jersey in 1948, New York in 1949, and
Hawaii in 1969. Of those five states, all but Hawaii have built upon their TDI program to also
provide some form of paid family leave.
In the absence of a preexisting program, the others that have since enacted a paid family and
medical leave program––Massachusetts, Connecticut, Oregon, Washington, and the District of
Columbia––made different decisions on how to implement and administer the plan. These
decisions included where to house the program, a process for collecting contributions and paying
benefits, and how to best develop the infrastructure needed to make the program functional. In
seeking to better understand how a statewide paid family and medical leave program would be
implemented in Virginia, the experiences of these states offer an opportunity to understand the
various options for developing a program and building the infrastructure in the absence of an
existing TDI program.
Overviews of Fully-Implemented Programs
California
Background and Structure
In 2002, California enacted the nation’s first Paid Family Leave (PFL) program as an additional
benefit to be incorporated into the preexisting State Disability Insurance (SDI) infrastructure.
The California Employment Development Department (EDD) administers SDI in addition to
Unemployment Insurance, payroll tax collection, and workforce development programs.
California’s program provides more than 18.7 million workers with family leave benefits.6
5
National Conference of State Legislatures, “Paid Family Leave Resources,” July 2020,
https://www.ncsl.org/research/labor-and-employment/paid-family-leave-resources.aspx
6
Employment Development Department, 2020, Overview of California's Paid Family Leave Program, State of
California, https://www.edd.ca.gov/pdf_pub_ctr/de2530.pdf.
8
Eligibility
In order to be eligible for PFL benefits, an individual must meet several requirements. First, an
individual must have earned at least $300 during the base period from which SDI deductions
were withheld. Second, the leave must have caused a loss in wages and be unable to work due to
the need to provide family care. Thirdly, an individual must be employed or actively looking for
work prior to taking family leave. Lastly, the individual must submit their claim between the first
and forty-first day of leave as well as provide a medical certificate on the claim. 7
The eligibility requirements for SDI benefits are similar to the requirements for PFL. An
individual must be unable to work for at least eight days and be employed or actively looking for
work prior to taking leave due to their disability. Additionally, they must have earned at least
$300 during the base period from which SDI deductions were withheld. The individual must be
under the care and treatment of a licensed physician or practitioner or an accredited religious
practitioner, and that practitioner must provide a medical certificate. 8
Duration and Types of Leave
California SDI allows for 52 weeks of paid benefits for an individual’s own nonwork-related
disability while California PFL allows for eight weeks of benefits for a seriously ill family
member or to bond with a new child. These eight weeks of PFL can be paid consecutively or
split up if the employee is working part-time or intermittently due to family leave.9 Beginning on
January 1, 2021, PFL will also allow for eight weeks of leave for qualifying military exigency. 10
While California’s programs provide partial wage replacement benefits, the programs do not
provide job protection, which means that an employer is not required to give a covered
individual their job back when they return from leave. However, some employees may receive
job protections under the federal Family and Medical Leave Act or the California Family Rights
Act.11
For the purposes of PFL, California includes in its definition of “family member” a spouse,
domestic partner, parent, parent-in-law, children, grandparent, grandchild, and sibling.12
7
Employment Development Department (CA), 2020, Am I Eligible for Paid Family Leave Benefits,
https://edd.ca.gov/Disability/Am_I_Eligible_for_PFL_Benefits.htm.
8
Employment Development Department (CA). 2020. Am I Eligible for Disability Insurance Benefits.
https://edd.ca.gov/Disability/Am_I_Eligible_for_DI_Benefits.htm.
9
Employment Development Department (CA), 2020, Overview of California's Paid Family Leave Program, State
of California.
10
Employment Development Department (CA), 2020, Am I Eligible for Paid Family Leave Benefits,
https://edd.ca.gov/Disability/Am_I_Eligible_for_PFL_Benefits.htm.
11
Employment Development Department (CA), 2020, Paid Family Leave,
https://edd.ca.gov/Disability/Paid_Family_Leave.htm,
12
California Unemployment Code §3302,
https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=UIC&division=1.&title=&part=2.&chapt
er=7.&article=
9
Benefits
For the duration of leave taken under both SDI and PFL, a covered employee receives a weekly
benefit equal to a percentage of their average weekly wage or the state average weekly wage.
The amount of this benefit is calculated by determining which quarter of the base year contained
the highest earnings, dividing that sum by the number of weeks in the quarter, and multiplying
that fraction by the wage replacement rate, which is 60 or 70 percent.
The wage replacement rate is determined by where the covered individual’s highest quarterly
earnings fall relative to the state average quarterly wage. According to the EDD, a covered
individual’s weekly benefit amount is:
● $50 if their highest quarterly earning was less than $929
● Approximately 70 percent of their earnings if their highest quarterly earnings were
between $929 and $5,741.66
● Approximately 60 percent of their earnings if their highest quarterly earnings were
in excess of $5,741.66
However, a covered individual’s benefit could be reduced if that same individual receives
conflicting wages while receiving PFL benefits. The EDD defines possible conflicting wages as
sick leave pay, paid time off, employer required vacation, military pay, residuals, holiday pay,
self-employment income, commissions, bonuses, insurance settlements, workers’ compensation
benefits, and wages (including part-time earnings).13
Premiums and Contributions
Both SDI and PFL are funded by employee payroll deductions deposited to the State Disability
Insurance Fund. The Fund is financed using a statutory formula—established in the State of
California’s Unemployment Insurance Code (UIC) Section 984—to set an annual contribution
rate that is applied to covered workers’ wages. Pursuant to UIC Section 984, the rate of worker
contributions for each year is set at 1.30 times the amount disbursed from the Disability Fund
during the preceding 12-months less the Fund balance, and divided by the total wages paid that
were subject to SDI contributions or deductions. 14 Additionally, California state law requires that
the contribution rate shall not exceed 1.5 percent or be less than 0.1 percent, and that it shall not
decrease from the previous year’s rate by more than two-tenths of one percent.15
13
Employment Development Department (CA), 2020, Overview of California's Paid Family Leave Program, State
of California, https://www.edd.ca.gov/pdf_pub_ctr/de2530.pdf.
14
California Unemployment Insurance Code, Section 984,
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=984.&lawCode=UIC.
15
California Unemployment Insurance Code, Section 984,
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=984.&lawCode=UIC.
10
Similarly, UIC Section 985 establishes a statutory formula for the taxable wage ceiling. This
ceiling is calculated by multiplying four times the maximum weekly benefit for each calendar
year by 13, and then dividing that total by 55 percent.16 The result of this formula is to increase
the SDI program’s taxable wage ceiling when the maximum weekly benefit amount increases as
the state average weekly wage increases.17
To assess the adequacy of the Fund’s solvency, California defines the Adequacy Rate of the SDI
Fund balance as being equal to 25 to 50 percent of the prior 12-months of disbursements. If the
Adequacy Rate falls below 25 percent, thus indicating a warning sign that the Fund could
become insolvent, the Director can use their authority to increase the contribution rate by 0.1
percent to generate additional revenue and achieve the target Adequacy Rate. Similarly, in
situations where the Adequacy Rate increases above 50 percent, the Director can use their
authority to decrease the contribution rate by 0.1 percent to reduce costs for workers.
In summary, the SDI and PFL are funded entirely by an employee payroll tax, with no
contributions coming from employers. For 2020, the contribution rate remained at 1 percent of
wages and the taxable wage limit is $122,909 per year. Therefore, the maximum premium any
single employee would be required in 2020 is $1,229.09.18
District of Columbia
Background and Structure
In implementing its paid family and medical leave program, the District established the Office of
Paid Family Leave (OPFL) under the Department of Employment Services (DOES). The OPFL
houses a variety of divisions and functions, including a Division of Tax, Division of Benefits,
Benefit Payment Control, Appeals, Medical, Call Center, and Support. The District created the
OPFL and its related systems over the course of a three-year implementation period that began in
2018. This program only recently became fully operational and began administering paid leave
benefits on July 1, 2020.
The District’s paid family and medical leave program does not allow for a private plan option.
Eligibility and Covered Employees
Pursuant to D.C. Law 21-264, a covered employer is defined as “Any individual, partnership,
general contractor, subcontractor, association, corporation business trust, or any group of persons
16
California Unemployment Insurance Code, § 985,
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=985.&lawCode=UIC.
17
Employment Development Department (CA), 2020, Overview of California's Paid Family Leave Program, State
of California, https://www.edd.ca.gov/pdf_pub_ctr/de2530.pdf.
18
Employment Development Department (CA), 2020, Overview of California's Paid Family Leave Program, State
of California, https://www.edd.ca.gov/pdf_pub_ctr/de2530.pdf.
11
who directly or indirectly or through an agent or any other person, including through the services
of temporary services or staffing agency or similar entity, employs or exercises control over the
wages, hours, or working conditions of an employee and is required to pay unemployment
insurance on behalf of its employees”. Excluded from the definition of a covered employer are
the United States, the District of Columbia, or any employer that the District of Columbia is not
authorized to tax under federal law or treaty. If a self-employed individual opts into the paid-
leave program, they are also included in the definition of a covered employer.19
The Act defines a covered employee as an employee of a covered employer (i) who spends more
than 50 percent of their work time for that employer working in the District or (ii) whose
employment is based in the District and who works predominantly in the District and not more
than 50 percent of their work time in another jurisdiction. An employee can be eligible both as a
part-time and full-time employee that meets these criteria.
Duration and Types of Leave
The District of Columbia’s paid family and medical leave programs allows for employees to take
a combined total of eight weeks of paid leave. This leave provides two weeks of medical leave
for a covered employee’s own serious health condition, six weeks of family leave to care for a
family member with a serious health condition, and eight weeks of parental leave to bond with a
new child. Following a qualifying event, an employee may use these leave benefits up to the
maximum leave durations described within a 52-workweek period. Furthermore, an employee
can utilize all three leave options within a 52-workweek period if the respective qualifying
events occur for each. 20
Benefits
When a covered employee takes leave under this program following a qualifying event, they
receive a weekly benefit that is a percentage of the employee’s average weekly wage. Following
a qualifying event, eligible individuals must wait one week before being entitled to receive paid-
leave benefits. However, this benefit is capped at $1,000 per week until October 1, 2021, after
which the amount will increase in proportion to the annual average increase in the CPI-U. Before
there is an increase in the maximum benefit amount, the District’s Chief Financial Officer must
certify that there are sufficient funds in the Universal Paid Leave Implementation Fund.21
An individual’s weekly paid-leave benefit is statutorily established in D.C. Law 21-264 and is
based on how the covered individual’s average weekly pay compares to the District’s minimum
wage. If an individual has multiple sources of income, the average weekly wage will be
19
D.C. Law 21-264, “Universal Paid Family Leave Act of 2016”
20
D.C. Law 21-264, “Universal Paid Family Leave Act of 2016”
21
D.C. Law 21-264, “Universal Paid Family Leave Act of 2016”
12
determined based on the combination of those incomes. The benefit payouts are based on the
following schedule22:
● 90 percent of the eligible individual’s average weekly wage, if an eligible individual
earns an average weekly wage that is equal to or less than 150 percent of the
District’s minimum wage multiplied by 40
● 90 percent of 150 percent of the District’s minimum wage multiplied by 40 plus 50
percent of the amount by which the eligible individual’s average weekly wage exceed
150 percent of the District’s minimum wage multiplied by 40, if an eligible individual
earns an average weekly wage that is greater than 150 percent of the District’s
minimum wage multiplied by 40. (This amount cannot exceed the statutorily
established maximum benefit limit).
Premiums and Contributions
Beginning on July 1, 2019, covered employers began contributing an amount equal to 0.62
percent of the wages of each of its covered employees to the Universal Paid Leave
Implementation Fund. Similarly, self-employed individuals who opted-in to the paid-leave
program began contributing an amount equal to 0.62 percent of their annual self-employment
income to the fund. There are no caps on the payroll tax contributions from any covered
employer.23
The financing of the District’s program is entirely employer funded. This makes the District the
only paid family and medical leave program in the nation that does not require employee
contributions to the fund. It is important to note that this funding model is a product of the
District’s taxing authority, as it was unable to fund its paid family and medical leave program
with employee contributions.
New Jersey
Background and Structure
In 1948, New Jersey passed the Temporary Disability Benefits Law (TDBL), which required
employers and employees to pay payroll taxes to fund a wage replacement insurance program for
employees who suffer from a medical condition that prevents them from working. 24 This
Temporary Disability Insurance (TDI) is offered either through a state plan or a private plan. As
of July 1, 2020, New Jersey law also provides for up to twelve weeks of Family Leave Insurance
22
D.C. Law 21-264, “Universal Paid Family Leave Act of 2016”
23
Department of Employment Services (D.C.), n.d., DC Paid Family Leave, https://does.dc.gov/page/dc-paid-
family-leave.
24
New Jersey Business & Industry Association, 2016, "Understanding New Jersey's Temporary Disability Benefits
Law (TDBL)," New Jersey Business & Industry Association, August 4, https://njbia.org/wp-
content/uploads/2016/05/FFUnderstanding_New_Jersey_s_Temporary_Disability_Benefits_Law_TDBL.pdf.
13
(FLI) benefits to bond with a new child.25 These programs are administered by New Jersey’s
Division of Temporary Disability and Family Leave Insurance.
TDI and FLI Eligibility and Covered Individuals
Eligibility for TDI benefits is based on whether an individual’s employment has paid into the
program and met the minimum gross earning requirements. However, federal government
employees, out-of-state employees, and workers that do not meet the definition of an employee
(such as independent contractors) do not qualify for TDI. In order to qualify for TDI benefits, an
employee must meet a minimum gross earnings requirement. Minimum gross earnings are based
on the last five quarters prior to the week your disability began. The period that comprises the
first four of those five quarters is considered the “base year.” In 2020, an individual must have
worked 20 weeks over the base year during which they earned at least $200 weekly a combined
total of $10,000.26 For individuals whose base year earnings do not meet the requirements, the
Division of Temporary Disability and Family Leave Insurance review a workers earnings over
the course of two alternate base year periods.
The same minimum gross earnings requirements that apply for TDI eligibility also apply for FLI
eligibility. The program is available for New Jersey workers to bond with a newborn, newly
adopted, newly placed foster child, or to provide care for a seriously ill or injured family
member.27 It is worth noting that New Jersey defines “family member” more broadly than most
states. Their definition includes siblings, any individual related by blood, and any individual
whose close association is like family. 28
TDI and FLI Duration
There is a 7-day waiting period after the first day of disability. Additionally, an individual has 30
days from the first day of their disability to file their application.29 Over a 52-week period, an
individual may take up to 26 weeks of leave for one’s own disability. Beginning July 1, 2020,
covered employees may receive up to 12 weeks of FLI benefits over a 52-week period.30
25
New Jersey Department of Labor & Workforce Development, 2020, "Expansion of NJ Family Leave Insurance
and Temporary Disability Insurance: How Parents Can Maximize Their Benefits," My Leave Benefits, May 22,
https://myleavebenefits.nj.gov/labor/myleavebenefits/assets/pdfs/TDI%20FLI%20Expansion%20of%20Benefits%2
0May%2022%20DRAFT%202.pdf.
