About 35,000 workers in New Jersey are taking paid time off each year to stay home with a new baby or care for a sick relative under that state’s paid family leave law, a program popular enough that lawmakers voted to bump up the max weekly benefit to $881 this year and extend it to 12 weeks.
In Washington, where state officials launched a paid-leave program Jan. 1, demand was so high it caught them off guard. The program — which has paid out $340 million in benefits in its first eight months — was dragged down by long wait times until the state could hire additional staff to process applications.
“We had an immediate demand for the program, far exceeding all projections, reaching our estimated total for the year by June,” said Clare DeLong, communications director for the Washington Employment Security Department.
As Colorado prepares to vote in November on whether to create its own paid-leave program, it can look to lessons learned — and mistakes made — in eight states and Washington, D.C. The first states to begin the programs, California in 2004 and New Jersey in 2009, are now several versions in, including expansions to cover a higher percentage of a worker’s salary.
None of the states’ programs is an exact match to the Colorado proposal, which borrowed ideas from across the country and used a blueprint created last year by a bipartisan task force. The question on the ballot here, Proposition 118, will ask voters to create a program that would:
— Give workers up to 12 weeks of paid time off to care for a new baby or adopted child, recover from an illness, or take care of a relative who is seriously ill.
— Require employers and employees to contribute 0.9% of the employee’s wage (that’s 0.45% each from the employer and the employee) into a statewide fund starting in January 2023. Businesses with fewer than 10 employees are exempt. Local governments and school districts could opt out.
— Allow workers, beginning in January 2024, to receive a percentage of their salary while they take time off, not exceeding $1,100 per week. Low-income workers, earning less than half of the state’s average pay, would get the highest percentage of their salaries, at 90%.
— Allow employers to purchase paid-leave insurance on the private market instead of through the state program.
Across the country, paid-leave programs are basically a social insurance pool. The amount workers or business owners pay into the fund fluctuates depending on how many people are applying for paid time off. Colorado’s measure would allow the state Department of Labor to increase the employer-employee contribution up to 1.2% should the fund face higher-than-anticipated demand.
New Jersey expanded program this year
In New Jersey, lawmakers voted — before coronavirus — to expand the state’s family leave program this year. The maximum benefit went to 12 weeks from six, and the allowed payment rose to 85% from 66% of a worker’s salary.
But to make that work, the contribution cap rose to $215 per year, up from $27.
Spread across an entire year, the payment still seems small, said Yarrow Willman-Cole, with New Jersey Time to Care, which is part of a coalition that pushed for the expansion.
“People aren’t necessarily noticing that. It’s not something that we’ve found to be problematic,” she said. Still, during the pandemic, “all pennies count now.”
In New Jersey, workers fund the entire family-leave pool. That’s because the state, along with three others that were the first to pass family-leave laws, already had a disability-leave program. Employers in New Jersey fund that program, which pays for workers to take time off when they are diagnosed with cancer or other serious illnesses.
Colorado’s program, if passed, would start from scratch, and would include both family and disability leave in one insurance pool.
The New Jersey disability and family-leave programs have been helpful to families during the coronavirus pandemic, allowing workers to take paid time off if they are sick with COVID-19 or to care for a loved one who has the virus. The family-leave program does not cover another major pandemic problem, however — workers who need to take time off because schools are closed and their children are at home.
Family-leave proposal has died six times at the legislature
In New Jersey, supporters of family leave worked for about five years before the law was passed by the legislature in 2008. That time frame adds up, considering how long Democrats in Colorado have pushed for such a law.
The proposal has died six years in a row at the Colorado legislature, most recently in May, when Democrats gave up on their latest version of the bill because of pushback from the business community in the midst of the pandemic.
Instead, proponents began collecting signatures to get the question on the November ballot. And last week, every Democrat in the state Senate — minus Sen. Joann Ginal — endorsed the measure, leading many to question why the Democrats, who hold the majority in both chambers, didn’t just pass the legislation.
“I’ve been working on this issue for six years. It’s been killed six years in a row,” said Loren Furman, senior vice president of state and federal relations for the Colorado Chamber of Commerce, which is working to defeat the ballot initiative.
The chamber, which represents hundreds of businesses statewide, is speaking out against the family leave program, calling it a “new billion-dollar bureaucracy” run by the Colorado Department of Labor and Employment. The initiative would create a $1.3 billion program with an estimated 200 employees who would process applications and dole out funds to workers.
Furman said she is particularly concerned about a clause that would give “wide discretion” to the governor-appointed head of the department to increase the employer-employee contribution if requests for paid leave are higher than anticipated.
