Large employers raise the alarm on varying state regulations around paid leave
Complying with a growing patchwork of state and local paid leave mandates makes offering paid leave benefits difficult.
An industry group representing large employers is warning that a patchwork of paid leave laws among states is hampering the ability of companies to offer consistent benefits to employees.
The ERISA Industry Committee (ERIC) is an advocacy group representing large employers who provide benefits under the Employment Retirement Income Security Act (ERISA), the wide-ranging federal regulatory law for minimum standards in employee benefits such as leave and retirement. ERISA plans cover more than 140 million workers in the US and control more than $7.6 trillion in assets, according to the Department of Labor.
Related: Paid leave benefits: Trends and challenges
ERIC’s new white paper, “Paying The Way—Large Employers and the State Paid Leave Patchwork” argues that compliance with the varying state paid leave laws and possible new federal regulations are creating a burdensome system for large employers. The paper argues that complying with a growing patchwork of state and local paid leave mandates makes offering this type of benefit more difficult, due to the operational cost and challenges created by the various regulations.
“Large employers want to offer generous paid leave benefits, but they want them to be equal for all their employees,” said Aliya Robinson, Senior Vice President of Retirement and Compensation. “With location-specific differences, employers must constantly review, re-design, and re-program their nationwide programs to ensure that benefit parity remains. This constant re-adjustment uses resources – time and money – without providing any greater benefits to the employee,” said Robinson.
A benefit that benefits all
The ERIC paper stresses that large employers want to offer paid leave to their employees. Such benefits allow them to recruit and retain quality employees, the report said, and create a better employment experience for their workers.
“For large employers, like ERIC member companies, paid leave is essential to ensuring a healthy, happy workplace,” Robinson said. “Employers understand that paid leave benefits give critical financial security and flexibility to today’s workforce, the ability to better balance work and family life, and ultimately improve productivity within their work environments.”
The problem, the white paper said, is that many states and localities go well beyond simply requiring employers to provide paid leave; they also include what ERIC calls burdensome administrative requirements. “The proliferation of administrative, record-keeping, and compliance burdens are creating a costly regulatory nightmare, particularly for employers with operations in many states,” the paper said. “As a result of this patchwork of redundant state requirements, employees who previously received valuable and efficient paid leave benefits through their employers have experienced a decline in the benefits they receive.”
The report noted that at least eight states have created mandatory insurance programs in this area, and that each state’s program has varying levels of paid leave benefits, with their own unique requirements and compliance burdens. “Significantly, no two jurisdictions share the same standards, definitions, available benefits, or compliance requirements, meaning that employers operating across multiple states have to contend and comply with inconsistent, and sometimes conflicting, state programs,” the report said. “This trend of independent state legislation has continued, as more than 35 states introduced and considered over 350 bills related to paid leave during 2019 state legislative sessions alone.”
A variety of systems = a variety of problems
The report outlines how the differences in state and local paid leave regulations creates a range of problems for employers. Administrative and record-keeping requirements, treatment of independent contractors, interaction with other benefits, litigation threats—the paper outlines a long list of problems that spring up when employers have different regulatory requirements in different geographic locations.
The paper argues this range of regulations actually provides a disincentive for employers to voluntarily create expansive paid leave policies. And it argues that state laws hamper the ability of employers to provide customized benefits to workers.
“No one-size-fits-all benefits policy could ever be designed that would satisfy every employee in every industry,” the report said. “As states place more and more emphasis on paid family and medical leave and continue to increase leave amounts, and expand certain standards governing this one type of leave, they ultimately curtail the flexibility of employers to design and provide new and creative leave benefits that are best tailored to the needs of their workforce.”
In outlining these problems among state requirements, the group also is looking to federal policymakers for consideration in any future action from Congress. Regardless of the outcome of November’s election, paid leave could be an issue taken up by federal lawmakers in coming years. ERIC’s white paper asks lawmakers in Washington, D.C. to avoid creating another layer of burdensome regulation in this area. The group also calls on policymakers to consider a national exemption or safe harbor for employers that currently offer paid leave benefits to their employees.
Read more: