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

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

The United States does not guarantee paid family and medical leave for workers. However, federal law does provide certain workers unpaid, job-protected leave through the Family Medical Leave Act (FMLA). Additionally, a business tax credit offsets the employer’s cost of providing paid family and medical leave benefits; Certain federal employees that have completed a minimum of 12 months of service are eligible to receive 12 weeks of paid parental leave; And, 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.

For more information on FMLA and state-based FMLA laws, see our explainers The Family and Medical Leave Act (FMLA): The Basics and State FMLA and Job-Protection Leave Laws Across the U.S., as well as our report on ways to improve FMLA for employees and employers.

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 benefit, 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 earn less than $90,000 annually.

Originally proposed by 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 FMLA 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 United States government (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

Thirteen states and the District of Columbia have enacted mandatory paid family leave systems. An additional eight states have enacted voluntary systems that provide paid family leave through private insurance. Of those 22 laws, 15 have been implemented and the remaining are not yet in effect. Most of these state laws provide parental and family caregiving leave as well as temporary disability insurance to provide paid personal medical leave. See BPC’s fact sheet on State Paid Family Leave Laws Across the U.S.

All but one of the 14 mandatory paid family leave systems use a social insurance policy design that funds these benefits through pooled payroll taxes on employees and/or employers. The states using a social insurance program are California, Connecticut, Massachusetts, New Jersey, Rhode Island, Washington, Colorado, Delaware, Maine, Maryland, Minnesota, and Oregon, as well as the District of Columbia.

New York instead provides paid leave using a mandatory private insurance system, in which the state requires employers to purchase paid family leave plans through a private insurance market. The New York state government oversees and strictly regulates the system, determining benefit levels and premium rates.

The remaining eight states adopted voluntary paid family leave systems by allowing the provision of the benefit in the private insurance market. The eight states using voluntary private insurance systems are Arkansas, Alabama, Florida, New Hampshire, Tennessee, Texas, Vermont, and Virginia.

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 2023, 73% 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 are nearly 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 are eight times more likely to have paid family leave than the lowest 10% of wage earners.[1]

What Happens When Paid Family Leave is Not Available?

Without access to a defined paid leave benefit, workers often use other benefits—or combinations of benefits—to be compensated while on parental, family caregiving, or medical leave. In 2018, about 66% of workers who took FMLA cobbled together other forms of leave to be paid while on leave. Of those who received pay, 70% used sick leave, 60% used vacation days, 8% used a state paid family leave benefit, and 30% used temporary disability insurance. Additionally, while low wage workers took leave for family and medical reasons at similar rates to middle- and high-wage workers (18% vs. 14%), low-wage workers were least likely to receive any pay (39%) compared to their middle- and high-wage counterparts (80%).[2]

How Does Paid Family Leave Differ from Other Types of Leave?

Paid family leave is designed to support extended periods away from work when the employee intends to return to the workplace. Paid family leave is not paid vacation or sick leave. As we have noted, however, many workers without access to paid family leave turn to vacation, sick leave, or other forms of paid time off when caregiving or medical needs arise.

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End Notes

^[1] U.S. Bureau of Labor Statistics. National Compensation Survey: Employee Benefits in the United States, March 2023, September 2023 https://www.bls.gov/ebs/publications/employee-benefits-in-the-united-states-march-2023.htm

^[2] Scott Brown, Jane Herr, Radha Roy, and Jacob Alex Klerman. Assessing FMLA: Results from 2018 Surveys. Abt Associates. September 15, 2020. Available at: https://www.abtassociates.com/insights/publications/report/assessing-fmla-results-from-2018-surveys.