Wednesday January 10th 2018
The recently signed tax overhaul bill is a game-changer that will impact employers in many ways—including some that might not be fully realized until further down the road.
Take paid leave benefits. The tax bill will provide businesses with a tax credit for offering up to 12 weeks of paid family and medical leave. That’s pretty straightforward.
But coupled with a lesser-known bill that’s currently moving through the House at a slower pace, the paid leave language in the new tax law could give employers an even larger incentive to provide paid leave voluntarily—by exempting them from the growing number of state and local laws that make paid leave mandatory.
In November, the Workflex in the 21st Century Act was introduced. The “workflex bill” is a combination of paid leave and flexible work options, with the stated goal of allowing employers to voluntarily adopt flexible work arrangements as a means to provide employees with paid leave.
The legislation amends the Employee Retirement Income Security Act to allow employers to voluntarily participate in offering flexible and predictable working options for their workers. Although participation is voluntary, once an employer decides to implement a workflex arrangement, there are several requirements that must be met.
If an employer decides to adopt a workflex plan, it would be required to provide paid leave and at least one of six voluntary workflex options to all employees. The options include telework, job sharing, compressed work schedules, biweekly work programs, flexible scheduling, and predictable scheduling.
Although paid leave and flexible work arrangements are addressed together in the bill, employees are not required to adopt a flexible work schedule in order to receive paid leave—all employees would receive paid leave even if they don’t adopt a flexible work schedule.
Additionally, because the plans would be offered under ERISA, employers would be subject to documentation and reporting requirements under the law.
To be eligible for a workflex arrangement, workers are required to be employed with their employers for at least 12 months and they must have worked at least 1,000 hours during the previous 12 months.
Under the proposal, employees accrue paid leave over the course of a plan year or employers can offer employees a lump-sum amount of leave at the start of the plan year.
New employees will have restrictions on the use of leave in the first 90 days of employment, while part-time workers would receive a proportional amount of paid leave based on the number of hours they work.
The amount of leave offered would depend on the size of the business and an employee’s tenure with the employer.
Currently, eight states and over 30 jurisdictions have enacted their own paid sick leave laws. However, this legislation provides employers who choose to offer a flexible work program exemption from state and local paid leave requirements.
Opponents of the legislation say it will “circumvent state and local laws designed to protect working people,” while advocates say it will “finally provide a federal standard on paid leave in the United States.”
The representatives who introduced the legislation say the combination of paid leave and flexible work arrangements will provide both full- and part-time workers with a better work-life balance.
The bill does not impact laws on unpaid leave; nor does it impact coverage requirements under the federal Family and Medical Leave Act and similar state laws.
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