How Does Paid Family Leave Work?

For most Americans, paid family leave is a luxury. In the United States, federal law only requires unpaid leave under certain criteria but allows states and employers to set their own policies. Taking time off to adjust to your new life or managing medical needs is essential but could be met with more administrative complications and stress if not planned properly. 

Small businesses and emerging employers are finding new ways to offer competitive benefits to improve the health and productivity of their employees. Providing a robust family leave option may not be in the budget, but consider a care management plan, such as Mira, to offer discounted doctor’s office visits, prescriptions, preventative testing, and more. Try Mira today.

How Paid Family Leave Works

The United States is the only industrialized country without a federal paid maternity leave policy. The federal government implemented the Family and Medical Leave Act (FMLA), ensuring 12 weeks of unpaid leave within a 12-month period for eligible employees of covered employers. An employee could also be eligible for 26 workweeks of leave during a 12-month period for military care of an immediate relative. 

FMLA

The FMLA also ensures job protection during leave and a continuation of health insurance benefits. Under the FMLA, eligible employees are entitled to 12 workweeks of unpaid leave for:

1. The birth of a child or care of a newborn within the first year of birth
2. The placement of a child for adoption or foster care within the first year of placement
3. To care for a spouse, child, or parent with a serious health condition
4. A serious health condition hindering the performance of essential functions of the job
5. A qualifying unexpected event arising from an immediate relative on “covered active duty.”

Nearly 60 percent of U.S. workers are eligible for FMLA through their employer, but only 19 percent receive paid family leave through their employer’s unique policy. The U.S. Department of Labor accepts feedback on specific challenges or best practices regarding the use or administration of FMLA leave. More information or to submit a comment, here. 

Covered Employers Under the FMLA

Only employers that meet certain criteria are subject to the provisions of the FMLA. These covered employers include public agencies such as local, state, or federal government employers. The FMLA also applies to public or private elementary and secondary schools. These public-sector and educational institutions are subject to the FMLA regardless of the number of employees.

The FMLA also applies to private-sector employers with 50 or more employees during at least 20 workweeks in the current or previous calendar year. In other words, if you work for a small business or startup, your employer may not be required to provide you the 12 weeks of unpaid leave. Clarify with your hiring manager or human resource team to understand the company’s time-off policies. Many employers have begun offering robust time-off benefits to increase competition and retention. 

Continue reading for more information on how some employers offer family leave. 

Eligible Employees Under the FMLA

If you work for an employer subject to the FMLA, it does not always mean you are automatically entitled to 12 weeks of unpaid leave. Employees also have to meet eligibility requirements to be entitled to job-protected leave. An eligible employee has:

1. Works for a covered employer, as outlined above.
2. Has worked for the employer for at least 12 months
3. Has worked at least 1,250 hours for the employer during the 12 months preceding leave
4. Works at a location where the employer has at least 50 employees within 75 miles

The 12 months of work required for an eligible employee does not have to be consecutive and could include seasonal work. If you have more than a seven-year gap of service for that organization, then you are no longer eligible unless that gap was due to military service for USERRA members.

Recent Attempts at Federal Paid Leave Expansion

Employers and Politicians see the benefit of paid leave policies. Since the early 2000s, some states and employers have developed robust paid family leave policies. In recent years, the Trump administration began discussing a national paid leave policy that did not come to fruition. Still, many suggested policies have been brought to our political leader's attention. Below are some recent efforts to expand the federal guidelines regarding paid family leave in the United States.

Federal Employee Leave Act

In October of 2020, the Federal Employee Leave Act was enacted, granting federal employees 12 weeks of paid parental leave for the birth or placement of a child. The FMLA policy had previously guaranteed federal employees 12 weeks of unpaid leave.

Healthy Families Act

The Healthy Families Act was introduced to the House of Representatives in April of 2021 but has yet to be passed. This law would allow employees to earn at least seven paid sick days, or 56 hours to care for themselves or their loved ones. This bill emphasizes the importance of “sick time” in the workplace to care for personal needs by setting a national paid sick leave policy. 