26
New Jersey Department of Labor and Workforce Development, n.d., Temporary Disability Insurance,
https://myleavebenefits.nj.gov/worker/tdi/.
27
New Jersey Department of Labor and Workforce Development, n.d., Family Leave Insurance,
https://myleavebenefits.nj.gov/labor/myleavebenefits/worker/fli/index.shtml.
28
New Jersey Department of Labor & Workforce Development, 2020, "Expansion of NJ Family Leave Insurance
and Temporary Disability Insurance: How Parents Can Maximize Their Benefits," My Leave Benefits, May 22,
https://myleavebenefits.nj.gov/labor/myleavebenefits/assets/pdfs/TDI%20FLI%20Expansion%20of%20Benefits%2
0May%2022%20DRAFT%202.pdf.
29
New Jersey Department of Labor and Workforce Development, n.d., FAQ: Temporary Disability Insurance,
https://myleavebenefits.nj.gov/labor/myleavebenefits/help/faq/tdi.shtml.
30
New Jersey Department of Labor & Workforce Development, 2020, "Expansion of NJ Family Leave Insurance
and Temporary Disability Insurance: How Parents Can Maximize Their Benefits," My Leave Benefits, May 22,
14
The TDI and FLI programs do not offer additional job protections when a worker takes paid
leave beyond what is afforded under FMLA and the New Jersey Family Leave Act.
TDI and FLI Benefits
An individual’s earnings over the base year also determine the amount of weekly benefits one
may receive, and the total amount one can receive throughout the life of a claim. Beginning July
1, 2020, individuals may now receive an increased benefit amount of 85 percent of the
employee’s average weekly wage, up to a maximum benefit of $881 per week for both TDI and
FLI.31
TDI and FLI Premiums and Contributions
Both employers and employees contribute to the cost of the TDI program. For 2020, workers
contribute 0.26 percent on the first $134,000 in covered wages earned during the calendar year.
The maximum worker contribution for 2020 is $350.74. This contribution is in the form of a
salary deduction taken from the employee’s weekly wage.32 Meanwhile, employers contribute a
variable rate, ranging from 0.10 percent to 0.75 percent. For 2020, employers contribute between
$35.30 and $264.75 on the first $35,300 earned by each employee during the calendar year.33 On
January 1 of each year, the taxable wage cap changes (presumably pegged to inflation, but it’s
not explicitly stated).
New Jersey’s Family Leave Insurance is entirely financed by employee payroll deductions.
Employers do not contribute to the program. In 2020, workers contribute 0.16 percent of the first
$134,900 earned during the calendar year. The maximum yearly deduction for FLI in 2020 is
$215.84. This contribution is in the form of a salary deduction that your employer takes from
your weekly wages.34
New York
DBL/PFL Structure and Background
New York’s paid family and medical leave system is different from other states in that it does
not offer a state managed plan or trust fund, but rather is built upon a private insurance model.
https://myleavebenefits.nj.gov/labor/myleavebenefits/assets/pdfs/TDI%20FLI%20Expansion%20of%20Benefits%2
0May%2022%20DRAFT%202.pdf.
31
New Jersey Department of Labor & Workforce Development, 2020, "Expansion of NJ Family Leave Insurance
and Temporary Disability Insurance: How Parents Can Maximize Their Benefits," My Leave Benefits, May 22,
https://myleavebenefits.nj.gov/labor/myleavebenefits/assets/pdfs/TDI%20FLI%20Expansion%20of%20Benefits%2
0May%2022%20DRAFT%202.pdf.
32
New Jersey Department of Labor and Workforce Development, n.d., Temporary Disability Insurance,
https://myleavebenefits.nj.gov/worker/tdi/.
33
New Jersey Department of Labor and Workforce Development, n.d., Information for Employers,
https://myleavebenefits.nj.gov/labor/myleavebenefits/employer/index.shtml.
34
New Jersey Department of Labor and Workforce Development, n.d., Family Leave Insurance,
https://myleavebenefits.nj.gov/labor/myleavebenefits/worker/fli/index.shtml.
15
New York law requires employers to obtain paid leave coverage and collect employee
contributions to pay for their coverage. 35 The state first implemented its Disability Benefits Law
in 1949, when it required private employers to provide disability insurance for their employees.
Disability benefits are covered through the employer’s insurance carrier, or employers may self-
insure. Employers may provide benefits using a Board approved plan when it is insured through
an insurer licensed by New York. These plans must meet––or be more generous than––the
statutory requirements for DBL.
New York built upon this policy in 2016 by requiring employers to obtain paid family leave
coverage from private insurers that met certain statutory criteria. As of January 2018, the Paid
Family Leave policy (PFL) has provided workers with job-protected, paid leave to bond with a
child, care for a family member with a serious health condition, or qualifying military exigency.
Eligibility 36
In order to be eligible for DBL, an employee must have been employed by a covered employer
for at least four consecutive weeks, or 25 days if they are a part-time employee. An individual
must be under the care of a physician, chiropractor, podiatrist, psychologist, dentist, or certified
nurse midwife in order to qualify for disability benefits.
In order to be eligible for PFL, an employee must be currently employed by a covered employer
for 26 or more consecutive weeks. Part-time employees become eligible once they have been
employed by a covered employer for 175 days. An employee must also provide sufficient
medical certification or documentation verifying the need for leave.
Duration and Types of Leave
Covered workers can take up to 26 weeks of combined leave between DBL and PFL. Under
DBL, a covered worker is able to take up to 26 weeks of paid leave for their own disability over
a 52-week period. Additionally, benefits are payable after a waiting period of the first seven days
of leave.37 For PFL, the duration of leave has increased from 8 weeks of leave in 2018 to 10
weeks of leave in 2019. Beginning in 2021, the duration of PFL allowed will be 12 weeks of
leave. 38
New York defines a “family member” for the purposes of paid family leave as being a child,
parent, spouse, domestic partner, grandparent, or grandchild.
35
New York State, n.d., Paid Family Leave Information for Employers, https://paidfamilyleave.ny.gov/employers.
36
New York Workers' Compensation Board, n.d., Disability Benefits,
http://www.wcb.ny.gov/content/main/offthejob/db-overview.jsp.
37
New York Workers' Compensation Board, n.d., Disability Benefits,
http://www.wcb.ny.gov/content/main/offthejob/db-overview.jsp.
38
New York State, n.d., Benefits Schedule, https://paidfamilyleave.ny.gov/benefits.
16
Benefits
For DBL benefits, covered employees are eligible to receive 50 percent of their average weekly
wage for the last eight weeks worked. The maximum weekly benefit allowed is currently set at
$170. 39
PFL benefits are currently being phased in over the course of a four-year period, which began in
2018. In 2020, covered employees are eligible to receive PFL benefits of 60 percent of a
worker’s average weekly wage up to 60 percent of the state average weekly wage. In 2021, PFL
benefits will increase to 67 percent of the worker’s average weekly wage and is similarly capped
at 67 percent of the state average weekly wage. A worker’s average weekly is defined as the
average of your last eight weeks prior to taking PFL, including bonuses and commissions. 40
Premiums and Contributions
New York’s disability benefits and paid family leave benefits are funded using different
calculations. Disability benefits are jointly funded by employee and employer payroll
contributions. Covered employees contribute 0.5 percent of workers wages, but not more than 60
cents per week. Employers are responsible for covering any remaining costs associated with the
disability benefits plan. However, employers are not required to deduct employee contributions
and can instead cover the costs entirely.41
Unlike the financing of disability benefits, paid family leave benefits are financed entirely by
employer contributions. The Department of Financial Services sets the employee contribution
rate, which was set at 0.270 percent of employees’ wages in 2020. The maximum annual
contribution in 2020 was set at $196.72. 42
Rhode Island
Structure and Background
In 1942, Rhode Island first enacted its Temporary Disability Insurance program to provide paid
leave to workers who suffered a loss of wages caused by a non-work related medical condition.
Building upon this longtime established program, Rhode Island enacted its Temporary Caregiver
Insurance law in 2013 to provide paid family leave to eligible workers. This program is
administered by the Temporary Disability Insurance division of the Department of Labor and
Training. Collectively, these two programs provide eligible Rhode Island workers with paid
family and medical leave benefits that are paid out of a single state fund.
39
New York Workers Compensation Board, n.d., Disability Benefits,
http://www.wcb.ny.gov/content/main/offthejob/db-overview.jsp.
40
New York State, New York Paid Family Leave Updates for 2020, https://paidfamilyleave.ny.gov/2020.
41
New York Workers Compensation Board, n.d., Complying with the Disability Benefits Law,
http://www.wcb.ny.gov/content/main/DisabilityBenefits/Employer/complyWithLaw.jsp.
42
New York State, n.d., Cost and Deductions. https://paidfamilyleave.ny.gov/cost.
17
Eligibility
In order to be eligible for paid leave under the TDI/TCI program, an employee must meet a wage
requirement of $12,600 in the base period in Rhode Island. Additionally, the employee must
have paid into the trust fund from which TDI/TCI benefits are paid. The Department of Labor
and Training requires that TCI claimants provide proof to validate the need for paid leave,
including either medical evidence of a serious medical condition or evidence of a parent/child
relationship for any bonding claim. TCI claimants must be out of work for seven days in order to
meet the eligibility requirements.
Duration and Types of Leave
In a 52-week period, a covered employee can take a combined total of 30 weeks of paid leave
per year under the TDI/TCI program. The TDI program allows covered employees to take up to
30 weeks of paid leave for the employee’s own temporary disability. The TCI program allows
covered employees to take up to four weeks of paid family leave to bond with a new child or to
care for a seriously ill family member. Rhode Island defines “family member” as a spouse,
domestic partner, parent, parent-in-law, child, and grandparent. 43
Covered employees receive job protections while on paid leave under TCI. However, there is no
greater job protection for leave taken under TDI than is afforded under FMLA or Rhode Island’s
Paid Family and Medical Leave Act.
Benefits
While on leave through the TDI and TCI programs, a covered employee is eligible to receive
benefits of approximately 60 percent of their weekly earnings (the exact calculation of the
benefit is set at 4.62 percent of wages received in the highest quarter of the worker’s base
period). As of July 1, 2020, the minimum and maximum weekly benefits that a covered
employee can receive while on paid leave is set at $107 and $887, respectively.44
Premiums and Contributions
Rhode Island’s TDI and TCI programs are entirely employee funded and premiums and
contributions are paid into a single state fund. As of January 1, 2020, the contribution rate was
set at 1.3 percent of the individual’s first $72,300 in earnings. 45
43
Rhode Island Department of Labor and Training, Temporary Disability / Caregiver Insurance FAQ, Rhode Island,
https://dlt.ri.gov/tdi/faq/.
44
Rhode Island Department of Labor and Training, Temporary Disability / Caregiver Insurance FAQ, Rhode Island,
https://dlt.ri.gov/tdi/faq/.
45
Rhode Island Department of Labor and Training, Temporary Disability / Caregiver Insurance FAQ, Rhode Island,
https://dlt.ri.gov/tdi/.
18
Washington
Structure and Background
In July 2017, the state of Washington enacted legislation to implement a statewide paid family
and medical leave program. Pursuant to the timeline set out in Senate Bill 5975, the state started
collecting contributions for the fund through payroll deductions on January 1, 2019 and began
providing benefits January 1, 2020. Contributions are paid to—and benefits are drawn from—the
Family and Medical Leave insurance account that is housed in the state treasurer’s office.
However, the program is administered through the Employment Security Department, which is
the Department that also administers Washington’s unemployment and workforce systems.
The Commissioner of the Employment Security Department appoints an advisory committee that
is tasked with reviewing issues and topics related to paid family and medical leave. Specifically,
the committee is charged with providing comment on department rulemaking, policies, and other
aspects of paid family and medical leave, as well as conducting any studies the committee deems
necessary. The committee is made up of four members tasked with representing employees’
interests (appointed from a list of at least four names submitted by a recognized statewide
organization of employees), four members representing employers (appointed from a list of at
least four names submitted by a recognized statewide organization of employers), and two ex
officio members (one representing the Department and the other shall be the Ombuds for the
family and medical leave program).
The Office of the Paid Family and Medical Leave Ombuds is responsible for working to improve
the delivery of services and the effectiveness of Washington’s paid family and medical leave
program. They serve as an advocate for both employees and employers in solving problems and
in the parties’ interactions with the Employment Security Department. 46
Eligibility and Covered Employees
Covered employees are defined as any individual who is in the employment of any private
employer, the state of Washington or its institutions or agencies, or any unit of local government.
Employees of the federal government are not covered by this legislation, nor is the United States
of America considered to be an employer pursuant to this law. Furthermore, self-employed
individuals are not required to participate in Washington’s paid family and medical leave
program, but they do have the option to opt into the program. In order for a covered employee to
be eligible for benefits under Washington’s paid family and medical leave program, they must
have worked for at least 820 hours in employment during the qualifying period. 47
46
Office of the Paid Family and Medical Leave Ombuds, n.d., About the Office.,
https://paidleaveombuds.wa.gov/about.
47
Substitute Senate Bill 5975, http://lawfilesext.leg.wa.gov/biennium/2017-
18/Pdf/Bills/Senate%20Passed%20Legislature/5975-S.PL.pdf.
19
Duration of Leave
Covered employees who have met the eligibility requirements for paid leave under this program
are able to take up to a total of sixteen weeks of paid leave in a 52-week period. However, if the
leave is pregnancy related, such employees can take a total of eighteen weeks of paid leave. So
long as they do not exceed the combined maximum duration, an employee is eligible to take:
● up to 12 weeks of paid family leave to care for a family member with a serious
health condition, bond with a new child, or for qualifying military exigency; and
● up to 12 weeks of paid medical leave to care for an employee’s own serious health
condition (or 14 weeks if pregnancy related).
Under Washington’s paid family leave policy, a family member is defined as a child, grandchild,
grandparent, parent, sibling, or spouse of an employee.
Benefits
For the duration of their paid leave, a covered employee is eligible to receive a percentage of
such employee’s average weekly wage up to a weekly maximum amount of $1,000. There is no
waiting period required prior to receiving benefits during family leave for the birth or placement
of a child. However, for all other instances of paid leave, benefits are payable after a waiting
period of the first seven days of leave. 48
A covered employee’s weekly benefit is determined relative to how their average weekly wage
compares to the state average weekly wage. According to SB5975, an employee’s weekly benefit
is:
● 90 percent of the employee’s average weekly wage, if the employee’s weekly wage
is 50 percent or less of the state average weekly wage;
● The sum of 90 percent of the employee’s average weekly wage up to 50 percent
of the state average weekly wage and 50 percent of the employee’s average
weekly wage that is greater than 50 percent of the state average weekly wage, if
the employee’s average weekly wage is greater than 50 percent of the state average
weekly wage.