“This is during the worst economic crisis that Colorado and the nation has ever seen and the proponents of this new tax believe that workers and businesses can afford yet another financial hit during the worst time imaginable,” she said. “What voters need to understand is that if there isn’t enough money to support this billion-dollar program, workers and businesses will get taxed at an even higher amount in future years to keep the program afloat.”
Under the proposal, statute would dictate Colorado’s employer-employee contribution rate, based on a formula similar to those used by insurance markets. The premium is determined by the prior year’s claims and administrative costs, and includes a buffer so the fund has some reserves, said Kathy White, deputy director of the Colorado Fiscal Institute, which supports the ballot initiative. It cannot exceed 1.2% of wages.
The ballot measure is also getting hit with a perennial question: is it a new tax, disguised as a “contribution?”
Douglas Bruce, a former state representative and the author of the Taxpayer’s Bill of Rights, told a legislative committee last week that the measure violates the state constitution. He contends that the initiative would create a new tax — not a fee, as proponents say — and therefore requires TABOR-style language on the ballot that would call it a tax.
Bruce said voters should really be asked whether they want to increase taxes by more than $1 billion annually through the bill. “It’s clearly a tax increase,” Bruce testified, vowing to sue if the measure passes. “It’s not a voluntary fee. It’s not something you choose to do. It’s mandatory.”
Senate Minority Leader Chris Holbert, R-Parker, submitted an amendment to the state-issued voter guide, known as the blue book, that would call it a tax. Democrats on the legislature’s Joint Legislative Council Committee on Thursday turned him down.
Washington’s program deluged in first weeks
Washington state’s program, which started from scratch as a program that covers both family and sick leave, was taking 10 weeks to process applications after more than 30,000 people applied within the first month and a half. The state Employment Security Department was overwhelmed.
Washington spokeswoman DeLong sees that as a good thing.
“This demand really speaks to the need for this type of program, where the benefit can be used to cover many circumstances that come up in all our lives,” she said.
Workers have used the program for various reasons, including accidents, childbirth, caring for a parent with Alzheimer’s disease and taking in a foster child, DeLong said. At the beginning of the year, most applications were from new parents but, eight months in, the reasons for leave have shifted. Now, 54% of applicants are asking for family leave or time to care for a loved one, while 46% want medical leave for their own illness.
Since January, 110,612 workers have applied, she said. The state hasn’t seen any “extreme spikes” in applications since the coronavirus hit, but the impact is hard to gauge because the program is so new it does not have an established baseline, DeLong said.
Similar to the Colorado proposal, employers and employees in Washington share the contribution. A portion of the total premium is deducted from workers’ paychecks, then employers add their share and send payment to the state.
Washington was the first state to “stand up a program from soup to nuts,” said Pronita Gupta, director of job quality at the Center for Law and Social Policy in Washington, D.C., which is pushing for a federal family-leave law.
“It’s a completely new program and they didn’t implode,” she said. “They have done it.”
California’s first version wasn’t reaching lowest-income workers
The lessons learned by the first states to enact family-leave laws have informed the latest round of state programs, including in Washington, Oregon and Connecticut.
The frontrunners learned through the years that their laws weren’t targeted to help the people who needed them the most, the lowest-income earners in the state.
Like New Jersey, California also has bumped the maximum paycheck a low-income worker can receive while on leave. The limit in California is now 90%. The change came after state officials realized that it was higher-income workers who were more likely to take advantage of the law, partly because they could survive off a portion of their paychecks. The lowest-wage workers were not taking time off if they could only receive 60% or 70% of their salaries.
“That’s just an unfair program, if you are forcing low-wage workers to pay into a program that they will never use,” said White, with the Colorado Fiscal Institute. That’s why Colorado’s plan is to pay low-income workers up to 90% of their paychecks.
The first round of states also learned that marketing their programs was key, and for similar reasons.
In California, higher-income workers who had access to high-level human resources departments were more likely to know about the benefit and get help filing the application.
About 95% of the lowest-wage workers in the country get no family leave through their employer, Gupta said. “This iterative process has been very helpful because it’s based on who is left out,” she said. “That’s the critical thing, that these policies are meeting the needs.”
There is no evidence so far that any of the programs are getting crushed by the coronavirus pandemic, and Gupta believes that’s because the programs are just one of many federal and state programs — including unemployment benefits and the federal coronavirus relief package — aimed at helping people through a crisis.
Many states — the number is now at 23 — also mandate that employers provide paid sick days. Some of those programs were expanded during the pandemic to ensure that workers could take up to 14 days off. The Colorado legislature passed a sick day law during its coronavirus special session this spring, requiring employers to provide six days per year and 14 paid days off for employees who catch the coronavirus.
“They are completely solvent,” Gupta said. “They are working. And workers are taking advantage of it.”
Colorado Sun writer Jesse Paul contributed to this report.