Shortly after being sworn in as the new governor of California, Gavin Newsom proposed extending California’s current six-week paid family leave (PFL) to six months. PFL, which became state law 17 years ago, currently provides up to six weeks of partial wage replacement to employees who take time off work to, among other things, care for a new child entering the family through birth, adoption or foster care placement. Other states – such as New York, Massachusetts and Washington – have followed, and have even surpassed, California’s PFL, providing more paid time off to parents.
The proposal may seem like good news to some, but not to all. On the one hand, the proposal will boost the amount of time employees can take off work to bond with a new child. And spending more time at home with a new child could decrease the cost of child care to parents. On the other hand, questions abound regarding how to fund the increase. PFL is funded 100% by employees through payroll taxes. One option for funding the proposal is to increase payroll taxes, i.e., to increase deductions from employees’ paychecks. The proposal does not call for six months for each employee, however – just six months for each child. Thus, the six months could be divided between two adults in the household taking care of a new child – such as one parent taking two months and the other taking four months. Other funding options include property and sales taxes, or even requiring employers to contribute toward PFL. Governor Newsom has suggested that the PFL proposal may become part of a larger tax reform initiative in the state.
Why it matters: The proposal is far from becoming new law, with Governor Newsom yet to release an estimate of the cost of the proposed increase. While many may agree with the idea of parents spending more time with their new child, resolving the issue of how to fund that increased time will be a central focus of many debates. Regardless, more and more private employers in California (and other states) are electing to provide more than the mandatory paid time off for parents to bond with their new children.