The Employment Security Department is the state agency responsible for administering
Washington’s paid family and medical leave program.
48
Substitute Senate Bill 5975, http://lawfilesext.leg.wa.gov/biennium/2017-
18/Pdf/Bills/Senate%20Passed%20Legislature/5975-S.PL.pdf.
20
Premiums and Contributions
On January 1, 2019, the Department began assessing premiums on employee and employers that
would fund the paid family and medical leave program. Pursuant to state law, the premium rate
for family leave benefits is set at one-third of the total premium rate and the premium rate for
medical leave benefits is set at two-thirds of the total premium rate. Beginning in 2022, the
Commissioner of the Department is charged with determining the percentage of paid claims
related to family leave benefits and the percentage of paid claims related to medical leave
benefits and adjusting the premium rates by the proportional share of paid claims.
From January 1, 2019 until December 31, 2020, the total premium rate is set at 0.4 percent of the
one percent of the individual’s first $137,700 in wages. 49
49
Washington Paid Family and Medical Leave Program, n.d., Employers, https://paidleave.wa.gov/employers/.
21
Overviews of Programs Not Yet Fully Implemented
Connecticut50
Background and Structure
Connecticut’s paid family and medical leave program, which was enacted in 2019, will begin
collecting premiums in January 2021 and paying benefits in January 2022. Connecticut law
allows for the utilization of either the state plan or a private plan. Employers are able to opt out
of the state plan if they have a program that is equal to––or more generous than––the state plan.
The Authority will coordinate with the Insurance Department to evaluate employers’ private
plans and ensure that they meet the standards and requirements set out in law.
Eligibility
In order to be eligible for family and medical leave insurance benefits, an individual must have
earned at least $2,325 during the highest earning quarter of their base period.51 Additionally, the
individual must be either presently employed, have been employed in the previous twelve weeks,
or is a self-employed individual or sole proprietor and Connecticut resident that has opted into
the program.52
Duration and Types of Leave
Connecticut’s Paid Family and Medical Leave Insurance Program provides up to twelve weeks
of family and medical leave compensation during a one-year period. This includes leave for a
covered employee’s serious health condition, to care for a family member with a serious health
condition, to serve as an organ or bone marrow donor, to bond with a new child, or for a
qualifying military exigency. 53
A covered employee is also eligible to receive an additional two weeks of compensation for a
serious health condition that results in incapacitation that occurs during a pregnancy.
Connecticut’s paid family and medical leave law defines a family member as a child, spouse,
sibling, grandparent, grandchild, parent, or an individual related by blood or affinity whose close
association to employee is the equivalent of a family relationship. 54
50
Connecticut Public Act No. 19-25, https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-
PA.pdf.
51
Paid Family and Medical Leave Insurance Authority, n.d., FAQs,
https://portal.ct.gov/DAS/Communications/PFMLI-Authority/FAQ.
52
Connecticut Public Act No. 19-25, https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-
PA.pdf.
53
Connecticut Public Act No. 19-25, https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-
PA.pdf.
54
Connecticut Public Act No. 19-25, https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-
PA.pdf.
22
Benefits
For the duration of their leave period, a covered employee is eligible to receive a weekly
compensation that is a proportion of the employee’s average weekly wage. A covered
employee’s weekly benefit rate is equal to:
● 95 percent of their average weekly wage if their wages are less than or equal to the
Connecticut minimum wage multiplied by 40; or
● 95 percent of the Connecticut minimum wage multiplied by 40 plus 60 percent of the
amount their weekly wage exceeds the minimum wage multiplied by 40.
The maximum benefit rate that a covered employee could receive is set at 60 times the
Connecticut minimum wage.55
Premiums and Contributions
Connecticut’s paid family and medical leave program is entirely employee funded. Each
employee as well as self-employed individuals and sole proprietors who are enrolled in the
program are required to contribute to the Family and Medical Leave Insurance Trust Fund at a
rate established by the Authority. Contributions cannot exceed 0.5 percent and up to the Social
Security contribution and benefit base. 56
Massachusetts
Background and Structure
On June 28, 2018, Massachusetts enacted legislation to implement a statewide paid family and
medical leave program with benefits beginning January 1, 2021. The legislation created the
Department of Paid Family and Medical Leave within the Executive Office of Labor and
Workforce Development to be responsible for implementing and administering the program. The
director of the Department is appointed by the Governor of Massachusetts.57
Massachusetts law allows for the utilization of either the state plan or a private plan. Employers
are able to apply to opt out of the state plan if they have a program that is equal to––or more
generous than––the state plan. In order to meet this criteria, all of the protections from the state
plan must still apply and both the duration of leave and benefit is equal to or greater than what
would be offered under the state plan. 58
55
Connecticut Paid Leave. n.d. For Employers. Connecticut Public Act No. 19-25,
https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-PA.pdf.
56
Connecticut Public Act No. 19-25, https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-
PA.pdf.
57
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121.
58
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121.
23
Eligibility and Covered Employees/Employers
In general, Massachusetts’ paid family and medical leave program covers all W-2 employees that
work in the state, including individuals that live in other states but work in Massachusetts. This
includes full-time, part-time, and seasonal workers. 1099-MISC workers who work in
Massachusetts but do not qualify as independent contractors are covered by the paid family and
medical leave program if they collectively make up more than 50 percent of their employer’s
workforce. Independent contractors and non-W-2 employees are able to opt in to the state plan if
their work is centered in Massachusetts.
In order to be eligible under this program, an employee must meet the financial eligibility
requirements of to be a covered individual under Massachusetts’ unemployment insurance
(Chapter 151A, Section 24(a)). 59
Duration and Types of Leave
Beginning on January 1, 2021, covered employees who have met the eligibility requirements for
paid leave under this program are able to take up to a total of 26 weeks of job-protected paid
leave in a 52-week period. So long as an employee does not exceed the combined maximum
duration, an employee is eligible to take:
● up to 12 weeks of paid family leave to care for a family member with a serious
health condition, bond with a new child, or for qualifying military exigency
● up to 20 weeks of paid medical leave to care for an employee’s own serious health
condition
● up to 26 weeks of paid military caregiver leave to care for a family member who is
a covered service member with a serious illness or injury
For the purposes of Massachusetts’ program, the definition of “family member” includes a
covered individual’s spouse, domestic partner, child, parent, grandchild, grandparent, or sibling
as well as the parent of a spouse or domestic partner of the covered individual and a person who
stood in loco parentis to the covered individual when the covered individual was a minor. 60
Benefits
No benefits are payable during the first seven calendar days of leave taken under this program,
but employees may use accrued sick or vacation pay or paid leave provided under an employer
policy during this time.61 A covered individual’s weekly benefit amount is the sum of:
59
Massachusetts General Laws, Part I, Title XXI, Chapter 151A, Section 24,
https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter151A/Section24
60
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121.
61
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121.
24
● 80 percent of the portion of a covered individual’s average weekly wage that is equal
to or less than 50 percent of the state average weekly wage; and
● 50 percent of the portion of a covered individual’s average weekly wage that is
greater than 50 percent of the state average weekly wage.
The weekly benefit amount is capped at $850 per week. The Department will annually adjust the
maximum weekly benefit amount to be 64 percent of the state average weekly wage. 62
The weekly benefit amount is reduced by the amount of wages or wage replacement that the
covered individual receives while on paid leave under this program for:
● Any government program or law, including but not limited to workers’ compensation,
(other than that for permanent partial disability incurred prior to the family or medical
leave claim, or any other state or federal temporary or permanent disability benefits
law); or
● A permanent disability policy or program of an employer.
However, the law specifies that weekly benefit amount cannot be reduced by the amount of wage
replacement that an employee receives from an employer’s temporary disability policy or paid
family or medical leave policy, unless the aggregate amount an employee would receive would
exceed the employee’s average weekly wage. Employers that make payments to a covered
employee who takes paid family or medical leave will be reimbursed out of any benefits due
from the trust fund.63
Premiums and Contributions
Beginning on January 1, 2019, employers and employees began making contributions to the
Family and Employment Security Trust Fund. The sums received by and held in this non-
reverting fund are used both to pay benefits under this program as well as to pay for the
administrative costs of the Department. The Trust Fund is required to maintain an annualized
amount of at least 140 percent of the previous fiscal year’s expenditure for benefits paid and for
the administration of the Department. The administration costs of the Department are prohibited
from exceeding 5 percent of the amount deposited in the Trust Fund for each fiscal year
following 2021.
Family leave is entirely employee funded, while medical leave is jointly funded by employees
and employers (40 percent employee funded and 60 percent employer funded). The contribution
62
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121
63
Massachusetts Acts of 2018, Chapter 121, https://malegislature.gov/Laws/SessionLaws/Acts/2018/Chapter121
25
rate is adjusted annually by the director. For 2020, the payroll tax is 0.75 percent of wages up to
$132,900.64
Additionally, employers that employ fewer than 25 employees in Massachusetts are not required
to pay the employer portion of premiums for family and medical leave. Employees of these small
businesses will contribute to the Trust Fund and remain covered by the program.
Oregon
Structure
Oregon’s Employment Department is currently implementing the state’s paid family and medical
leave insurance program and will be responsible for administering the program. As the program
was only recently enacted, the Department will begin receiving contributions from a payroll tax
by January 2022 and will begin paying benefits by January 2023. Oregon law allows for the
utilization of either the state plan or a private plan. Employers are required to participate unless
the employer has an equivalent paid family and medical leave program that has been approved
by the Employment Department.
Eligibility
In order to be eligible for family and medical leave insurance benefits, an individual must have
contributed to the Paid Family and Medical Leave Insurance Fund and earned $1,000 or more in
the year prior to their claim. Self-employed individuals and independent contractors are able to
opt into the program.65
Duration and Types of Leave
Covered individuals are able to qualify for up to 12 weeks of family and medical leave insurance
benefits per year. The types of job-protected leave covered under this program are medical leave
for one’s own serious health condition, family leave for the care of a family member’s serious
health condition or to bond with a new child, and safe leave. Safe leave pertains to leave taken
for reasons related to domestic violence, harassment, sexual assault, or stalking.
Covered individuals may take an additional two weeks for limitations related to pregnancy,
childbirth, or a related medical condition.
Covered individuals may also be eligible for an additional four weeks of unpaid family leave to
care for a sick or injured child, military exigencies, and the death of a family member if they
meet certain requirements.
64
Department of Family and Medical Leave., n.d., Family and medical leave contribution rates for employers,
https://www.mass.gov/info-details/family-and-medical-leave-contribution-rates-for-employers.
65
80th Oregon Legislative Assembly, 2019 Regular Session, House Bill 2005,
https://olis.leg.state.or.us/liz/2019R1/Downloads/MeasureDocument/HB2005/Enrolled.
26
Oregon’s paid family and medical leave law uses an expansive definition of “family member”
relative to that used in most other states. Under this program, the definition of “family member”
includes a child, spouse, domestic partner, parent, grandparent, grandchild, sibling as well as any
individual related by blood or affinity whose close association is the equivalent of a family
relationship.66
Benefits
A covered employee’s weekly benefit is determined relative to how their average weekly wage
compares to the state average weekly wage. According to Oregon law, a covered individual’s
weekly benefit is:
● 100 percent of the employee’s average weekly wage if their average weekly wage is
less than or equal to 65 percent of the state average weekly wage;
● The sum of 65 percent of the average weekly wage and 50 percent of the employee’s
average weekly wage that is greater than 65 percent of the average weekly wage, if
the eligible employee’s average weekly wage is greater than 65 percent of the state
average weekly wage.
Oregon law sets the maximum weekly benefit amount at 120 percent of the average weekly wage
and the minimum weekly benefit amount at five percent of the average weekly wage.67
Premiums and Contributions
Beginning January 1, 2022, the Department will begin collecting contributions from the
employees and employers that jointly fund the program. On an annual basis, the Employment
Department is responsible for setting the total payroll tax rate, which cannot exceed one percent
of the worker’s first $132,900 in wages. Employees are responsible for contributing 60 percent
of this tax while employers contribute 40 percent. However, employers with fewer than 25
employees are not required to pay the employer contribution. For those small businesses that do
pay their share of the contribution, Oregon offers grants to offset some of the employer’s costs.
Specifically, qualifying small businesses can receive up to $3,000 to offset the cost of hiring
temporary employees and up to $1,000 for the reimbursement of wage-related expenses that are
incurred while an employee is out on leave. 68
66
80th Oregon Legislative Assembly, 2019 Regular Session, House Bill 2005,
https://olis.leg.state.or.us/liz/2019R1/Downloads/MeasureDocument/HB2005/Enrolled.
67
80th Oregon Legislative Assembly, 2019 Regular Session, House Bill 2005,
https://olis.leg.state.or.us/liz/2019R1/Downloads/MeasureDocument/HB2005/Enrolled.
68
80th Oregon Legislative Assembly, 2019 Regular Session, House Bill 2005,
https://olis.leg.state.or.us/liz/2019R1/Downloads/MeasureDocument/HB2005/Enrolled.
27
Impacts of Paid Family and Medical Leave Programs
A recent study of paid family and medical leave conducted by the Congressional Research
Service, a nonpartisan staff to congressional committees and Congress, demonstrates that there
are a number of potential benefits (ranging from stronger labor force attachment to greater
income stability) as well as potential costs (ranging from contributions to expenses related to
employees taking leave). 69 In seeking to understand and quantify the impact of paid family and
medical leave programs, researchers have studied the effects of implemented programs both
nationwide and internationally. This section will summarize key findings to highlight the
potential effects of a paid family and medical leave program in Virginia and provide an
estimated cost to employers and employees.
Advantages of Paid Family and Medical Leave Programs
Research on other paid family and medical leave programs suggests several key economic
benefits for employers––including improved increased employee productivity and greater labor
force attachment for women––as well as both economic and health benefits for workers.
Additionally, the establishment of a statewide paid family and medical leave program would
provide cost savings to those employers that currently provide paid leave to its employees. In
conversations with businesses that continue to pay their employees while they are out on medical
or family leave, those employers explained that a statewide paid family and medical leave
program funded by contributions would ultimately save their businesses money.
First, it is worth offering examples of the macroeconomic effects of paid family and medical
leave. The passage of the federal Family and Medical Leave Act, a study written by Christopher
Ruhm and Jackqueline Teague sought to explore the economic impact of mandated family leave
policies.70 This study found that “leave entitlements of moderate duration (especially when paid)
operate to raise employment levels”. 71 Additionally, an analysis of the effects of paid leave
programs on unemployment rates conducted by Danielle Corley, Sunny Frothingham, and Kate
Bahn at the Center for American Progress illustrate that states that implemented paid family and
medical leave programs did not experience a rise in unemployment one year later. 72 These
findings as well as the impacts of paid family and medical leave on labor force participation and
productivity (described below) suggest that paid family and medical leave policies could support
69
Donovan, Sarah A., 2020, "Paid Family and Medical Leave in the United States," Congressional Research
Service, February 19, https://crsreports.congress.gov/product/pdf/R/R44835.