Family and Medical Insurance Leave Act

Introduced to the Senate in February of 2019, the Family and Medical Insurance Leave Act, also known as the FAMILY Act, establishes the Office of Paid Family and Medical Leave within the Social Security Administration. This would entitle every individual to a family and medical leave insurance benefit for a specified period and under certain calculated eligibility benefit amounts. This bill amends our current tax system and would impose a new tax on employers, employees, and self-employed individuals to fund the FAMILY benefit.

State-Based Paid Family Leave Policies in the United States

Many states are beginning to recognize the benefit of paid leave policies, but only eight states and the District of Columbia have enacted these programs. Some states have just recently passed their paid leave laws but have yet to be enacted. Check with your state to determine how they define “family members” or qualifying leave events.

States such as California, New Jersey, Rhode Island, and New York have paid leave policies effective as early as 2004. The District of Columbia, Washington state, and Massachusetts have only recently enacted their policies between 2019 and 2021. In the coming years, between 2021 and 2024, paid leave policies in Connecticut, Oregon, and Colorado will begin to take effect. Outlined below is the general structure of state-based paid leave policies in the United States.

California

As of 2019, California has processed about 12.3 million claims since enacted in 2004. The California Paid Family Leave (PFL) policy provides benefit payments to finance time off while caring for family members with serious illness, bonding with a new child (birth, adopt, or foster), or those participating in a qualifying event because of a relative’s military deployment. Depending on your eligibility, employees could receive benefit payments for up to eight weeks at 60 to 70 percent of their weekly earnings from wages during 5 to 18 months before your claim date. 

Employers do not have to pay employees' salaries while on leave because the PFL is funded entirely through worker contributions to the State Disability Insurance program. Citizenship and immigration status does not affect eligibility in California. For information on eligibility requirements, visit the Employment Development Department of California website. The state website also allows you to calculate your paid family leave benefit amount.

New Jersey

In New Jersey, worker payroll deductions fund Family Leave Insurance to provide a monetary benefit but do not entitle workers to leave. The Family Leave Insurance does not guarantee job protection, as does the FMLA, but provides up to six weeks of Family Leave Insurance benefits during a 12-month period. 

The benefit amount is based on your average weekly wage from the eight weeks before the start of your claim, paying out 85 percent of that average weekly wage. For 2021, the maximum weekly benefit rate is $903 per week. Those eligible must have worked 20 calendar weeks and receiving earnings within the state of at least $169.

Rhode Island

Rhode Island implemented its Temporary Caregiver Insurance Program (TCI) in 2014 and has had 200,000 claims filled. TCI provided up to four weeks per year of partial wage replacement benefits to RI workers and was the first to offer reinstatement and job protection to prevent workplace retaliation and employment termination. Employees contribute 1.2 percent of their first $64,200 in earnings.

New York

As of this year of 2021, New York’s paid family leave program provides 12 weeks of job-protected paid family leave at 67 percent of an employee’s average weekly wage. New York is the first state to implement a state-based paid leave policy for military family needs before deployment. More than half of the claimants reported annual incomes of $60,000 or less, and employee payroll deductions fund the program. 

State-Based Paid Leave Policies in Recent and Coming Years

California, New Jersey, Rhode Island, and New York are pioneers for states offering their own paid family and medical leave policies. As previously mentioned, many other states are catching on and expanding and implementing their own policies. Below is a table outlining recent and upcoming paid leave policy expansions. 

Source: National Partnership, A Better Balance

Employer-Based Paid Family Leave Policies 

From a 2015 to 2020 review of organizations, nearly 200 brand-name companies have enhanced their paid leave policies across multiple industries. These companies report that these policies have promoted gender equality, employee respect, and improved employee health. Paid leave policies have also been beneficial for employers in that they improved recruitment and retention, boosting the company brand and reputation.

Some companies even offer the same amount of leave to their part-time employees as they do to full-time employees. Visit a comprehensive list here. 

