Significant paid vacation laws were passed in the United States in 2020, most notably the Families First Coronavirus Response Act. Even if the mandatory provisions of the law ended at the end of the year, the issue continues to attract the interest of legislators at the federal, state and local levels.
Now that Congress Democrats form a majority in the House and Senate, “we think we will likely see success with paid family vacation proposals that are not directly related to COVID,” said Sheri Pullen, senior compliance manager at absence management software company ReedGroup during the DMEC Virtual Compliance Conference 2021 on March 3rd.
A number of proposals have been made in recent years, but Pullen said a new bill could include a 12-week paid vacation entitlement that replaces up to 66% of monthly wages up to a maximum, “likely” including a combination of workers and employer’s payroll contributions that cover leave for reasons such as illness or the need for care of a family member.
Regardless of which federal proposal is passed, employers should “not lose sight of their incentive to grant paid family and sick leave as part of the Fischer tax credit” extended by five years Carla O’Sullivan, also a Senior Compliance Manager at ReedGroup, said by the end of 2025 through the Consolidated Appropriations Act of 2021.
Additionally, employers continue to face a patchwork of state and local paid vacation laws, and several jurisdictions have already introduced new laws in this area in 2021, Jonathan Kemp, assistant director of product management at Sun Life Financial, told a separate meeting.
But even the state and local proposals, supported by constituents and lawmakers, face obstacles to becoming law, O’Sullivan said. “I’m afraid this is another victim of the pandemic.” This is because states are spending scarce resources on pandemic aid. “Unfortunately, there isn’t much left to support paid family members and doctors who have serious problems at the state level – at least not at the moment.”
Employers may be able to spot some general trends and similarities between various state and local paid vacation programs. “However, when you look at the compliance details in one state, you quickly find that the details themselves are incredibly different from states,” Kemp said.
A notable trend among various state laws is that some effort is being made to expand the definition of “family member” to include domestic partners, siblings, grandchildren, and grandparents, O’Sullivan said. For example, California recently expanded this definition to include domestic partners and adult children, among others.
Marjory Roberston, associate vice president and senior counsel at Sun Life Financial, said there are many “hallmarks” of many laws governing paid family and medical leave, including the combination of occupational health and safety and income replacement for those who take vacation. Eligibility based on the presence of a “serious state of health”; limited medical certification; and permission to say goodbye temporarily.
“You would think there would be some kind of law coming into being … but that is exactly what doesn’t happen,” Robertson said.
This is just a selection of the full list of variable factors presented by Kemp and Robertson. Some suggestions relate to and explicitly cover an employee’s post-employment leave, while others do not. The waiting times vary from one waiting time per year to one waiting time for each claim until no such period at all. Some states offer higher payments for lower-income workers, while others offer the same percentage of payment for all workers.
An interesting “metamorphosis” has been the willingness of states to move from state vacation programs to private plans, Robertson said. Some also request quotes from insurers who can run government vacation programs.
Kemp and Robertson also noted some “strange” examples or laws, in part due to the size of the bucket. Washington, DC, for example, gives eight weeks of paid vacation to bond with a new child and six weeks to care for a family member with severe health – but only two weeks to care for an employee’s own severe health said Robertson. Vacation is also not job-protected, which is different from other state laws.
Keeping track of all of these elements is “a real challenge” for employers in several states, especially with many laws governing paid family and sick leave even if the employer only has one employee in a given jurisdiction, Robertson said. “In today’s world where teleworking is more common, you don’t have to be a huge employer to be affected.”
Employers may be interested in the prospect of a federal solution that could help simplify compliance obligations, but it’s still not clear whether federal law would prevent state and local laws, Robertson said. Meanwhile, the list of new paid vacation proposals at the latter level “just gets longer,” said Kemp.
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