Paid Family Leave: The Basics

What is Paid Family Leave?

Paid family leave is compensated time away from work for specific caregiving needs. While existing policies vary, there are generally three qualifying reasons for paid family leave:

• Parental Leave—Time to bond with a newborn, newly adopted, or newly fostered child. This includes paternity and maternity leave.
• Family Caregiver Leave—Time to care for a qualifying family member with an illness or injury.
• Medical Leave—Time to recover from a personal health issue that makes the employee unable to work for a short period of time.

What Paid Family Leave Laws Exist Across the U.S.?

The United States does not guarantee that workers receive paid family and medical leave. However, federal law does provide over half of workers unpaid, job-protected leave. Additionally, a business tax credit offsets the employer’s cost of providing paid family and medical leave benefits. Furthermore, certain federal employees that have completed a minimum of 12 months of service are eligible to receive 12 weeks of paid parental leave. Lastly, several states have implemented their own paid family and medical leave laws.

Federal Laws

Family and Medical Leave Act (1993)

The Family and Medical Leave Act (FMLA) provides many workers with the right to take 12 weeks of unpaid, job-protected leave each year. Although FMLA does not guarantee paid benefits, it does provide workers with the peace of mind that they can be away from work for up to 12 weeks and return to their job (or an equivalent job at the same compensation level).

Under the FMLA, covered employers must provide eligible employees unpaid leave for parental, family caregiving, or personal medical leave. However, FMLA only guarantees job-protected leave for workers who meet a certain set of eligibility requirements. To qualify for FMLA, a worker must:

• Have worked for their employer for at least one year;
• Have worked at least 1,250 hours for their employer in the past year; and
• Work for an employer that has at least 50 employees within a 75-mile radius.

As a result of these eligibility requirements, FMLA covers only 56% of employees. Lawmakers have modified FMLA only a few times since its enactment in 1993. A recent Bipartisan Policy Center report outlines ways to modernize FMLA so that it better meets the needs of today’s businesses and workers.

45S Employer Credit for Paid Family and Medical Leave (2017)

The 45S Employer Credit for Paid Family and Medical Leave is available for businesses of all sizes that provide their employees with paid parental, family caregiving, and/or personal medical leave. To qualify, employers must provide at least two weeks of paid leave that compensates their employees with at least 50% of their regular earnings. The size of the tax credit depends on the generosity of the paid leave benefits, ranging from 12.5% of the cost of paid leave that replaces 50% of earnings to 25% of the cost of paid leave benefits replacing 100% of earnings. The credit is only available for leave taken by workers who have been employed for at least one year and who make less than $81,000 annually.

Originally proposed by U.S. Senators Deb Fischer (R-NE) and Angus King (I-ME) and Representatives Mike Kelly (R-PA) and Terri Sewell (D-AL) as the Strong Families Act, this bipartisan tax credit was enacted as a two-year pilot in the Tax Cuts and Jobs Act of 2017 (TCJA) and is currently authorized through 2025.

Federal Employee Paid Leave Act (2019)

The Federal Employee Paid Leave Act (FEPLA) became law in December 2019 as part of the National Defense Authorization Act for Fiscal Year 2020. FEPLA amends the Family and Medical Leave Act to allow eligible federal employees to take 12 weeks of paid parental leave (not family caregiving or personal medical leave). Paid parental leave may only be taken during the 12-month period following the birth, adoption, or placement (for foster care) of an employee’s child.

To be eligible for paid parental leave under FEPLA, the employee must have completed at least 12 months of service as an employee of the Government of the United States (12 months of covered government service, no tenure requirement for specific employer), be a full-time or part-time employee, and have an appointment to continue work for at least one year.

State Laws

Eighteen states and the District of Columbia have enacted paid family and medical leave laws. Arkansas, California, Connecticut, the District of Columbia, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, Virginia, and Washington have laws that are currently in effect. Colorado, Delaware, Maine, Maryland, Minnesota, Oregon, and Texas enacted laws that have not yet been implemented. Most of these state laws provide parental and family caregiving leave as well as temporary disability insurance to provide paid personal medical leave. Many also use a social insurance policy design that pays for benefits by creating a pooled fund through payroll taxes on employees, employers, or both (see BPC’s fact sheet on State Paid Family Leave Laws Across the U.S.).

However, some states are exploring the role of private insurance. Specifically, Arkansas, New York, New Hampshire, Vermont, Virginia and Texas have enacted laws that provide paid family and medical leave through private insurance on a mandatory (New York) or voluntary (Arkansas, New Hampshire, Texas, Vermont, and Virginia) basis. Under a private insurance system, companies and/or workers’ pay premiums to private insurers that pay out benefits for paid parental, family caregiving, and/or personal medical leave.

Who Has Access to Paid Family Leave?

Outside of the states with paid family leave programs, paid family leave is not widely available in the U.S. As of 2022, 75% of American workers lacked access to an employer-provided paid parental or family caregiving leave benefit, and 59% lacked access to personal medical leave. Moreover, these benefits are not distributed equally. Employees working for companies with more than 500 workers were twice as likely to receive paid family leave benefits as those working for companies with fewer than 50 workers, while the top 10% of wage earners were nearly six times more likely to have paid family leave than the lowest 10% of wage earners.^[1]