Paid Family Leave in California

An Analysis of Costs and Benefits

In 1993 President Clinton signed the Family Medical Leave Act (FMLA) into law, allowing covered and eligible employees to take up to 12 weeks of unpaid leave from a job to attend to their own health, the health of a family member, or to spend time with a new child. Much data exist, however, indicating that while many Americans need to take leave for family or medical reasons, a significant percentage of these individuals do not take leave because they cannot afford to miss a pay check.

Numerous states have identified this shortcoming in the current law and the adverse impact it has had on employees and their employers. Consequently, in 28 states, including California, Massachusetts, New York and New Jersey, paid leave bills have been introduced.

In this report, researchers conduct a cost benefit analysis of one such piece of legislation, SB 1661, introduced in the California legislature in February 2002. This legislation expands the state’s existing State Disability Insurance (SDI) system. The current SDI system already provides partial paid family and medical leave, providing employees 55-60 percent wage replacement when they take leave to recover from a nonworkplace-related serious illness, including pregnancy- and birth-related disabilities. SB 1661 would extend this family and medical leave insurance system to allow employees 50-60 percent wage replacement when they take up to 12 weeks of leave to care for a newborn or newly adopted child or for a seriously ill family member.

Using data from the U.S. Department of Labor, researchers begin by providing three different cost scenarios for SB 1661. They then examine cost savings for employers using data that indicate that employees who receive some form of paid benefits are more likely to return to their employer. They also analyze data concerning 5 the percentage of unpaid leave takers that currently end up on public assistance.the percentage of unpaid leave takers that currently end up on public assistance. Researchers conclude by discussing the costs and benefits of SB 1661 and also propose recommendations for future study.