Below are a few examples of how health-related organizations are developing their own policies to meet the needs of their employees. These policies differ from their standard sick-time or vacation time policies. Understand these policies may be subject to additional eligibility criteria as set by the organization. Please visit the company websites for more information on the specific details of their paid leave policy. 

Cleveland Clinic

The Cleveland Clinic provides their eligible employees 8 weeks of paid maternity leave, plus an additional 4 weeks of paid parental leave. In other words, birthing a child increases the number of paid weeks of leave. The four weeks of paid parental leave include adoption and surrogate parents.

Johnson & Johnson

Eligible employees at Johnson & Johnson can receive up to 17 weeks of paid leave in total. Nine weeks are allotted to those who give birth, plus an additional 8 weeks of parental leave, including adoptive parents. Johnson & Johnson also includes a breast milk shipping service for mothers while traveling for business purposes, childcare centers at many campuses worldwide. The health company offers fertility benefits up to $35,000, adoption benefits up to $20,000, and even a $20,000 surrogacy reimbursement per child. 

CVS

All full-time hourly and salaried employees working for CVS for at least one year are eligible for up to 10 weeks of paid family leave. Six weeks of medical leave are provided for parents who give birth, plus an additional 4 weeks of paid parental leave. CVS will also provide reimbursement for certain expenses related to the adoption of a child. 

The Gates Foundation

As an employee of the Gates Foundation, you could be eligible for 26 weeks of paid parental leave, including adoptive and foster parents. The Gates Foundation also provides a $20,000 stipend for new parents to spend on childcare and family needs, a $20,000 reimbursement for adoption-related expenses, and even up to $40,000 toward reimbursement for fertility treatment.

Paid Family Leave Frequently Asked Questions (FAQs)

For more information regarding the use of federal, state, and employer-based leave policies, here are a few commonly asked and answered questions. 

What if I don’t qualify for FMLA or require more time off than my employer or FMLA allows?

Many Americans are still not eligible for either paid or unpaid leave. If your employer does not have a paid family leave policy, you have exhausted all the allowed time set by your employer, or under the FMLA, you may want to consider short-term disability insurance. This plan requires you to be enrolled before pregnancy and under certain eligibility criteria and cannot be used voluntarily - only if pregnancy or labor and delivery directly cause a disability hindering your return to work.

Are unemployed individuals eligible for FMLA?

No, unemployed individuals are not eligible for FMLA. The FMLA does not require paid leave but 12-weeks of unpaid, job-protected leave for eligible employees of covered employers. Many states have varying definitions of what it means to be “unemployed.” If you are not working or receiving any payment during your FMLA unpaid leave for a serious medical event, but you do have job security, you could receive unemployment benefits. 

If I am eligible for FMLA, do I have to use my 12-weeks at one time?

Under certain circumstances, an eligible employee may use FMLA leave intermittently or on a reduced schedule. This means that the full 12 weeks of entitled leave could be taken over various blocks of time. Leave can be taken in different time blocks for the birth, adoption, or fostering of a child if approved by your employer. For planned medical leave, the employee must make an effort to schedule their treatment in a manner that does not disrupt their employer’s operations.

If my employer offers their own policy, how else can I use my paid leave?

Dependent on an employer’s leave policy, an eligible employee may also use their accrued paid leave, such as sick time or vacation time to cover some of their family or medical leave period. Employees are required to comply with their employer’s requirements for requesting leave and provide sufficient information for their employer to determine whether the FMLA applies to their circumstances. 

Bottom Line

Only certain employers are required to provide unpaid leave to their eligible workers, leaving millions scrambling when it comes to family or medical planning. Some states have developed systems offering paid family leave, while many have left it up to employers to determine a competitive benefit. If you or your company are not eligible for federal leave, you may want to consider short-term disability insurance to help finance necessary time off from work.

Paying for health insurance while engaging in frequent and costly care to prepare for an expanded family can cause unanticipated medical bills. Mira offers affordable preventative and primary care and over 1,000 highly discounted prescriptions. Try Mira today to get covered.