SHRM Expresses Concerns over Paid Leave Bills

June 11, 2009 (PLANSPONSOR.com) - In a House Education and Labor Subcommittee hearing on recently proposed paid leave bills, China Miner Gorman, chief operating officer of the Society for Human Resource Management (SHRM), said the society "has strong concerns with the one-size-fits-all mandate encompassed in H.R. 2460, the "Healthy Families Act" (HFA)."

Introduced in May, the bill would require public and private employers with 15 or more employees for 20 or more calendar workweeks in the current or preceding year to accrue one hour of paid sick leave for every 30 hours worked (see CT Legislator Introduces Paid Sick Leave Bill ).

Under the HFA, an employee begins accruing the sick time upon commencement of employment and is able to begin using the leave after 60 days. The paid sick time could be used for the employee’s own medical needs or to care for a child, parent, spouse, or any other blood relative, or for an absence resulting from domestic violence, sexual assault or stalking.

While Gorman said SHRM shares the goal that employees should have the ability to take time off to attend to their own or a close family member’s health, and that the leave should be paid, it believes that at a time when employers are facing unprecedented challenges, imposing a costly paid leave mandate on employers could easily result in additional job loss or cuts in other important employee benefits.

Gorman noted four significant challenges with this bill from an HR professional’s perspective:

The HFA, like the current FMLA, prescribes a series of vague and ill-defined qualifying events that may trigger leave eligibility for the employee. Under the current FMLA, employers and employees alike must make a determination if the requested leave is eligible for coverage as a qualifying event. While in many instances this determination of leave eligibility under the FMLA can be made easily, in others it requires the employer and employee to make a rather subjective, sometimes intrusive determination to determine leave eligibility – often leaving both parties frustrated and distrustful of each other. Gorman said SHRM anticipates that employers and employees will have a similar experience under the HFA in trying to determine leave eligibility.

Although it may not be the intention of the bill sponsors, the HFA would disrupt current employer paid leave offerings. As an example, Gorman said, if an employer’s existing paid leave policy fails to meet all the requirements of the Act, the employer’s plan would need to be amended to comply with the HFA requirements. “HR professionals are best situated to understand the benefit preferences of their workforce, not the federal government,” Gorman commented.

The HFA specifically states that the Act does not supersede any state or local law that provides greater paid sick time or leave rights, thus forcing employers to comply with a patchwork of varying federal, state and/or local leave laws – as well as their own leave policies. As it stands now, employers consistently report challenges in navigating the various conflicting requirements of overlapping state and federal leave and disability laws. The HFA would only add to the already complex web of inconsistent but overlapping leave obligations under federal and state laws, Gorman contended.

The HFA’s “inflexible approach” could cause employers to reduce wages or other benefits to pay for the leave mandate and associated compliance costs, limiting employees’ benefit and compensation options. This is because employers have a finite pool of resources for total compensation. If organizations are required to offer paid sick leave, they will likely “absorb” this added cost by cutting back or eliminating other employee benefits, such as health or retirement benefits, or forgo wage increases, a potential loss to employees who prefer other benefits rather than paid sick leave.

Gorman contended the HFA is inexplicably punitive on employers who already offer paid leave benefits. She said it removes the discretion of employers to design benefits which best meet the needs of their employees and their operations and which are the best recruiting and retention tools. Also, employers who are already providing these benefits would be subject to a new regulatory regime, additional compliance and recordkeeping costs and litigation for alleged violations of the law – and “would be subject to liquidated damages that are awarded, in an unprecedented fashion, as a matter of course, with no good faith defense and no discretion from the courts,” according to Gorman.

SHRM believes the federal government should encourage paid leave – without creating new mandates on employers and employees – and let employees decide how to use it.

Attorney Victoria A. Lipnic, of the U.S. Chamber of Commerce, expressed similar concerns to those of SHRM for small businesses.

Gorman also commented on H.R. 2339, the "Family Income to Respond to Significant Transitions (FIRST) Act -   legislation that provides grants to states to implement programs that provide partial or full wage replacement for those taking leave for birth or adoption, or those who are taking leave to care for themselves, their child(ren), spouse or parent with a serious health condition, as defined by the FMLA.

Gorman noted that under H.R. 2339, states could provide wage replacement for employees out on FMLA leave through a state unemployment compensation benefit program. SHRM is concerned this would further spend down unemployment insurance reserves for the entirely unrelated purpose of compensating leave takers - ultimately risking the safety net for unemployed workers.

"During the present economic recession, with elevated levels of unemployment claims, it is critical that unemployment funds are available for the unemployed in order to fulfill the original purpose of the UI program," Gorman said. She encouraged policymakers not to use unemployment compensation programs to provide paid leave. "With UI funds severely strained, an expansion of the UI program at this time would likely lead to increases in employer payroll taxes at a time when employers can least afford it," Gorman added.

Debra Ness, president of the National Partnership for Women & Families, unveiled new research assessing the health impact of the Healthy Families Act. It indicates that providing employees with paid sick leave benefits will significantly improve the nation's health.

The research suggests that guaranteed paid sick days would reduce the spread of pandemic and seasonal flu. "More than one-third of flu cases are transmitted in schools and workplaces. Staying home when infected could reduce by 15% to 34% the proportion of people impacted by pandemic influenza," Ness said.

The research indicates that without preventive strategies, more than two million people in America could die in a serious pandemic flu outbreak.

In addition, the findings suggest that if all workers had paid sick days, they would be less likely to spread food-borne disease from restaurants and there would be fewer outbreaks of gastrointestinal disease in nursing homes. Paid sick days may also be associated with less severe illness and a reduced duration of disability due to sickness, because workers with paid sick days are 14% more likely to visit a medical practitioner each year, which can translate into fewer severe illnesses and hospitalizations.

Finally, the study finds that parents who had paid time off are more than five times more likely to care for their sick children rather than send them to school or day care.

The full research report is posted on www.nationalpartnership.org and www.humanimpact.org/PSD .

Additional testimony from the hearing can be viewed from  here .

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