70
Ruhm, Christopher J., and Jackqueline L. Teague, 1995, Parental Leave Policies in Europe and North America,
Research Paper, Cambridge, MA: National Bureau of Economic Research, Inc.
71
Ruhm, Christopher J., and Jackqueline L. Teague, 1995, Parental Leave Policies in Europe and North America,
Research Paper, Cambridge, MA: National Bureau of Economic Research, Inc.
72
Corley, Danielle, Sunny Frothingham, and Kate Bahn, 2017, "Paid Sick Days and Paid Family and Medical Leave
Are Not Job Killers," Center for American Progress, January 5,
https://www.americanprogress.org/issues/women/reports/2017/01/05/295908/paid-sick-days-and-paid-family-and-
medical-leave-are-not-job-killers/.
28
overall economic growth, as suggested in a 2017 report from an American Enterprise Institute-
Brookings Working Group report.73
A 2018 report from an American Enterprise Institute-Brookings Working Group discussed the
potential economic effects of paid family and medical leave. The AEI-Brookings report notes
that paid leave programs could reduce productivity losses caused by presenteeism, which is
defined as when an employee is present at their job but is unable to perform their work to the
best of their abilities due to an injury or medical condition. 74 The report references a study that
found that “the cost associated with performance based work loss or ‘presenteeism’ greatly
exceeded the combined costs of absenteeism and medical treatment combined”. 75 The AEI-
Brookings report explains that the loss of productivity caused by presenteeism could be
combated by paid family and medical leave programs, which would encourage workers to seek
necessary medical treatment when it is needed to address a health problem rather than continue
to work through their condition due to financial insecurity or an inability to take leave. This
example illustrates one area in which paid family and medical leave could provide benefit to
businesses by way of enhancing its long-term output and productivity.
There is a considerable amount of research demonstrating the positive relationship between
women’s access to paid family leave programs and labor force participation levels. According to
a 2012 Rutgers study, paid family leave “may strengthen women’s workforce attachment and
workforce stability by allowing women to retain employment both before and after a birth,
particularly employment with the same employer and at the same, or better, wage”. 76 A more
recent study conducted by Kelly Jones and Britni Wilcher further illustrates the positive effects
that paid family and medical leave could have on labor force participation rates amongst women.
Analyzing data from California and New Jersey, Jones and Wilcher find that state paid family
leave programs can reduce the negative impact of having a child on women’s labor force
participation by up to 20 percent. 77
73
Mathur, Aparna, Isabel V. Sawhill, Heather Boushey, Ben Gitis, Ron Haskins, Doug Holtz-Eakin, Harry J.
Holzer, et al., 2017, "Paid Family and Medical Leave," AEI – Brookings, May, https://www.brookings.edu/wp-
content/uploads/2017/06/es_20170606_paidfamilyleave.pdf.
74
Mathur, Aparna, Isabel V. Sawhill, Heather Boushey, Ben Gitis, Ron Haskins, Doug Holtz-Eakin, Harry J.
Holzer, et al., 2018, "The AEI-Brookings Working Group Report on Paid Family and Medical Leave," AEI –
Brookings, September, https://www.aei.org/wp-content/uploads/2018/09/The-AEI-Brookings-Working-Group-
Report-on-Paid-Family-and-Medical-Leave.pdf.
75
Collins, James J., Catherine M. Baase, Claire E. Sharda, Ronald J. Ozminkowski, Sean Nicholson, Gary M.
Billotti, Robin S. Turpin, Michael Olson, and Marc L. Berger, June 2005, "The assessment of chronic health
conditions on work performance, absence, and total economic impact for employers." Journal of Occupational and
Environmental Medicine 547-57.
76
Houser, Linda, and Thomas P. Vartanian, 2012, "Pay Matters: The Positive Economic Impacts of Paid Family
Leave for Families, Businesses and the Public," Rutgers Center for Women and Work, January.
https://smlr.rutgers.edu/sites/default/files/images/CWW_Paid_Leave_Brief_Jan_2012_0.pdf.
77
Jones, Kelly, and Britni Wilcher, 2019, Reducing Maternal Labor Market Detachment: A Role for Paid Family
Leave, Working Paper 2019-07, Washington, DC: American University.
29
A statewide paid family and medical leave program would offer numerous benefits to
employees, particularly to those who do not currently have access to such leave. At its most basic
level, a statewide paid family and medical leave program is likely to benefit the economic
security of workers.
In addition to these benefits, researchers have argued that the increased health outcomes are
associated with economic benefits. Firstly, and as has been previously described, access to paid
family and medical leave enables individuals who are suffering from a serious health condition
to take leave and seek necessary medical treatment without fear of sacrificing their economic
security. Secondly, access to paid family leave is associated with better infant and maternal
health. Research conducted by Jody Heymann, et al. found that 10 weeks of paid maternity leave
was associated with statistically significant lower neonatal and infant mortality rates. 78 A study
written by Ariel Pihl and Gaetano Basso further found that infant hospitalizations decreased––
particularly with regards to outcomes positively affected by improved home-care––following
implementation of California’s paid leave program. 79 These studies are just a few select
examples of the studies that have been conducted on these topics.
According to the U.S. Bureau of Labor Statistics (BLS), there are disparities in access to paid
family and medical leave by race and ethnicity. In this study published in January 2019, the most
statistically significant finding was that Hispanic workers have lower rates of access to paid
family and medical leave access compared to White non-Hispanic workers. Additionally, this
BLS study finds evidence that Black non-Hispanic have less access to paid family and medical
leave than White non-Hispanic workers. These findings illustrate the positive economic impact
that the implementation of a statewide paid family and medical leave program would have on
reducing disparities in access to paid leave by race, ethnicity, and income level, thereby
supporting greater equity in health and economic security. 80
Costs of Paid Family and Medical Leave Programs
The primary economic costs that would be caused by a paid family and medical leave program
include an increased tax burden on employees and employers, administrative costs to employers,
and potential business disruptions.
78
Heymann, Jody, Amy Raub, and Alison Earl. 2011. "Creating and Using New Data Sources to Analyze the
Relationship Between Social Policy and Global Health: The Case of Maternal Leave." Public Health Reports.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3150137/pdf/phr126s30127.pdf.
79
Pihl, Ariel Marek, and Gaetano Basso. 2018. "Did California Paid Family Leave Impact Infant Health?" Journal
of Policy Analysis 38 (1): 155-180. https://onlinelibrary.wiley.com/doi/epdf/10.1002/pam.22101.
80
U.S. Bureau of Labor Statistics, 2019, "Racial and ethnic disparities in access to and use of paid family and
medical leave: evidence from four nationally representative datasets." U.S. Bureau of Labor Statistics Monthly
Labor Review, January, https://www.bls.gov/opub/mlr/2019/article/racial-and-ethnic-disparities-in-access-to-and-
use-of-paid-family-and-medical-leave.htm.
30
As is illustrated in the experiences of other states, there are several variables that influence how
many dollars would need to be contributed and placed into a trust fund from which benefits
would be paid out to covered employees who qualify for paid family and medical leave. The
total amount that would be required to maintain solvency of the trust fund dictates how the
payroll tax rate that employers and employees would be required to pay into the fund.
The specifics of any enacting legislation would have a significant impact on the necessary
amount to keep the trust solvent and likewise on the payroll tax rate. These determinants include:
1. Eligibility requirements. Expanding eligibility requirements will shift the duration
and utilization rate of the program. Such considerations as definition of family
members, minimum average earned income, and length of employment are all
considerations when developing an economic model.
2. Pool Size and Risk- Several states that have employer contributions have exemptions
for small businesses. The larger the pool of workers, the lower the risk of employees
utilizing benefits, which can drive down individual contribution rates.
3. The duration of paid leave allowed under the law. This component will determine
the maximum amount of time that a covered employee could take paid leave. As a
result, increases to the duration of paid leave will increase the amount of funds
needed to be contributed to the fund (likewise, decreases to the duration of paid leave
will decrease the amount).
4. The wage replacement rate that will determine the benefit amount. Similar to the
effect that the duration of paid leave has on the contribution rate, a more generous
wage replacement rate will result in a greater amount of funds needed to be
contributed to the fund, and vice versa. Additionally, the maximum benefit amount
allowed under the law would also have a similar effect.
5. Whether or not there is an annual maximum contribution amount. Many states
have implemented a ceiling on the amount of taxable wages or have outright capped
the amount an individual is required to contribute.
6. The framework that will determine the Commonwealth’s role and
responsibilities for implementing and administering the program. Assuming that
the administration of the program is self-funded using resources from the fund, it will
be necessary to ensure that the incoming contributions are enough to offset the
amount being paid to cover the administrative costs.
In addition to the variables that are controlled by the program framework set out in legislation,
several factors that also affect these calculations. These factors are largely related to
demographic and economic data, such as who would be covered by the program and their annual
wages. Relatedly, the utilization rate of paid leave will impact these costs. The utilization rate
31
will need to be predicted in advance of benefits being officially paid out in order to garner the
initial period of contributions. However, once benefits begin to be paid out, the contribution rate
for programs in other states is typically based on the program’s expenditure amounts and
utilization in the previous year.
In order to quantify the precise tax burden that would be caused by a statewide paid family
and medical leave program, the Commonwealth would need to procure an independent
actuarial study. The actual premiums and amount necessary to be held in the fund would be
based on these actuarial principles and, in out-years, on real usage and demand for the program.
However, an initial estimation of this cost was calculated as part of this study to provide a
preliminary understanding. This estimation uses BLS Average Annual Employment 2019 data,
for which employment was 3,938,841 individuals. This data also indicates that for these
employees, the average employee wage was $60,200 and the total annual wages were
$237,119,277,133. In order to calculate an estimated amount of funding in the trust fund and
contributions, certain assumptions needed to be made regarding the program’s utilization rate
and the average duration of leave taken. For the purposes of this estimation, these calculations
assumed that the medical leave utilization would be 3 percent and that the family leave
utilization rate would be 1 percent. Additionally, these calculations assumed that the average
duration taken for medical leave would be eight weeks and for family leave would be ten weeks.
Conversations with experts and staff in other states regarding the projections calculated by VEC
for the 2020 Fiscal Impact Statement indicated that the average duration of leave was higher than
would likely be expected and that the utilization rate was lower than would likely be expected.
These assumptions were further based off of findings regarding other programs’ estimated and
realized utilization rates and durations.
The total, estimated amount needed for the trust is approximately $1.2 billion. The estimated
premium rate for this model would be .50 percent, which would be split 50-50 between
employers and employees under the framework set out in the legislation introduced in the 2020
General Assembly Session. For example, an employee that earns $60,000 annually would pay a
contribution rate of .25 percent, which equal approximately $2.89 per week or $150.35 annually.
The other .25 percent (or $2.89 per week) would be covered by the employer of the covered
individual.
Several states with paid family and medical leave programs that are jointly funded by employers
and employees have taken steps to decrease the tax burden borne by small businesses. As
described in Section 2 (“An Overview of Programs Implemented in Other States”),
Massachusetts, Washington, and Oregon have all exempted small businesses from having to pay
their share of premiums. However, their employees still contribute to the fund and are eligible to
take paid leave after qualifying events. Massachusetts and Oregon exempt businesses from the
payroll tax requirements if they have fewer than 25 employees while Washington exempts
32
businesses with fewer than 50 employees. It is important to note that both Washington and
Oregon offer incentives to smaller employers who choose to contribute despite qualifying for the
exemption. These incentives are intended to help offset technology and administrative costs.
The administrative costs to employers associated with paid family and medical leave programs
are caused by the changes that would be necessary to ensure compliance with the law and the
proper withholding of payroll tax contributions. The administrative costs to each employer will
vary based on individual circumstances. Additionally, available data from other states illustrates
this range of impacts. One study conducted by the New Jersey Business and Industry Association
indicated that smaller businesses face higher administrative costs relative to other sized
employers, with 54.7 percent of small businesses experiencing higher costs relative to 36 percent
of medium-sized businesses and 41.2 percent of large businesses.81 Such costs to Virginia
employers are indeterminate. These administrative costs are similar to those associated with
other changes in payroll taxes that an employer is obligated to pay, such as deductions paid
towards the unemployment insurance fund. Currently in the Commonwealth, when the payroll
tax that is paid towards unemployment insurance changes in response to trust fund balances,
employer layoff numbers and overall pool tax, employers must adapt. Oftentimes, this results in
changes to the payroll system or software.
Lastly, there are some economic costs associated with potential business disruptions. These
include the loss of an employee who takes leave, the need to hire and train a temporary employee
to fill in, to pay for overtime for employees filling in, and sometimes to retrain returning
employees. However, it should be noted that these costs are not solely and uniquely caused by
the establishment of a statewide paid family and medical leave systems, but rather are costs
inherently associated with any incident that causes an employee to take leave, paid or unpaid.
The New Jersey Business and Industry Association study indicated that costs spent due to
overtime pay had ranging effects on different sized employers, with 34.9 percent of small
businesses, 73.1 percent of medium sized employers, and 59.4 percent of large employers
experiencing increased costs due to overtime pay.82 These numbers are likely associated with the
study’s finding that New Jersey businesses overwhelmingly cover work for an employee on
leave by temporarily assigning that work to other employees. 83 While there are certainly
instances when these savings do not cover the complete cost of potential business disruptions,
81
Ramirez, Miriam, 2012, "New Jersey Business and Industry Association: Impact of Paid Family Leave on New
Jersey Businesses," Bloustien School of Planning and Public Policy, https://bloustein.rutgers.edu/wp-
content/uploads/2012/03/Ramirez.pdf.
82
Ramirez, Miriam, 2012, "New Jersey Business and Industry Association: Impact of Paid Family Leave on New
Jersey Businesses," Bloustien School of Planning and Public Policy, https://bloustein.rutgers.edu/wp-
content/uploads/2012/03/Ramirez.pdf.
83
Ramirez, Miriam, 2012, "New Jersey Business and Industry Association: Impact of Paid Family Leave on New
Jersey Businesses," Bloustien School of Planning and Public Policy, https://bloustein.rutgers.edu/wp-
content/uploads/2012/03/Ramirez.pdf.
33
some businesses can offset some costs because they do not pay for the wages of employees while
they are on paid leave.
Administrative Impact to the Commonwealth of Virginia (from the “2020 Fiscal Impact
Statement” for House Bill 825, prepared by the Department of Planning and Budget) 84
It is anticipated that implementing the new family and medical leave program will have impacts
on the Commonwealth’s technology infrastructure that are yet to be determined. Impacts are
expected to occur for systems that manage time, labor, payroll, and benefits offered. The
Commonwealth is currently in the process of developing the new Cardinal Human Capital
Management (HCM) system, which is expected to be deployed by October 2021. Therefore, if
any immediate changes to this system are necessary, such changes likely would cause significant
disruption to the project schedule and cost.
The Department of Human Resource Management’s Personnel Management Information System
(PMIS) and the Department of Account’s central payroll and leave system, Commonwealth
Integrated Payroll Personnel System (CIPPS), will be decommissioned and are expected to be
replaced by the new Cardinal HCM system in October 2021, based upon the current project
schedule. Technology staff are currently dedicated to day-to-day operational systems
maintenance and critical Cardinal transition tasks. Consequently, all labor-intensive system
reconfigurations to these antiquated, legacy systems (PMIS and CIPPS) have been discontinued.
Therefore, the systems changes that would be necessary to implement this legislation cannot be
implemented in PMIS or CIPPS. Any system changes to the new Cardinal HCM system would
need to wait until the new system is implemented to avoid disruption to the system development
schedule.
In addition to these statewide systems, there are also multiple state agencies that use their own
systems for time, labor, payroll, and benefits, including some that have been purchased with
general fund appropriations and others that have been purchased with state non-general fund or
federal fund revenues. A cost estimate for the impact to these agencies is currently indeterminate.
The statewide administrative impact and impact to the Department of Human Resource
Management and the Department of Accounts is also indeterminate.
84
Department of Planning and Budget, 2020 Fiscal Impact Statement, House Bill 825, https://lis.virginia.gov/cgi-
bin/legp604.exe?201+oth+HB825F122+PDF.
34
Operating Plan
In conducting this study, the Secretary of Commerce and Trade and the Governor’s Chief
Workforce Advisor considered several options for how to best administer a statewide paid family
and medical leave program. As is detailed in Section 2 (“An Overview of Programs Implemented
in Other States), other states have implemented a variety of operating plans to administer their
program, each of which is significantly influenced by their existing institutions and benefit
programs. Some states––such as California and Rhode Island––built upon their existing
temporary disability insurance programs to deliver paid family leave as well. Others––such as
Washington state and the District of Columbia––incorporated the administration of their paid
family and medical leave program into the responsibilities of the department that administers
their unemployment systems, as they did not have the existing policy foundation from temporary
disability insurance.
Based on the research of other states’ programs as well as the existing resources and agency
structures in the Commonwealth of Virginia, it is recommended that any statewide paid family
and medical leave program be administered under the Virginia Employment Commission, but in
a separate department from that which handles unemployment insurance. This option would
provide the Commonwealth with the greatest cost-savings related to standing up the program’s
infrastructure by aligning the contributions system with the existing system as much as allowed
by the U.S. Department of Labor.
Below is an operating plan for administering a statewide paid family and medical leave
program, should such a program be enacted into law.
Currently, the Virginia Employment Commission (VEC) oversees a variety of U.S. Department
of Labor programs such as the Virginia Unemployment Insurance Program (UI), Workforce
Innovation Opportunity Act Title III Wagner Peyser, Jobs for Veterans State Grant, and
Workforce Information Grants for States. VEC is a non-general fund state agency that receives
all of its funding from the federal government and employer contributions into the
Unemployment Insurance Trust Fund. The Virginia Unemployment Insurance Program is a joint
state-federal program that provides cash benefits to eligible workers who have been dislocated
from their jobs. Each state administers a separate unemployment insurance program, but all
follow the same guidelines established in federal law.
By law, employers are required to pay 100 percent of all employees’ unemployment insurance
contributions to the VEC. Contributions are calculated based on an individual's wages and the
employer tax rate, which can vary by pool tax, experience tax and fund building tax. The
35
Commissioner of the VEC sets the tax rates each year. Employers are familiar with the process
of providing payroll data on wages and calculating contributions that are paid quarterly. Paid
family and medical leave divisions such as claims, contributions, compliance, fraud, technology,
appeals, and outreach are very similar divisions to the current organization structure of VEC.
Similar to unemployment insurance, the Commissioner of the VEC should provide
administrative oversight over the Paid Family Medical Leave Program. The Commissioner,
Deputy Commissioner and the Confidential Assistant for Policy and Legislation are appointed by
the Governor every four years. To advise the Commissioner, a Paid Family and Medical
Leave Board should be established. This Board may include small and large business
owners, business organizations, General Assembly members, government officials, labor,
and citizen members. Members of this Board would be appointed by the Governor and
General Assembly.
An office of the Paid Family and Medical Leave Ombuds should be created and physically
located at the Virginia Employment Commission. The Ombuds would be appointed by the
Governor and serve as an independent third party to investigate, report, and help settle
complaints from employers and employees. This position will be lead staff to the Paid Family
and Medical Leave Board.
The Paid Family Medical Leave Program will be overseen by a Deputy Commissioner who
reports directly to the Commissioner. Due to similarities between the Unemployment Insurance
Program and Paid Family Medical Leave, many roles and responsibilities between the programs
will be similar. Leveraging the agency’s current talent and reducing duplicative services will be a
cost savings for both benefits programs. The US DOL establishes guidelines that the
unemployment insurance program must follow and combining funds, staff and technology is
prohibited.
The following departments are recommended to run an effective and efficient Paid Family Leave
Program:
● Contributions: This department will work with employers on calculations of
employer and employee contributions, collect payroll data on wages of individuals,
collect contributions quarterly from employers and employees, cross check data
collected for UI, and provide outreach and support to employers.
● Benefits/Claims: This department would verify benefit determinations, collect needed
documentation, notify employers of employee requests, process claims, and distribute
benefits through electronic transfer or other means. To support this department, a call
center will be contracted to handle questions and claims submitted by phone.
● Compliance/Fraud: Investigators will be hired to review cases that are fraudulent and
make sure businesses are abiding the law.
36
● Appeals: Employees that are denied benefits may enter into an appeals process.
● Technology: A new technology will be created to accept employer and employee
contributions, access benefit applications, upload documents, distribute benefits, and
communicate with employees on balances, payouts, and denials. Initially, this
department will include leadership and potentially contracted staff to develop and
integrate a new system.
● Outreach/Communications: This department will communicate with employees and
employers about annual rate changes, develop and update FAQs and general
resources, engage communities that are exempted from contributions and encourage
participation in the program, and provide reports to the Governor and General
Assembly members.
● Audit/Data Collection: An internal auditor will review internal processes, evaluate
compliance, and inspect a random sample of benefits for accuracy. A report from the
internal auditor will be presented to the Board annually. Data collection will be
needed to set annual rates, examine uptake trends, and calculate any additional
economic impacts.
● Administration: Accounting, human resources, maintenance, procurement and other
administrative responsibilities will be needed and can be shared with other divisions
at VEC.
Staffing Needs
An estimated 250 people are needed to administer a successful Paid Family and Medical Leave
Program, based on the average number of VEC employees who work on the unemployment
system. Overall, administrative tasks such as accounting, human resources, and procurement can
be shared amongst the other divisions at VEC. Unlike the Paid Family Leave Program,
unemployment insurance staffing needs can shift with the economy. By leveraging some of
VEC’s current staff in similar departments, cost savings would be achieved.
An alternative to fully staffing the Paid Family and Medical Leave Program would be to contract
with vendors to provide services such as benefit claims processing, call center work, and
technology support. Connecticut is preparing to use this model for cost savings. This option
could be more affordable if more states implement PFML programs using a shared service
model.
Paid Family and Medical Leave Trust Fund
The Paid Family and Medical Leave Trust Fund should be created in the state treasury as a
special, nonreverting fund and established on the books of the Comptroller. This fund will
receive employer and employee contributions, collect interest and earnings, disburse benefits,
and support start-up and ongoing administrative costs. To determine the full amount needed in
the Trust, a full, independent actuarial study should be conducted within the first six
37
months after the bill has passed to ensure that the Program has sufficient time to project
the necessary funds for a solvent trust and determine the payroll tax rate necessary to
achieve such amount.
Annually, no later than December 1, the Commissioner shall calculate and announce the annual
employee and employer contribution rate for the following calendar year. The annual
contribution rate should be calculated so the Trust’s total amount would be equal or greater than
140 percent of the previous year’s expenditures for benefits and administrative costs.
Both covered employees and employers should jointly fund the program. Employers are
required to deduct from employees’ wages the amount established by the Commissioner or a
lesser percentage if agreed upon by the employer and employee. Both employee and employer
contributions are remitted to the Fund through a technology system quarterly. Premiums should
be paid into the Paid Family and Medical Leave Trust at least one year in advance of
awarding benefits.
To develop and build the infrastructure of the Program, several states have used state treasury
loans to pay for new technology and start-up staffing costs. These loans are paid back within the
first several years of the program through increased contribution rates established through
actuarial studies.
The Trust should also provide grants that support eligible small businesses by offsetting some
of the administrative, technology, and personnel replacement costs that are incurred due to
the implementation and utilization of a statewide paid family and medical leave program.
Technology Needs
In 2019, the VEC started a modernization of its technology system that was disrupted by the
unprecedented number of claims in March 2020 due to COVID-19. This upgrade will create a
more citizen-centered technology used to track claims and submit documentation. The new
upgrades and technology might provide similar functionality needed for the Paid Family and
Medical Leave technology and can be replicated to build a similar program.
After an initial conversation with the U.S. Department of Labor, the current unemployment
insurance tax system that collects contributions can be used to collect Paid Family Medical
Leave contributions. These contributions will come from employers through one technology and
then be distributed into the two different trust funds. A new technology will need to be built to
file a claim, upload documentation and finance information, track progress of approval and
benefit allocations, distribute funds and communicate through multiple means such as text, chat
and email.
38
Outreach and Education
Many states and workgroup members agreed that developing an outreach and education plan is a
must. This plan should include multiple ways to communicate to employers and employees about
the new benefit system, potential contributions, timeline, and eligibility requirements.
Leveraging connections of chambers of commerce, trade associations, nonprofit organizations,
and labor unions, a statewide communication strategy should be developed and implemented.
Other states have required in regulations or law that an employer must communicate to
employees about the new Paid Family and Medical Leave Program. This communication could
include written notice upon hiring and annually, displaying and maintaining a poster with
employee rights, and having employees sign documents demonstrating an understanding of the
benefits system. All materials need to be in multiple languages and in an accessible form for
people with disabilities.
Regulations and Business Practices
The Virginia Employment Commission will promulgate regulations to implement and operate
the paid family and medical leave program. This rulemaking process will include extensive
public comment from businesses and employees. This process will be essential for
operationalizing the program set out in language in a manner that fits the needs of both
employees and employers.
Many states that were interviewed encouraged any state developing a new Paid Family and
Medical Leave program to create policies, procedures, and business practices that are
similar to other programs such as the Federal Family and Medical Leave Act and
unemployment insurance. This does not necessarily mean the same guidelines and eligibility,
but using the same terminology, forms, technology, and reporting will help employers navigate
the new program.
Enforcement/Civil Penalties
Should the Commonwealth adopt certain exemption and waiver policies similar to Washington,
Oregon, and Massachusetts, agency staff will develop processes for ensuring proper compliance
with paid family and medical leave policies under the Program. This could include reviewing
waivers submitted from employers that provide paid time off programs that are equal to or
more generous than the Program. These procedures could also include oversight of small
businesses that may be exempt from paying the employer share of the contribution to
guarantee proper compliance with such exemption. The specific details of such procedures––
including any reporting and documentation requirements––can be established and set out in
regulations to best fit the needs of employers and employees.
39
Oversight and Program Integrity
In order to guarantee and verify the necessity of paid leave claims under the program, employees
will be required to submit detailed documentation along with their claim. As is practiced in other
states with existing programs, claims must include medical certification forms from a physician
or practitioner indicating a determination that the employee––or the family member of an
employee––has a serious medical condition that qualifies them for a paid leave. This
documentation should indicate the duration of leave that is necessary so that the amount of paid
leave that is approved is specific to the employee’s true need.
Other states have articulated that fraud is not a rampant problem, and employing these best
practices in the Commonwealth would provide an effective safeguard against abuse of the
program. These documentation requirements, coupled with the development of an efficient
system for thoroughly reviewing claims and staff dedicated to investigating and eliminating any
suspected cases of abuse, will ensure the program’s integrity.
Reporting
By December 1 each year, the Commissioner shall submit a report to the Governor and General
Assembly which should include:
1. The total amount of family and medical leave insurance benefits paid by the
Commission during the previous fiscal year;
2. The total amount remaining in the Fund at the close of such fiscal year;
3. The total amount equal to 140 percent of the previous fiscal year's expenditure for
family and medical leave insurance benefits paid and for the administration of the
family and medical leave insurance program;
4. The amount by which the total amount remaining in the Fund at the close of the
previous fiscal year is less than or greater than 140 percent of the previous fiscal
year's expenditure for family and medical leave insurance benefits paid and for the
administration of the family and medical leave insurance program; and
5. The amount by which the contribution rate shall be adjusted to ensure that the Fund
shall maintain or achieve an annualized amount of not less than 140 percent of the
previous fiscal year's expenditure for family and medical leave insurance benefits
paid and for the administration of the family and medical leave insurance program.
40
Implementation Plan
The following implementation plan has been developed after consulting and researching other
states who have implemented paid family and medical leave programs with similar
administrative schemes. The implementation timeline detailed below spans three years and is
designed to ensure a smooth launch of the program for the Commonwealth, employers, and
employees. However, one consistent theme from discussions with other states is the value in
allowing for ample time to develop the program’s infrastructure and adapt to changing
circumstances. The complexity and details of any final legislation or policy could feasibly alter
the design of an implementation plan.
Fiscal Year 1 of the implementation timeline focuses primarily on ensuring the key department
leadership is in place to commence hiring of personnel responsible for managing
communications and the contributions system. Additionally, Fiscal Year 1 will see the
establishment of a Paid Family and Medical Leave Board that will serve as an advisory body.
The various perspectives represented on this body––ranging from business and labor
representatives to government officials and legislators––will provide essential insights to the
implementation of the Program, the development of regulations, and the launching of a
communications plan to educate businesses and workers of their responsibilities and the
Program.
Fiscal Year 2 of the implementation timeline shifts the focus to building out the benefits system
and hiring the necessary personnel to manage benefits and claims. Division staff will continue to
execute the communications and outreach plan in order to raise awareness of the program,
answer questions, and receive feedback from stakeholders on the implementation of the program.
Also, in Fiscal Year 2, covered employees and employers will begin to contribute to the Fund
beginning January 1.
Fiscal Year 3 of the implementation timeline consists of the final preparations for the launch of
the benefits system and the full implementation of a statewide paid family and medical leave
program. This third phase of hiring focuses on meeting the remaining programmatic needs of the
Department necessary for successful administration and oversight of the benefits program.
Fiscal Year 1 Personnel: Phase One of hiring prioritizes hiring agency leadership
that will be essential in overseeing the implementation of a paid
family and medical leave program. This includes hiring:
● A Deputy Commissioner of the Division of Paid Family and
Medical Leave
● A director of communications and external affairs
41
● A director to oversee the development and implementation
of the contributions and benefits systems
● An Ombuds serves as an independent third party who
investigates, reports, and helps settle complaints from
employers and employees. Additionally, the Ombuds will
staff the Paid Family and Medical Leave Board
● Staff to review waivers from employers, if the program
includes certain exemptions for employers who have equal
or more generous leave options
In addition to these leadership personnel hires, Phase One of hiring
will also include the onboarding of staff necessary to:
● Develop and run the contributions systems
● Launch a communications and outreach plan tailored to
covered employers and employees
Procurement of New Contracts: There will be several areas in
which the Commonwealth will need to initiate the RFP process for
contracts that meet the needs of the program.
