Business groups fought hard to ensure employers had a way to opt out of the state’s new program to provide paid family and medical leave benefits if they offer a more generous plan to their workers.
If only it were that simple.
The new mandate creates a required public benefit of up to 12 weeks of guaranteed paid family leave and 20 weeks of paid personal medical leave, with the state collecting payments and administering coverage similar to unemployment insurance. And this week, the state Executive Office of Labor and Workforce Development started accepting requests for exemptions from companies.
Time sure looks tight. The new assessments on companies to fund the benefits kick in on July 1. Employers were told they need to decide by the end of May if they want out.
But there’s a big hitch. A spokesman for Associated Industries of Massachusetts, the state’s largest employer group, says there are no insurance products yet available in Massachusetts that employers can buy to provide paid family leave. One reason: Insurers have been waiting for the Baker administration to finish regulations for the new program.
Unsurprisingly, some business leaders have pushed the administration for more time. AIM initially sought to delay the July 1 start of the assessments. That didn’t work. Then, AIM focused on the deadline to opt out.
On that front, the group might be about to score a victory. The state’s labor office declined to comment about a possible postponement, other than to offer an encouraging sign Tuesday, saying the agency will “continue to be responsive to feedback.”
But there are other remaining questions. Employers also need to deal with the delicate issue of how much of the costs to unload onto their workers — through deductions from their paychecks. If mid-size and large companies stick with the new state plan, they can pass as much as 100 percent of the family leave portion onto employees, but not more than 40 percent of the medical leave portion. (Companies with fewer than 25 employees can make their workers pay for all of the costs.)
AIM surveyed its members in the past few weeks, and nearly 60 percent of respondents said they’re still not sure how much of the cost they would will pick up, and how much their workers would.
This won’t be an easy decision for many bosses. The dollars add up, no matter how you count them. AIM pegs the average total cost for both programs would be $8.72 a week, or $453 a year, per person. These fees would kick in on July 1, but workers wouldn’t be able to start accessing the benefits until 18 months later, in 2021.
The hope is that these benefits will make all these headaches worthwhile. The new law resulted from the Grand Bargain negotiations last year between labor and community activists and business leaders. The union-backed Raise Up Massachusetts coalition dropped its plan to take paid leave to the ballot as a result.
Raise Up also scuttled plans for a parallel ballot question to raise the state’s minimum wage, after the Grand Bargain negotiators agreed to a set of increases over several years.
The two opposing forces — business groups such as AIM on one side, Raise Up on the other — continued their discussions after the bill became law last June. Their shared goal: To ensure as smooth a transition as possible. A spokesman for Raise Up says the group remains willing to consider changes, so long as they don’t affect the benefits that workers will receive.
Some bumps in the road are inevitable with changes this significant. But many companies could learn the hard way that the Grand Bargain might not be much of a “bargain” for them.