The evolution of paid family leave regulations and what to expect next
Managing the complexities of paid leave regulations has gone from a periodic annoyance to mission-critical.
As employers look for new ways to attract new talent and retain existing employees, there’s one demographic of the population in particular that needs a little extra attention: working parents. From women who have dropped out of the workforce to take care of their families to younger couples looking to start their own, a family-friendly company culture is a must. In designing such a benefits package, employers need to consider not only what will be most enticing to workers, but what is legally required.
The movement to create more family-friendly workplace policies, while well-intentioned, has left a complicated and confusing patchwork of regulations for employers to navigate as they put together paid leave policies.
Related: Pandemic driving greater business support for paid leave
Frank Alvarez and Michelle LaFond, founding legal counsel with employee leave management platform Cocoon, recently shared their perspectives on how paid leave regulations will change and evolve as we move forward.
As industry veterans, what have been the most exciting or surprising legal or regulatory changes you’ve seen over the course of your career?
Frank Alvarez: When I began practicing law in 1990, the Americans with Disabilities Act and Family and Medical Leave Act were not in effect. Few states had leave laws. Paid, job-protected leave essentially did not exist. Anything employers offered in that realm essentially was completely voluntary. Thirty years later, everything has changed. Leave is a legal morass that is both incredibly complex and time-consuming. Federal FMLA and the ADA is just the tip of the iceberg. There are literally hundreds of uncoordinated state and local leave laws. Some laws provide only job protection. Others provide just pay. And still others provide both job protection and pay. And the law is utterly uncoordinated. It is so different from when I started my career.
Michelle LaFond: As a regulatory expert, the biggest change I have experienced is the shift in the focus of regulators from what has happened in the past (more of an audit approach) to emerging risks, such as cyber and Environment, Social Governance (ESG). Regulators expect that companies will be anticipating what is next and ensuring there is a focus on identifying these risks, a plan to mitigate, and proper oversight of execution. Also, understanding the consequences of working in a global marketplace is critically important whether that is capital standards or appreciating the impact of pandemics. This holistic approach to the complexities of risk management is really important and evolving at a rapid pace.
What upcoming laws or potential policies—state or federal—around leave should companies prepare for now?
FA: Get ready for more paid leave that will cover an increasingly wider variety of situations. Employers are still digesting Connecticut’s new paid leave law and Oregon’s law is coming soon. When a federal paid leave law eventually arrives, it will provide benefits that will need to be integrated with existing state laws and employer leave policies. This will further complicate leave administration, especially for multi-state employers.
Essentially, we’ll have to combine the most favorable provisions of federal, state and local law, integrate them with employer policies, and operationalize them into employee forms, communications and absence tracking systems. No small task.
ML: I completely agree with Frank. The patchwork of federal, state, and local leave laws is already stunningly complicated and is only going to get more complex as more states respond with laws that differ on what events are covered, specifics of protected time, benefits, and so on. Adding to the complexity of 50+ state solutions is whether states permit private insurers as part of the solution and with that come additional discussions around the flexibility of design and rates, interplay with other leaves, and the possibility of tax credits.
Given how much there is to keep track of, what do you think is the most important thing for employers to keep top of mind in all of this?
Employers need to keep top of mind that leave compliance is paramount for a good employee leave experience. Employers are trying to figure out the best way to attract, retain, and develop top diverse talent. Feeling valued and supported during important life events is one way employers can show they care and demonstrate their commitment to employees. This can only happen with a smooth experience with a partner company that is an expert in leave compliance.
Otherwise, the frustrations from not getting leave right during these important personal times overshadow an employer’s best intentions. When the burden of managing (and worrying about) compliance is lifted, People teams can focus on the work they really want to be doing—caring for their employees.
From what you’ve seen, what are the biggest challenges for employers as they attempt to integrate leave, compliance, and pay?
FA: Exactly as Michelle said, the new leave frontier is employee experience. Getting employees paid promptly through state paid leave systems is a huge challenge. Think about it—how valuable is a state or federal paid leave benefit if you’re waiting 4, 6, or 8 weeks to receive those benefits? Employees have bills to pay, families to feed. In the near and medium-term, it is unrealistic to expect meaningful changes in government systems. Employers need innovative solutions. That’s one of the things that first attracted me to Cocoon. We’re making great strides and rethinking the status quo of employee pay during leave. I’m super excited about where we are heading.
What is the role of technology in leave compliance? How do you think that will change?
FA: In short, it will share knowledge and resources with employees in an incredibly scalable way. Historically, leave systems have worked from the top down, meaning employers did what they could to track leave requirements and develop systems that would tell employees whether leave was available in any particular situation. It was slow and often inaccurate and responses were completely dependent on humans, whom we know are prone to error. If employers outsourced leave to vendors, those vendors used clunky technology that was patched into other legacy systems that were initially designed to manage disability claims.
In that context, leave services generally were loss-leaders offered to retain more profitable services. As leave has become more complex and employees have demanded more support and involvement, the thinking around leave technology has begun to evolve. Today, new leave software must empower leave administration from the bottom up. Employees are the new consumers of leave services. Employers are removing themselves increasingly from leave management and supporting employee self-service.
Leave software must now integrate leave and pay, regardless of whether pay is received from states, insurers or employers. This is very different and powerful. Ultimately, this approach will enhance compliance and employee experience because one well-crafted “single-source of truth” can be delivered to an almost limitless number of employers and employees. We will soon see all the major HRIS systems tap into this software through API. It is very exciting.
ML: Technology to ensure leave compliance across the entire ecosystem is crucial. That means states and municipalities with leave entitlement must also prioritize the technology to timely and accurately process leave claims and be able to coordinate/integrate with tech companies as part of the implementation.
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