● Independent Actuary Study: Immediately beginning this
study will ensure that the authority has sufficient time to
project the necessary funds for a solvent trust and determine
the payroll tax rate necessary to achieve such an amount
● IT Developers: IT developers will be necessary to develop
contributions systems
Public Education and Outreach Campaign: In order to ensure
that employers and employees are aware of the new program, their
responsibilities under the program, and the implementation
timeline, it is essential to develop and execute an effective public
education campaign. This includes but is not limited to:
● A notice to employers and employees alerting them of the
program
● A website with answers to frequently asked questions, a
detailed timeline, and resources to assist businesses with any
transition/changes
● Outreach to employers and employees for town halls,
webinars, and other engagement opportunities to offer
assistance, answer questions about the program, and solicit
feedback to inform the development of regulations
42
Paid Family and Medical Leave Board: This board will serve as
an advisory body to the Commissioner. It shall include small and
large business owners, business organizations, General Assembly
members, government officials, labor, and citizen members.
Members of this board will be appointed by the Governor and
General Assembly. The Ombuds will serve as the lead staff to the
advisory body. This board will commence regular meetings to
advise the Commissioner on the implementation of the paid family
and medical leave program.
Regulations: The Virginia Employment Commission will begin
promulgating regulations to implement and operate the paid family
and medical leave program. This rulemaking process will include
extensive public comment from businesses and employees. This
process will be essential for operationalizing the program set out in
language in a manner that fits the needs of both employees and
employers. The Commission will finalize regulations by the
conclusion of Fiscal Year 1.
Fiscal Year 2 Personnel: Phase Two of hiring focuses primarily on building out
the necessary staff responsible for managing the contributions and
benefits systems.
Contracts: There will be several areas in which the Commonwealth
will need to initiate the RFP process for contracts that meet the
needs of the program.
● IT Developers: It will be necessary to contract out for the
development of a claims management and processing
system to handle benefits
● Contact Center: The Commonwealth will need to contract
out for a call center to assist customers with claims
Implement the Contributions System: The Commission will
launch the contributions system on January 1 of Fiscal Year 2. In
preparation, the Commissioner will determine the contribution rate
at which premiums will be assessed for the upcoming calendar year
based on the independent actuarial study. The Commissioner shall
announce this rate by October of Fiscal Year 2. On January 1, the
43
Commission will assess premiums to employees and employers.
Public Education and Outreach Campaign: The communications
and external affairs staff will continue to execute the public
education and outreach campaign to spread awareness of the
program and educate employers and employees of their
responsibilities. In addition to the ongoing outreach efforts from
Fiscal Year 1, this campaign will engage with community and
advocacy organizations to inform minority and hard-to-reach
communities about the benefits that are available under this
program to raise awareness amongst these populations.
Fiscal Year 3 Personnel: Phase Three of hiring focuses on meeting the remaining
programmatic and oversight needs. This includes:
● Staff to review submitted claims and the required
documentation validating eligibility
● Staff to ensure program integrity and conduct audits
● Staff to review and process appeals and disputed claims
Implement the Benefits System: The Commission will launch the
benefits system on January 1 of Fiscal Year 3. In preparation, the
Commission will develop and make publicly available an online
tool that employees can use to calculate benefits.
Assess Trust Solvency: The Commissioner will assess the solvency
of the trust and will report on the collection of contributions. If it is
necessary to adjust the contribution rate at which premiums will be
assessed, the Commissioner will announce such change by
December 1 and the adjustment will be made effective January 1.
Public Education and Outreach Campaign: The communications
and external affairs staff will continue to execute the public
education and outreach campaign to spread awareness of the
program and educate employers and employees of their
responsibilities.
44
An Overview of Resources Necessary for Implementation
In order to determine what resources are necessary to implement the statewide program, the
Secretary and the Chief Workforce Advisor studied the implementation experiences of other
states through resources published by those states, conversations with staff at those states’
agencies, and published research. The findings of this research along with discussions with staff
at the Virginia Employment Commission informed the estimated implementation costs to stand
up and launch a statewide paid family and medical leave program. As detailed in the table below,
the estimated startup cost to implement this program during Year 1 and Year 2 are $55,600,000.
These startup costs could be paid for using a treasury loan that the Program would pay
back to the Commonwealth.
This approach––which has been taken by other states including Washington, Connecticut, and
Oregon––offers a budget-neutral approach to standing up and implementing the program. The
fiscal impact statements for each of these programs along with details regarding the
startup loans that they were appropriated by their respective legislatures are included in
the appendices. It is important to note that given each state’s differences in infrastructure,
existing personnel, and technology needs, that each are not precisely comparable to what specific
resources the Commonwealth would need to build such a program.
In the long-run, any paid family and medical leave program would be self-funded by the
contributions paid into the Fund. This includes repaying the treasury loan back to the
Commonwealth, paying benefits to approved claimants, and also funding the ongoing costs
needed for VEC to administer the program. VEC anticipates that ongoing operational costs
would be approximately $33.5 million annually, which is comparable to the ongoing costs the
agency incurs to administer the federal Unemployment Insurance Program. An additional $10
million is estimated to cover the cost of a grant assistance program for small businesses.
Estimated Year 1 Budget
Resource Cost Description
Independent Actuarial Study $300,000 A full, independent actuarial study should
be conducted within the first six months
after the bill has passed to ensure that the
Program has sufficient time to project the
necessary funds for a solvent trust and
determine the payroll tax rate necessary
to achieve such amount.
45
Technology $25,000,000 This cost would provide funding to develop
the IT infrastructure necessary for developing
the benefits and contributions systems.
Personnel 83 FTEs, $5,000,000 VEC estimates that a staff of approximately
250 individuals will be needed for this
program. These hires should be phased in
over the course of the three years of the
implementation plan as appropriate and
needed for the implementation and
administration of each program component.
This includes call center staff.
Operations and Maintenance $5,000,000 This cost accounts for other operational
expenses VEC would incur, including for
facilities, telecommunications, postage, legal
services, etc.
Estimated Year 2 Budget
Technology $8,000,000 This cost would provide funding to develop
the IT infrastructure necessary for developing
the benefits and contributions systems.
Personnel 166 FTEs, $10,000,000 VEC estimates that a staff of approximately
250 individuals will be needed for this
program. These hires should be phased in
over the course of the three years of the
implementation plan as appropriate and
needed for the implementation and
administration of each program component.
This includes call center staff.
Operations and Maintenance $2,300,000 This cost accounts for other operational
expenses VEC would incur, including for
facilities, telecommunications, postage, legal
services, etc.
Estimated Startup Cost of $55,600,000
a Treasury Loan for Year
1 and Year 2:
Estimated Ongoing Costs
Personnel $14,000,000 This cost accounts for salaries and benefits
for personnel administering the Program.
VEC estimates that it would need 250 FTEs
once the Program is fully implemented and
operation, which is comparable to the number
of personnel necessary to administer the
46
federal Unemployment Insurance Program.
This includes call center staff.
Technology $16,000,000 This cost accounts for ongoing IT costs to
cover anticipated VITA expenses, call center
systems, and other IT Services.
Operational Expenses $3,500,000 This cost accounts for other operational
expenses VEC would incur, including for
facilities, telecommunications, postage, legal
services, etc.
Small Business Grant $10,000,000 This is an estimated cost of a grant program
Assistance Program to support small businesses. As the program
is funded out of the trust, the funding
dedicated to this program could be adjusted
to meet demand.
Estimated Ongoing Cost: $43,500,000
Existing COV Policies and Benefits
The Fiscal Impact Statement produced for House Bill 825 (Carroll Foy, 2020) outlines the
various impacts that this legislation would have to other benefit programs offered to public
employees in the Commonwealth. 85 Other state benefits are absent from that Fiscal Impact
Statement, but worthy of flagging, such as the Commonwealth’s existing parental leave policy (§
2.2-1210), which provides eligible employees with 320 hours of parental leave and receive full
pay as well as the Commonwealth’s traditional sick leave policy.
After reviewing existing policies––including, but not limited to, the Commonwealth’s traditional
sick leave policy, the Virginia Sickness and Disability Program, the Virginia Locality Disability
Program, and the Commonwealth’s parental leave program––this study suggests that future
deliberations regarding a statewide paid family and medical leave proposal should consider how
such a program would interact with existing state policies and benefits. State agencies should not
be exempted from full benefits, but there should be discussion around how existing state benefits
may fit into the policy. (Department of Planning and Budget 2020)
85
Department of Planning and Budget, 2020 Fiscal Impact Statement, House Bill 825, https://lis.virginia.gov/cgi-
bin/legp604.exe?201+oth+HB825F122+PDF.
47
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—. 2018. "The AEI-Brookings Working Group Report on Paid Family and Medical Leave." AEI -
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National Conference of State Legislatures. 2020. Paid Family Leave Resources. July 21.
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leave.aspx.
National Partnership for Women & Families. 2018. "Paid Family and Medical Leave: A Racial Justice
Issue - and Opportunity." National Partnership for Women & Families. August.
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family-and-medical-leave-racial-justice-issue-and-opportunity.pdf.
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_TDBL.pdf.
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of%20Benefits%20May%2022%20DRAFT%202.pdf.
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—. n.d. FAQ: Temporary Disability Insurance.
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—. n.d. Temporary Disability Insurance. https://myleavebenefits.nj.gov/worker/tdi/.
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—. n.d. Cost and Deductions. https://paidfamilyleave.ny.gov/cost.
—. n.d. Paid Family Leave Information for Employers. https://paidfamilyleave.ny.gov/employers.
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https://paidleaveombuds.wa.gov/about.
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America. Research Paper, Cambridge, MA: National Bureau of Economic Research, Inc.
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49
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https://paidleave.wa.gov/employers/.
50
Appendices Overview
● Appendix A: Copy of the Budget Language
● Appendix B: Workgroup Slideshow Presentations
○ Meeting 1: Slideshow Presentation
○ Meeting 2: Slideshow Presentation
○ Meeting 3: Slideshow Presentation
● Appendix C: Survey/Public Comment Summary
● Appendix D: Links to Relevant Fiscal Impact Statements
● Appendix E: Methodology for Estimating Contributions
51
Appendix A: Copy of the Budget Language
D.1. The Chief Workforce Development Advisor and Secretary of Commerce and Trade are
hereby directed to study the development, implementation and costs of a statewide paid family
and medical leave program for all employers including the Commonwealth of Virginia. In
conducting this study, the designated executive branch officials shall: (i) research other states
that have fully implemented paid family and medical leave; (ii) quantify economic impact on
businesses and workers if a paid family and medical leave was implemented; (iii) develop an
operating plan which includes designated agency or entity, staffing needs, technology
requirements, implementation timeline and business practices; (iv) identify resources needed to
implement a statewide program; and (v) research start up loans for paid leave programs in other
states and loan payback. Such study shall be reported to the Governor and the Chairs of the
House Appropriations and Senate Finance and Appropriations Committees on or before
September 30, 2020.
2. In completing the study required in paragraph D.1. of this item, the Chief Workforce
Development Advisor and Secretary of Commerce and Trade shall convene a workgroup of
industry stakeholders. Such stakeholders may include, but not be limited to, representatives from
small business owners, chambers of commerce, the insurance industry, labor, and health care.
52
Appendix B: Workgroup Slideshows
53
9/30/20
Industry Stakeholder
Workgroup
Friday, August 7, 2020 – 10:00 AM
1
Secretary Brian Ball, Secretary of Commerce and Trade
Introductions Dr. Megan Healy, Governor’s Chief Workforce Advisor
2
1
9/30/20
The Chief Workforce Development Advisor and Secretary of Commerce and
Trade are hereby directed to study the development, implementation and
costs of a statewide paid family and medical leave program for all
employers including the Commonwealth of Virginia. In conducting this
study, the designated executive branch officials shall:
(i) research other states that have fully implemented paid family and medical
leave;
(ii) quantify economic impact on businesses and workers if a paid family and
Budget medical leave was implemented;
(iii) develop an operating plan which includes designated agency or entity,
Language staffing needs, technology requirements, implementation timeline and
business practices;
(iv) identify resources needed to implement a statewide program; and
(v) research start up loans for paid leave programs in other states and loan
payback.
Such study shall be reported to the Governor and the Chairs of the House
Appropriations and Senate Finance and Appropriations Committees on or
before September 30, 2020.
3
In completing the study required in paragraph D.1. of this item,
the Chief Workforce Development Advisor and Secretary of
Budget Commerce and Trade shall convene a workgroup of industry
Language stakeholders. Such stakeholders may include, but not be limited
to, representatives from small business owners, chambers of
commerce, the insurance industry, labor, and health care.
4
2
9/30/20
As Secretary Ball and Dr. Healy conduct their study and write their
report, they will be engaging with the industry stakeholder
workgroup as resource that can provide unique perspectives.
Role of the Secretary Ball and Dr. Healy will utilize this group and each
participant’s networks to gather insights from the individuals that
Workgroup would be affected by a Paid Family and Medical Leave program.
The thoughts and discussions of the workgroup participants will
help inform Secretary Ball and Dr. Healy’s study as they research
the elements outlined in the budget language.
5
Paid Family and Medical Leave typically provides long-term leave
due to an employee’s serious illness or medical condition, the need
to care for an ill family member, and parental leave when one has
a new child.
PFML usually takes the form of an insurance program that is paid
What is Paid into by workers and/or employers. Eligible employees can draw
down partial wage replacement while on leave.
Family and PFML is different from both the Family and Medical Leave Act
Medical Leave? and Paid Sick Leave.
FMLA provides unpaid leave for family and serious medical reasons
at private sector employers with 50 or more employees, public
agencies, and K-12 schools.
Paid Sick Leave laws allow employees to accrue paid sick leave hours
that they can use typically for short time illnesses. Laws vary by
state, but often allow workers to accrue between 24 and 72 hours.
