February 16, 2022
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WILMINGTON — As Gov. John Carney signals his support for paid family and medical leave legislation this year, the Delaware State Chamber of Commerce heard from state finance and labor officials on Wednesday about how the policy would work if it passed into law.
Delaware Secretary of Finance Rick Geisenberger and other state officials have studied nine states and Washington, D.C.’s paid family and medical leave policies to see where the revised Senate Bill 1 stacks up.
“What’s been crafted is much more flexible and responsive to business concerns than franky any other state that we’ve looked at that has it or is going to adopt it,” Geisenberger. “There’s no doubt that this is certainly in the ballpark of reasonableness.”
SB1 would offer 12 weeks paid parental leave and six weeks for medical and caregiving leave through a state social insurance program. Under the bill, eligible Delaware workers could receive up to 80% of their average weekly wages or up to $900 through the state-run insurance program.
Businesses with less than 10 employees would not automatically qualify for paid parental leave, and those with 25 employees or less would not be covered for caregiving or medical leave.
Paid family and medical leave would only apply to full-time employees who worked 1,250 hours, or a full year, much like the federal Family Medical Leave Act of 1993. The benefit is tied to inflation, state officials noted.
The program would be funded by a 0.8% tax of an employee’s weekly pay, split evenly by the employee and employer. Breaking that down, Geisenberger notes that 0.4% tax would be for medical leave benefits, 0.08% for family caregiving — which included military leave — and 0.32% for parental leave. 0.8% would equal $4 for every $1,000 spent.
Another notable feature of SB 1 is that, if the program begins, contributions start at a fixed rate in 2025 and 2026, but it can adjust.
The Delaware Department of Labor will be assessing the rate in early 2027. The bill is written to in essence cap the contribution rate to 1%, and if the benefit formula were to go over 1%, it would decrease benefits for workers. After payouts are assessed and costs to administer the program, the Secretary of Labor will determine whether it would be lowered.
“When we looked at all 10 states, 0.8% is a start,” Geisenberger said. “With the full-year requirement, this goes beyond what other states in the country are doing now. I wouldn’t be entirely shocked if rates do come down … but we want to be sure that when we start, we’ve collected enough money to pay for benefits in the first year.”
Businesses would be able to opt out of the potential Paid Family and Medical Leave program, if they have an established paid leave program that is comparable. Businesses can choose to opt in for one of the three leave policies — medical, caregiving, parental — and leave the other policies on the table to mix and match with the private policies.
State Sen. Sarah McBride (D-Wilmington), the bill’s sponsor, noted that this amendment to her previous proposal was made per the suggestion of small and medium-sized businesses in order to ensure costs are low as the benefit is geared to long-term employees and companies who may not have a program in place.
“This reinforces the fact that it’s not one-size-fits-all … This program provides a wage replacement so that the business is able to then retain the wage or they would otherwise feel sort of a personal obligation to pay their employees to do what they see fit with it, whether that is saving that money or utilizing it to compensate for the absence,” she said. “This doesn’t necessarily increase leave or increase absences. It just increases the support for folks when they hit hard times.”
However, the governor’s Deputy Chief of Staff for Policy Albert Shields noted there may be some challenge in determining which business is eligible to opt out of the program, if approved.
“Where you may get into a gray area is plans that are more generous in one place but less generous in another area, like a company that provides leave for not as many weeks but for 100% of the employee’s pay,” Shields said. “Those are the conversations I think the employer and the Department of Labor are going to have to work through.”
The Delaware Labor Secretary Karryl Hubbard said that if the program was created, she would focus on immediately staffing up to start educating and training employers that are not enrolled in FMLA – the federal law only applies to workplaces with at least 50 employees and those who have worked there for a year. Sometime down the line, Hubbard also hopes to start automating the process.
“The idea is that hopefully we will have a more electronic paperwork project to make it less burdensome for employers,” she said. “We are working with other states
to understand their processes. There is quite a bit of history being made in terms of implementation and how this can be a successful program in many states.”
McBride noted in her research that 71% of companies in New York and New Jersey surveyed in the National Bureau of Economic Research supported paid leave programs after experiencing them. The U.S. Bureau of Labor and Statistics found that 40% of workers in the Mid-Atlantic Region have access to a short-term disability insurance policy, and 23% of workers had access to family caregiving or parental leave benefits.
About 352,000 workers in Delaware do not have access to paid parental leave, she added.
“I’ll also say that what I consistently hear from folks is that [paid family and medical leave] is a policy they care about increasingly in a world with two-income households,” McBride said. “These types of flexible policies to allow workers to fulfill care responsibilities and still participate in the workforce are increasingly in demand.”