Stateline Story

New Jersey Enacts Paid Family Leave

  • May 14, 2008
  • By Christine Vestal

New Jersey Gov. Jon Corzine (D) said his near-fatal car accident last year changed the way he thought about several state policy priorities. Paid family leave was one of them.

"When I was in the hospital after my accident last spring, it was the strong support from my family that kept me going. I was fortunate my family members had the flexibility to be there for me, day-in and day-out. But not everyone has that luxury," Corzine said.

On May 2, Corzine signed a bill - only the third in the nation - giving all New Jersey workers the same flexibility his children had. The new law requires employers to give workers up to six weeks a year of paid leave to look after family members, including newborns and adopted children.

Now that the federal government has boosted the minimum wage and most states have lifted hourly pay above the federal minimum, family-friendly work schedules - including paid sick days and paid family leave - are at the top of state labor agendas.

California (2002) and Washington state (2007) have enacted paid family leave laws, and Oregon and New York are expected to consider leave laws next year, according to the National Partnership for Women & Families , which advocates for workers.

But business groups say the new leave requirements will hurt productivity and create miles of red tape.

"It's hard enough to compete in this economy without having to give key employees time off," Laurie Ehlbeck of the National Federation of Independent Businesses told Stateline.org.

Although 33 percent of large companies voluntarily offer employees some form of paid family leave, according to a survey by the Society for Human Resource Management , the federal government requires businesses with 50 employees or more to give workers only time off without pay under the Family and Medical Leave Act signed by President Bill Clinton in 1993.

That puts the U.S. behind 168 other countries that guarantee paid leave for mothers to take care of newborns and 66 countries that also require paid leave for new fathers, according to a study by McGill University in Canada.

New Jersey's plan, like California's, will be funded by employee payroll deductions that are dispersed from a state-administered account. The plan will give workers time off to bond with newborns and adopted or foster children or to care for ailing spouses, children, or parents.

In California, where a paid family leave policy has been in place since 2004, nearly 90 percent of beneficiaries are women who take time off to care for their newborn children.

"New Jersey's new law is evidence that momentum is building for family-friendly policies," said Kate Kahn of the National Partnership. "With the economy in trouble and families struggling to make ends meet, we need basic workplace policies to help families avoid a financial disaster when illness strikes or new babies come."

Starting Jan. 1, 2009, New Jersey workers taking family leave can get two-thirds of their wages up to $524 a week for as much as six weeks a year. The Legislature estimates the plan will cost workers $33 a year and be used by about 38,000 employees, or 1 percent of the state's workforce.

The New Jersey Chamber of Commerce, which represents the state's largest companies, argues the new benefit will cost workers much more. In a recent report , the group said that the state's projections fail to account for expanded use of leave benefits which will increase the deductions for everyone.

Particularly squeezed will be industries that require specially trained and licensed professionals, the Chamber says. "In the casino industry, for example, where most employees undergo background checks, it's impossible to find someone to come in and work for six weeks. Most jobs will go vacant," said James Leonard of the New Jersey Chamber.

But so far, California's Employment Development Department , which administers the family leave program, reports businesses have had few complaints. Large companies with more than 1,000 employees account for only 14 percent of California's workforce, but nearly half of all family-leave claims were filed by employees of large companies, according to a report by the California Senate Office of Research .

Small businesses already offer flexible work arrangements, such as telecommuting and part-time schedules when employees need to care for family members, said Ehlbeck of the National Federation of Independent Businesses. "New Jersey's new mandate may make sense for big companies, but small businesses will suffer."

California's family leave fund provides 55 percent of wages, capped at $882 per week for up to six weeks. In addition to six weeks of paid family leave, mothers who give birth can take another six weeks of disability leave.

Out of a workforce of 18 million, about 160,000 Californians received paid family leave benefits averaging $436 in 2006, and the number is projected to rise by 7 percent over the next two years, according to a state forecast . Employee contributions are currently set at .8 percent of income up to $86,698, lower than when the fund was started in 2004.

In Washington state, employees will get $250 per week for up to five weeks of family leave, and lawmakers have yet to decide how the benefit will be funded. Gov. Christine Gregoire (D) this year approved $6.2 million to cover administrative costs to set up the program, and lawmakers promise to work out a financing scheme in the next legislative session.

Tags: Labor