6
3
9/30/20
An Overview Kristin Henshaw, Mercer
of the National Tom DeSimone, Mercer
Landscape
7
Senate Bill 770
Patrons: Boysko, Hashmi, McClellan, McPike, and Morrissey
Action: Passed by indefinitely with a letter
Review of Past
HB825
Legislation Patrons: Carroll Foy, Helmer, Hurst, Kory, Ayala, Convirs-Fowler,
Hope, Jenkins, Keam, Rasoul, Samirah, Sickles, Simon, Simonds,
Wampler
Action: Passed Labor and Commerce and left in Appropriations
8
4
9/30/20
Individual who:
Is caring for a new child during the first year after birth, adoption or
placement
Is caring for a family member with a serious health condition
2020 Has a serious health condition that makes the covered individual
Legislation: unable to perform the functions of the position of such employee
Is caring for a covered service member who is the covered
Eligibility individual’s next of kin or other family member
Is eligible for qualifying exigency leave arising our of the fact that a
family member of the covered individual is on active duty, or has
been notified of an impending call or order to active duty, in the
Armed Forces
9
Duration
12 weeks
Starts immediately with no waiting period
2020 Legislation: First payment of benefits shall be made to an individual
within two weeks after claim is filed
Duration and
Amount
Amount Benefits 80 percent of covered individual’s average weekly wages
during the 12 months preceding or 80 percent state average
weekly wage if employed less than a year
Shall not be less than $100 per week
10
5
9/30/20
Payroll contribution rates are set by the Commissioner of
the Virginia Employment Commission annually
2020
Each employer shall deduct up to 50 percent from the
Legislation: employee
Contribution Self-employed person may elect coverage for an initial
period of not less than three years
11
Any covered individual who takes family and medical leave
shall be restored by the employer to the position held by the
2020 covered individual or to an equivalent position
Legislation: During leave, the employer shall maintain any health care
benefits. The individual will continue to pay the covered
Protections individuals share of the cost of health benefits
and Retaliation An employer shall not take retaliatory personnel action or
otherwise discriminate against an individual who requests,
files, applies for or uses family and medical benefits
12
6
9/30/20
What is your initial reaction? How would this impact your
business, workers, or stakeholder community?
Do any of you already provide these benefits? All or some?
Discussion
What are the biggest strengths? Weaknesses?
What’s missing?
13
Upcoming These dates are still tentative, particularly in light of the upcoming
Special Session of the General Assembly.
Meetings Friday, September 4, 2020 at 11:00 AM
(Tentative) Monday, September 21, 2020 at 1:00 PM
14
7
9/30/20
15
Industry Stakeholder
Workgroup
Friday, August 7, 2020 – 10:00 AM
16
8
9/30/20
Industry Stakeholder
Workgroup
Friday, September 11, 2020 – 1:30 PM
1
Researching the National Landscape and Other State Programs
Study Update Understanding Economic Impacts
Exploring Best Practices in Administration and Implementation
2
1
9/30/20
National Landscape and State-by-State Research
Reviewing laws and frameworks
Discussing programs with other states and administering agencies
Study Update Currently engaged in conversations with Massachusetts,
Washington, Connecticut, Rhode Island, D.C. and Oregon
3
Benefits
Retention
Productivity
Participation
Understanding Costs
Economic Contributions
Administrative costs
Impacts Possible disruptions to business (costs associated with hiring
temporary replacements, etc.)
4
2
9/30/20
Understanding Economic Impacts - Contributions
California
Understanding Employee Funded – 1 percent of employee’s first $118,371 of wages
Connecticut
Economic Employee Funded – 0.5 percent of employee’s first $132,900 of wages
Impacts Rhode Island
Employee Funded – 1.1 percent of employee’s first $71,000 of wages
5
Understanding Economic Impacts - Contributions
Understanding District of Columbia
Employer Funded – 0.62 percent of the wages of each of its covered
Economic employees
No cap
Impacts
6
3
9/30/20
Understanding Economic Impacts – Contributions
Massachusetts
Employee and Employer Funded – Premium rate is 0.75 percent of wages of
employee’s first $132,900
Family Leave is 100 percent employee funded
Medical Leave is 40 percent employee funded; 60 percent employer funded
Employers with fewer than 25 employees are exempt from paying the employer
Understanding contribution
Oregon
Economic Employee and employer funded – 1 percent of wages of employee’s first $132, 900
Impacts Employers with fewer than 25 employees are exempt from paying the employer
contribution
Washington
Employee and Employer Funded – 0.4 percent of employee’s first $132,900
Family Leave is 100 percent employee funded
Medical Leave is 45 percent employee funded; 55 percent employer funded
Employers with fewer than 50 employees are exempt from paying the employer
contribution, but are eligible to receive state assistance if they do contribute.
7
As seen in the experiences of other states, the potential costs of
any PFML program are largely determined by specific policy
details, including
Understanding How contribution shares are divided
Payroll tax rate (dependent upon certain variables to maintain
Economic solvency in the Fund from which benefits are paid)
Caps on contributions
Impacts Amount of benefits and duration of leave
Whether or not exemptions / waivers are included
State operations
8
4
9/30/20
Exploring Best Practices in Development, Operations, and
Implementation
Different approaches to administering such programs based on each
states’ existing infrastructure and policies
Study Update Allow for more time than you think you need to implement
Leverage existing systems wherever possible
If possible, use systems that employees/employers are familiar with
A clear policy and a clear public education plan is necessary
9
Presentations
Dr. Sarah Jane Glynn, Senior Fellow at the Center for American
on PFML Progress
Research
10
5
9/30/20
The need for Paid Family and Medical Leave in the United
States
• Most leaves are taken for a worker’s own health concern
• Nearly 1 in 5 people in U.S. have a disability
• Families – and the economy – cannot afford to go back to having a stay-at-home
caregiver
o From 1979-2008, women’s earnings as a share of total family income increased by
156%, making up for more than 33% of the decrease in men’s earnings
• The workers who need paid leave the most are the least likely to have access
o 8% of workers in the bottom earnings quarter have employer-provided paid leave,
compared to 30% in the top quarter
americanprogress.org
11
Family and Medical Leave Usage
• Overall, 15 percent of
Reason for leave
U.S. employees report
taking parental, family
caregiving, or medical
leave in the past 12
months.
Perso nal me dica l Pare ntal Ca regi ving
americanprogress.org
12
6
9/30/20
Need for Paid Family and Medical Leave in Virginia
o More than one-quarter (28.6%) of all households in Virginia have
children.
o Two-thirds of children under age 6 (67.0%) and nearly three-fourths of
children age 6 to 17 (72.8%) have all parents in the family in the labor
force, either because a single working parent or a dual-earner couple
heads the household.
o Seniors projected to comprise 20% of Virginia’s population by 2030, and
there are already nearly as many people age 62 and older (18.1%) as
there are school age children (18.9%).
americanprogress.org
13
Benefits of Paid Family and Medical Leave
For firms:
o Improved employee retention, lower turnover costs
o Boosts to employee productivity, higher performance
o Anecdotal evidence of reductions to workers compensation claims
o Social insurance programs can provide cost savings over employers
providing benefits themselves
americanprogress.org
14
7
9/30/20
Benefits of Paid Family and Medical Leave, cont.
For workers:
o Improved labor force attachment over time
o Fewer gaps in employment lead to better wage trajectories over time
o Parental leave associated with better maternal physical and mental
health outcomes, higher rates of vaccinations, and improved child
outcomes
o Temporary disability and caregiving leaves associated with better health
outcomes
americanprogress.org
15
Benefits of Paid Family and Medical Leave,
cont.
For the economy:
o Increases in women’s labor force attachment between 1979-2012
account for 11 percent of growth in gross GDP, i.e. $1.7 trillion less
spending on goods + services
o Reduced state and local spending on public assistance (e.g. TANF,
SNAP) due to family income predictability
americanprogress.org
16
8
9/30/20
Benefits of Paid Family and Medical Leave, cont.
For public health:
o Parental leave associated with better maternal physical and mental
health outcomes, higher rates of vaccinations, and improved child
outcomes
o Temporary disability and caregiving leaves associated with better health
outcomes
• California’s program has resulted in an 11% decline in nursing home usage
among older adults
americanprogress.org
17
Necessary components of a Paid Family and Medical Leave
program
In order to function efficiently and effectively, any PFL program must be able to:
o Evaluate qualifying events
• Requires the ability to verify births/adoptions/foster placement and make medical determinations related to
family caregiving
Applications for TDI and Caregiving leave should require medical certification from licensed medical providers. This should
include:
HIPAA waivers
IDC codes
Additional detailed diagnostic information as appropriate
Signed certification from the care recipient (in the case of family caregiving leave)
Penalties for falsifying medical information should be significant.
o Determine program eligibility
• Varies depending on exact program rules, in most cases will require access to individual-level data on earnings
for workers employed in the state/municipality
o Calculate benefit amount and process payments
• With the exception of flat benefits, also requires access to data on prior earnings.
o Process information efficiently and effectively (IT)
o Review and process appeals for claims that are initially declined
americanprogress.org
18
9
9/30/20
Thank you!
Sarah Jane Glynn
Senior Fellow
Center for American Progress
sjglynn@americanprogress.org
americanprogress.org
19
The following slides offer an overview of the responses that we
have received thus far.
As of Thursday, September 10, over 1,000 responses and
Survey comments had been submitted.
Responses Due to the outpour of comments, we will be continuing to leave
the survey open through next week to ensure that as many
individuals as possible can share their perspective through this
avenue.
20
10
9/30/20
Are you submitting this survey on paid family and medical leave as
an employer or an employee?
99
615
299
21
Are you submitting this survey on paid family and medical leave as
an employer or an employee?
99
615
299
22
11
9/30/20
Employers: What is your role?
62
13
6
11
23
Employers: How many people does your organization or business
employ, either full time or part time?
53
11
15
7
6
24
12
9/30/20
Additional Comments from Small Business Employers
“Paid family leave is a wonderful BENEFIT but it should not be forced upon
small employers… The benefit should be a perk if a business chooses to
provide it in order to attract excellent employees… And if a business does not
offer paid leave but is a wonderful place to work, people get to have that
choice to work there or leave for a job that does have the benefit.”
“I am third generation [small business] owner and we have paid our
employees when they have been out for hip replacements, maternity leave
and other personal reasons. We still have to replace the labor that is missed
while the employee is not working. This will be a great program for the
Commonwealth of Virginia and will encourage people to go back to work.”
25
Employers: Does your organization or business offer some form of
paid family and medical leave to employees?
46
51
26
13
9/30/20
Employers: Does your organization or business offer some form of
paid family and medical leave to employees?
46
51
27
Employers: What factors have influenced your decision to not offer
paid family and medical leave to your employees? (please select all
that apply)
30
18
11
**All of the listed factors
7 appear to be relevant to
some degree. The
14 percentages are still
preliminary.
13
7
28
14
9/30/20
Additional Comments from Employers That Do Not Offer PFML
“With 97% of business in Virginia as small and most with 7% or less profit, we
cannot afford this without reducing the commission to staff and paying less
to hourly in conjunction with raising prices… Piggy backing this on top of
raising the minimum wage is crazy for current times for sure.”
“I think the biggest barrier is the complexity of the market for an employer.
Though I'm only a small business, I want to offer this benefit to my
employees - but it's rather difficult to figure out on my own. If the state set
up the infrastructure and mechanism, that would relieve so much of the
burden on my business.”
29
Employers: Have you been able to find adequate paid leave programs
to offer your employees in the private marketplace?
3
23
30
15
9/30/20
Employers: Does your organization or business offer some form of
paid family and medical leave to employees?
46
51
31
Employers: Would you say that offering paid family and medical
leave has been positive for your organization overall?
25
10
4
3
1
2
32
16
9/30/20
Employers: Do you think offering paid family and medical leave
supports recruitment and retention of talent?
27
7
5
3
2
1
33
Employers: What has been your biggest concern regarding offering
paid family and medical leave? (please select all that apply)
20
9
17
6
**All of the listed concerns
appear to be relevant to
2 some degree. The
percentages are still
preliminary.
10
34
17
9/30/20
Are you submitting this survey on paid family and medical leave as
an employer or an employee?
99
615
299
35
Employees: Roughly how many employees does your place of work
have?
110
77
74
115
223
36
18
9/30/20
Employees: Have you ever taken more than a week away from work
to care for the health needs of yourself or a family member?
330
275
37
Employees: Have you ever taken more than a week away from work
to care for the health needs of yourself or a family member?
330
275
38
19
9/30/20
123
If YES… Was this 54
leave paid or
unpaid?
147
193
43
How much time did you
take?
27
61
39
Additional Comments From Employees on Access to PFML
“While my employer does not offer paid leave, I do have paid time off that I
have accumulated that I can use to cover any missed income while on leave
for up to the banked amount (8 weeks). Beyond that, I also have disability
protection that would kick in. I think people often forget our goal as a society
is to move beyond minimum-level jobs, and with those better opportunities
come more benefits."
“When I had my knees replaced, my husband was able to use his paid leave
to care for me. He would not been able to care for me otherwise.”
40
20
9/30/20
Employees: As far as you know, are you currently eligible for either
paid or unpaid leave to care for: (please select all that apply)
240
228
156
208
170
164
161
41
Employees: In your experience, what impact has access to paid
family and medical leave had on you as an employee? (please select
all that apply)
328
337
300
273
72
125
42
21
9/30/20
Additional Comments from Employees on Impact of PMFL
“Paid leave is the only way I can happily balance my family responsibilities
and do the job I love well.”
“It's not the place of government to have anything to do with leave of any
sort, but should be solely between an employer and employee. “
“Expanding paid leave benefits would make me happier, more satisfied, and
less likely to leave my job. In addition, it would give me peace of mind
knowing that I can care for other or myself in times of need (especially given
COVID) without fear of loss of pay or losing my job.”
43
Discussion
44
22
9/30/20
Additional Conversations and Follow Up
Next Steps Tentative Upcoming Meeting Date
Monday, September 21, 2020 at 1:00 pm
45
Industry Stakeholder
Workgroup
Friday, September 11, 2020 – 1:30 PM
46
23
9/30/20
Paid Family and Medical
Leave Study
Draft Considerations and Background
9.23.2020 – 11:30 AM
1
The 2020 Appropriations Act directed the Secretary of Commerce and
Trade and the Governor’s Chief Workforce Advisor to study the
development, implementation and costs of a statewide paid family and
medical leave.
The designated executive branch officials were tasked with:
Background Researching other states that have fully implemented programs;
Quantifying economic impact on businesses and workers;
Developing an operating plan which includes designated agency or entity,
staffing needs, technology requirement, implementation timeline, and
business practices;
Identifying resources needed to implement; and
Researching start up loans for paid leave programs in other states and
loan payback.
9.23.2020 – 11:30 AM
2
1
9/30/20
In conducting this study, the Secretary of Commerce and Chief
Workforce Advisor:
Organized a work group comprised of industry stakeholders for the
purpose of gaining their perspectives on this issue.
This work group brought together a number of viewpoints, including small
businesses, larger employers, labor organizations, DHRM, chambers of
commerce, and the insurance industry.
Met virtually with other states—including Washington, Massachusetts,
Background Rhode Island, Connecticut, Oregon and Washington, DC—that have
implemented, or are implementing, paid family and medical leave
programs.
Conversations included staff from state agencies and Governor’s offices as
well as some stakeholders from the business and labor communities.
Analyzed and synthesized available, published research.
Collected public comment through an electronic survey.
9.23.2020 – 11:30 AM
3
Preliminary Findings for Paid Family and
Medical Leave Survey
• 9218 respondents
began the survey
and 5463
respondents
completed
• 4801 responses
from employees and
662 from employers
• 3852 public
comments received
*Respondents in the “other” category included independent contractors, advocacy groups, retirees, and the
unemployed.
4
2
9/30/20
The following slides outline a number of items that it is
Draft General recommended be considered in any General Assembly
deliberation of a statewide paid family and medical leave
Considerations program.
