Bill proposes employer-friendly paid parental leave
Frustrated by other federal paid leave proposals that have them footing the bill, employer groups say a new GOP proposal — which would allow parents to draw from Social Security to supplement their income during parental leave — is a “step in the right direction.”
Though many have been calling for federal paid leave, most employers argue against mandating it out of fear they will be locked into funding it through tax increases — which is why industry experts say the new legislation looks to be a better option for companies.
“It’s important to note that [employers] are already paying the lion’s share of healthcare costs. Adding additional taxes would be a burden to all involved,” says Cheryl Larson, president and CEO of the Midwest Business Group on Health, noting that the GOP’s bill is preferable for employers if there is no cost or administrative burden for them.
Lisa Horn, vice president of policy engagement at the Society for Human Resource Management, said during a recent SHRM conference that mandated paid leave should be optional for employers because it’s “a one-size-fits all policy that stifles employer creativity.” SHRM chose not to comment on the new legislation.
The Economic Security for New Parents Act — or the New Parents Act, for short — would allow parents to draw from Social Security to supplement their income during parental leave. Republican lawmakers sponsoring the bill said during a press conference on Wednesday that it’s the best method for providing federal paid leave because employers won’t have to pay for it.
“We believe it’s the conservative, responsible solution that won’t burden government or employers,” said Sen. Ann Wagner of Missouri, a sponsor of the bill. “It lets parents access a system they’re already paying for.”
Sen. Marco Rubio of Florida introduced the New Parents Act back in August, but changes were introduced on Wednesday in an effort to make the bill more appealing to parents. The original bill said parents would delay their retirement by six months in exchange for accessing Social Security early for parental leave. Now, there’s two more options for offsetting the cost of early withdrawal — parents can opt to have a percentage of their Social Security benefits withheld the first five years of their retirement, or they can pay back the sum before reaching retirement.
“This way we make sure it doesn’t affect current or future benefits,” Wagner said.
Both mothers and fathers are eligible to receive Social Security funding for parental leave through the bill. Lawmakers changed the bill to allow parents to give a portion of their leave benefits to their spouse if they’d like to return to work sooner.
The New Parents Act is in competition with other bills vying to determine how federal parental leave will be funded, said Adrienne Schweer, a fellow at the Bipartisan Policy Center, during SHRM’s conference. For instance, the Democratic-sponsored Family Act proposes offering 12 weeks of partially paid parental leave. Funding for this program would be provided through employer and employee payroll taxes — something proponents of the New Parents Act are trying to avoid.
“Our Democrat friends say to increase taxes instead, but how about letting people take an advance from a system they’re already paying for?” Sen. Mitt Romney of Utah, a sponsor of the bill, said. “[The New Parents Act] allows people to maintain their own resources at a time when they need them significantly.”
Another Democrat bill, the Working Parents Flexibility Act proposes creating tax-exempt savings accounts — similar to HSAs — parents can rely on during parental leave, Schweer said. Employers could potentially provide contributions to these accounts as part of their benefits offering, but it’s not required.
"No working American should ever have to choose between earning their paycheck and actually providing for that urgent family need," said Sen. Kirsten Gillibrand of New York, a proponent of the Working Parents Flexibility Act, in a previous CNN report. "But unfortunately that is a very real choice that parents and family members have to make every single day throughout their careers."
In an effort to attract and retain talent, many employers added parental paid leave policies to their benefits package. Reynolds American, Eataly, XPO Logistics and VF Corp. are some of the most recent companies to offer a parental leave program to their employees. The New Parent Act won’t affect these programs, or discourage employers from offering similar incentives, Rubio said.
“[The bill] does nothing to impede the private sector’s ability to provide it,” Rubio said. “We’re not trying to discourage companies from offering these programs.”