9.23.2020 – 11:30 AM
5
The Virginia Employment Commission would be the most
appropriate agency to have oversight of the Paid Family and
Medical Leave program because of the similarity of technology
and process in collection of unemployment insurance premiums,
relationship with the business community, enforcement, and
familiarity with fraud and adjudication processes.
Draft General For additional oversight of the Program, a Paid Family and
Medical Leave Board should be formed to advise the
Considerations: Commissioner. This board would include small and large business
owners, business organizations, legislators, government officials,
Operations and labor, and nonprofit organizations. Members of this board would
be appointed by the Governor and General Assembly.
Implementation An office of the Paid Family and Medical Leave Ombudsman
should be created and physically located at the Virginia
Employment Commission. The Ombudsman would be appointed
by the Governor and serve as an independent third party who
investigates, reports, and helps settle complaints from employers
and employees.
9.23.2020 – 11:30 AM
6
3
9/30/20
An outreach and education campaign is essential to ensure all
employers and employees are aware of the new program’s
contribution and benefits structures as well as the requirements
and responsibilities of the program.
Draft General Premiums should be paid into the Paid Family and Medical Leave
Considerations: Trust at least one year in advance of awarding benefits.
Operations and A full, independent actuarial study should be conducted within the
first six months after the bill has passed to ensure that the
Implementation program has sufficient time to project the necessary funds for a
solvent trust and determine the payroll tax rate necessary to
achieve such amount.
9.23.2020 – 11:30 AM
7
Regulations and guidelines should align as closely as possible to
Draft General the federal Family Medical Leave Act to eliminate confusion of
eligibility, leave time and administration.
Considerations: The Commonwealth should consider a grant fund that supports
Policy Details small businesses’ administrative, technology, and personnel
replacement costs.
9.23.2020 – 11:30 AM
8
4
9/30/20
Small businesses should be exempted from having to contribute
to the program. Employees who pay into the program at such
exempted businesses should still be eligible for benefits.
Draft General Employers should be exempted who currently have equal or more
Considerations: generous paid time off, short term disability, or other leave
options. This exemption is contingent upon verification of a
Policy Details waiver.
Both covered employees and employers should jointly fund the
benefits system.
9.23.2020 – 11:30 AM
9
5
Appendix C: Survey Results Report
DATA COLLECTED
Respondents were first asked if they were submitting the survey as an employer, employee, or
other. A total of 9218 respondents answered this first question, including 848 employers,
5853 employees, and 2517 other. Those that selected “other” were taken directly to the question
asking for any general comments or concerns on the issue of paid family and medical leave.
Approximately 4795 employees and 662 employers completed the survey, for a total of 5463
respondents. 3852 respondents, including those in the “other” category, provided
additional comments in the open-ended portion of the survey. The full list of survey
questions is below:
1. Are you submitting this survey on paid family and medical leave as an employee or an
employer: employer, employee, or other?
Employer Questions
1. What is the name of the organization you represent (optional)?
2. What is your role: Owner/CEO, Management level, HR Director, or Member of an
Organization?
3. How many people does your organization or business employ, either full time or part
time: 1-20, 21-50, 51-100, 101-500, or over 500?
4. Does your organization offer some form of paid family and medical leave to employees:
yes or no?
If answered “no” to #4…
a. What factors have influenced your decision to not offer paid family and medical
leave to your employees (select all that apply): cost of providing paid leave,
administrative responsibilities to implement the policy, availability of plans on the
market, complexity of the market, being able to find someone to fill in for the person
on leave, it would be too hard to tell who is taking advantage of the policy and who
really needs it, and other?
b. Have you been able to find adequate paid leave programs to offer your employees
in the private marketplace: yes or no?
54
If answered “yes” to #4…
a. Would you say that offering paid family and medical leave has been positive for
your organization overall: strongly agree, agree, somewhat agree, neither agree nor
disagree, somewhat disagree, disagree, and strongly disagree?
b. Do you think offering paid family and medical leave supports recruitment and
retention of talent: strongly agree, agree, somewhat agree, neither agree nor disagree,
somewhat disagree, disagree, and strongly disagree?
c. What has been your biggest concern offering paid family and medical leave: being
able to find someone to fill in for the person on leave, wage replacement, cost of the
leave program, it is too hard to tell who is taking advantage of the policy and who
really needs it, other, and I have no concerns?
5. Do you have any additional comments or concerns you would like to share on the issue of
paid family and medical leave?
Employee Questions
1. What is the name of your employer (optional)?
2. Roughly how many employees does your place of work have: 1-20, 21-50, 51-100, 101-
500, or over 500?
3. Have you ever taken more than a week away from work to care for the health needs of
yourself or a family member: yes or no?
If answered “yes” to #4…
a. Was this leave paid or unpaid: paid, partially paid, or unpaid?
b. How much time did you take: one to four weeks, four to six weeks, six to 10
weeks, or 10 to 12 weeks?
55
4. As far as you know, are you currently eligible for either paid or unpaid leave to care for:
my own serious medical condition, a family member with a serious medical condition, a new
child, or I am not eligible for any paid or unpaid family and medical leave?
5. In your experience, what impact has access to paid family and medical leave had on you
as an employee: I am less likely to leave a job that offers paid leave, I am more loyal to my
employer when they provide me with paid leave, my morale is higher in a job that offers paid
leave, I am more productive in a job that offers paid leave, having access to paid leave does
not have a significant impact on my experience as an employee, or I have never held a job
that offered paid leave?
6. Do you have any additional comments or concerns you would like to share on the issue of
paid family and medical leave?
KEY FINDINGS
Key findings are informed both by quantitative trends in survey responses as well as
respondents’ comments to the open-ended question, “Do you have any additional comments or
concerns you would like to share on the issue of paid family and medical leave?”
1. While their opinions of paid family and medical leave vary from strongly support to
strongly oppose, most small business respondents are concerned about the cost burden
of a new program.
The majority of employer respondents to the survey are owners/CEOs (63.9 percent) from
businesses with 1 – 20 employees (54.7 percent). The open-ended additional comments section
reflects a diversity of small business perspectives on paid family and medical leave, with some
in favor and some against. However, there is significant concern about the ability of small
businesses in particular to shoulder the cost of a new paid family and medical leave program.
Additional comments include:
“We are a small business and take care of our employees based on length of time worked
and circumstances as to medical situation. To just have a blank card to have to pay
people and then get replacements is unreasonable. Not to mention pay additional payroll
taxes and then on top of that to create the necessary payroll changes. Not every company
is big and has the means to implement this type of thing. The small businesses are the
ones taking the big blow.” – Real estate firm
56
“I am third generation owner and we have paid our employees when they have been out
for hip replacements, maternity leave and other personal reasons. We still have to
replace the labor that is missed while the employee is not working. This will be a great
program for the Commonwealth of Virginia and will encourage people to go back to
work.” – Funeral home
“Mandatory paid family leave, while a nice benefit for an employee to have, is a
financial and person-hour burden on businesses with fewer than 50 employees. While we
try as much as possible to assist an employee with a long absence is necessary, if we
were told we had to pay them not to work for the entire time they are out, it would be very
difficult. We recommend accident & disability insurance to our team instead.” –
Furniture retailer
“With 97% of business in Va. as small and most with 7% or less profit, we cannot afford
this without reducing the commission to staff and paying less to hourly in conjunction
with raising prices. Payroll cut with commission-based stylist would probably have many
leave and that would close us. Piggy backing this on top of raising the minimum wage is
crazy for current times for sure.” – Salon business
2. Of the employer respondents that already offer paid family and medical leave, a
majority feel that it has been positive for their organization overall. However, employer
respondents with and without leave programs share similar concerns about cost and
finding someone to fill in for the person out on leave.
For those 43.3 percent of employer respondents that do offer some form of paid family and
medical leave to their employees, 77 percent somewhat to strongly agree that it has been
positive for their organization overall. 80.77 percent somewhat to strongly agree that offering
the leave supports recruitment and retention of talent. However, only 44 respondents say that
they have no concerns with offering paid family and medical leave. The most common
concerns are “being able to find someone to fill in for the person on leave” and “the cost of the
leave program.”
Graph 1: In your experience, what impact has access to paid family and medical leave had on
you as an employee (please select all that apply)?
57
56.7 percent of employer respondents do not offer any form of paid family and medical leave
to employees. The factor that most greatly influenced their decision to not offer the benefit was
“the cost of providing paid leave,” with the second “being able to find someone to fill in for the
person out on leave”. The availability of adequate paid leave programs is also a significant
factor. 95 percent of employer respondents say they have not been able to find anything to
offer their employees in the private marketplace.
Graph 2: What factors have influenced your decision to not offer paid family and medical
leave to your employees (please select all that apply)?
58
3. A majority of employee respondents have had to take time away from work, but
many either did not have leave or the leave was unpaid.
60 percent of employee respondents have taken more than a week away from work to care for
the health needs of themselves or a family member. For many, this leave was only partially
paid or unpaid. The open-ended additional comments section reflects a variety of both negative
and positive experiences with needing to take time off. Additional comments include:
“When I had my knees replaced my husband was able to use his paid leave to care for
me. He would not been able to care for me otherwise.”
“From discussions with coworkers who had children before paid family leave
(maternity/paternity leave) was made available to VA employees, I realize how fortunate
I was to have had a child in 2019 when this benefit was available. I was better able to
care for myself and my new child knowing that my employment and our household
income would not be negatively impacted.”
“I was just starting a new job, and two months later I found out I was pregnant. I didn’t
have sick time accrued so I didn’t get paid. This would have been great to get paid for
this time. The bills didn’t stop just because I had a baby.
59
“I have been in this situation before and had paid leave once. Another time I did not
have paid leave. It put a terrible hardship on our family without the paid leave.”
“Though I am blessed to have it now and my kids are grown, I know what it’s like to not
have paid leave. I was that single mother, two small children both with asthma. I couldn’t
afford for them to get sick literally.”
4. The majority of employee respondents feel that having access to paid family and
medical leave has had a significant impact on them and their relationship with their
employer.
Only 478 employee respondents said that “having access to paid leave does not have a
significant impact on my experience as an employee.” A majority selected at least one positive
impact.
Graph 3: In your experience, what impact has access to paid family and medical leave had on
you as an employee (please select all that apply)?
60
61
Appendix D: Fiscal Impact Estimates
Below are links to the fiscal impact estimates that were produced for states that—similar to
Virginia—did not have an established temporary disability insurance law/program.
Connecticut: https://www.cga.ct.gov/2018/FN/2018SB-00001-R000205-FN.htm
Washington: https://fnspublic.ofm.wa.gov/FNSPublicSearch/GetPDF?packageID=49094
Oregon: https://olis.oregonlegislature.gov/liz/2019R1/Measures/Analysis/HB2005;
https://olis.oregonlegislature.gov/liz/2019R1/Downloads/MeasureAnalysisDocument/51681
Washington, D.C.:
https://does.dc.gov/sites/default/files/dc/sites/does/page_content/attachments/UPLA%20Report_
v12_0.pdf
62
Appendix E: Methodology for Estimating Contributions
In order to quantify the precise tax burden that would be caused by a statewide paid family
and medical leave program, the Commonwealth would need to procure an independent
actuarial study. The actual premiums and amount necessary to be held in the fund would be
based on these actuarial principles and, in out-years, on real usage and demand for the program.
However, an initial estimation of this cost was calculated as part of this study to provide a
preliminary understanding. This estimation uses BLS Average Annual Employment 2019 data,
for which employment was 3,938,841 individuals. This data also indicates that for these
employees, the average employee wage was $60,200 and the total annual wages were
$237,119,277,133. In order to calculate an estimated amount of funding in the trust fund and
contributions, certain assumptions needed to be made regarding the program’s utilization rate
and the average duration of leave taken. For the purposes of this estimation, these calculations
assumed that the medical leave utilization would be 3 percent and that the family leave
utilization rate would be 1 percent. Additionally, these calculations assumed that the average
duration taken for medical leave would be eight weeks and for family leave would be ten weeks.
Conversations with experts and staff in other states regarding the projections calculated by VEC
for the 2020 Fiscal Impact Statement indicated that the average duration of leave was higher than
would likely be expected and that the utilization rate was lower than would likely be expected.
These assumptions were further based off of findings regarding other programs’ estimated and
realized utilization rates and durations.
The calculations used by this study to estimate the total amount needed in the fund is different
from the methodology employed in the 2020 Fiscal Impact Statement prepared for House Bill
825 (Carroll Foy). This analysis used two sets of data: BLS Average Annual Employment 2019
data and 2018 Census/ACS Data. The BLS data was used to establish the number of employees
(3,938,841) and the total annual wages ($2.37 billion). The 2018 Census/ACS Data provided an
approximation of how many individuals in Virginia fell within certain wage ranges. The
proportions of these wage ranges were used to determine the proportion of how many employees
would receive the maximum benefit amount (80 percent of the average weekly wage) when on
paid family and medical leave. The Census/ACS breakdowns facilitated the estimation of an
average weekly wage and benefit for those employees who would not receive the maximum
benefit amount (and would instead receive 80 percent of their average weekly wage).
Using these inputs, this study calculated the estimated amount needed to cover the cost of
benefits for both categories of workers: maximum benefit earners and non-maximum benefit
earners.
• The amount needed to cover the benefits for maximum benefit earners was calculated by
determining the amount needed to pay for paid medical leave. This was calculated by
first multiplying the assumed medical leave uptake rates, the assumed medical leave
duration, the total weekly wages, and the partial wage replacement (80%). This was then
63
repeated using the appropriate paid family leave inputs. The sum of these amounts was
multiplied by the proportion of how many employees would receive the maximum
benefit amount out of the total employee population (34%).
• The amount needed to cover the benefits for those individuals who would not receive the
maximum weekly benefit was calculated by multiplying the average weekly wage that
was calculated for non-maximum benefit earning employees and the total number of non-
maximum benefit earning employees. That product was then multiplied by the paid
medical leave duration and uptake rates to estimate the amount needed to cover the
payment of medical leave benefits for this population. This calculation was then repeated
using the paid family leave duration and uptake rates. These two products were then
added together to estimate the total amount needed to cover benefits for the population of
employees who would not receive the maximum weekly benefit.
• The amounts needed to cover benefits for both of these groups of employees were added
together, multiplied by 1.4 (the adequacy rate needed to maintain solvency in the fund),
and combined with the ongoing administrative costs necessary for the VEC to administer
this program. This total sum is the estimated amount needed in the trust under this set of
assumptions.
The total, estimated amount needed for the trust is approximately $1.2 billion. The estimated
premium rate for this model would be .50 percent, which would be split 50-50 between
employers and employees under the framework set out in the legislation introduced in the 2020
General Assembly Session. For example, an employee that earns $60,000 annually would pay a
contribution rate of .25 percent, which equal approximately $2.89 per week or $150.35 annually.
The other .25 percent (or $2.89 per week) would be covered by the employer of the covered
individual.
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