Key Elements of the Build Back Better Act’s Paid Family and Medical Leave Proposal Explained

The Build Back Better Act — the jobs, families, care and climate bill currently under consideration in Congress — includes federal investments in a first-ever permanent national paid family and medical leave program. A national commitment to paid family and medical leave would set a floor, guaranteeing paid leave for the first time to an estimated 18.5 million workers each year who do not have paid family or medical leave through their jobs to care for a new child, a seriously ill or injured loved one, or address their own serious health condition. Creating a new, permanently funded paid leave program would create certainty and stability for workers and their families, states, and employers. Paid leave is one of the most popular elements of the Build Back Better agenda and must be part of final legislation.

Paid leave would have multiple important outcomes, including creating greater economic security and better health for workers, children, and older adults; providing more support for small businesses; and boosting the country’s economic growth through greater labor force participation and higher earnings for women and caregivers. Researchers estimate that paid leave could keep more than six million caregivers connected to the labor force by 2030.

Adopting national paid family and medical leave would end the United States’ outlier status. The U.S. is the only high wealth country that does not guarantee paid leave to parents who have given birth, one of two countries does not guarantee paid sick leave, and one of a few that does not guarantee paid leave to new fathers or adoptive parents. It would also put the United States in a favorable position relative to our international peers with respect to family caregiving leave, which many countries provide but others do not.

The Build Back Better Act’s paid family and medical leave guarantee would be historic and transformational. It would fundamentally change U.S. policy; encourage greater partnership between state government, the federal government, and the private sector; and begin to establish a culture of care that reflects the needs of people, families, and businesses. While scaled back from proposals put forward earlier in the legislative process to reflect downward pressures on the overall size of the budget package, it is still significant and will make a meaningful difference in people’s lives.

The Build Back Better Act would create and fund a national paid family and medical leave program with ten key elements. It would begin to operate in January 2024 to guarantee much-needed support to millions of workers who currently have little to no leave and demonstrate to employers the value of paid leave for their employees and their business.

The key features of the proposal include:

(1) Comprehensive coverage for all core, original FMLA purposes.

The proposal recognizes that, at some point, every nearly working person will need time away from their jobs to provide or receive care. It covers all of the original purposes established by the Family and Medical Leave Act (FMLA) of 1993:

• Care for a newborn or newly placed adopted or foster child
• A loved one’s serious health condition, which could also be used to care for a wounded servicemember
• Worker’s own serious health condition

Addressing all original FMLA reasons, at a minimum, is essential to ensure all people can benefit from a paid leave policy when they need it. For example, about half of workers use unpaid FMLA leave to address their own health issues (51%), one-quarter use FMLA leave to care for a new child (25%), and one-fifth use FMLA leave to care for a loved one with a serious health condition (19%).

The current proposal removed the deployment-related reasons and safe leave for survivors of domestic violence, which were included in the original Ways & Means proposal and the original Biden-Harris American Families Plan and which some state programs also include. These could be areas for expansion in the future once the program is established.

(2) Eligibility rules that are inclusive of virtually all workers.

Benefits will be available to anyone with a certified, qualifying health condition or caregiving need within 90 days before or after filing an application and who has at least $2,000 in earnings from work over the eight prior calendar quarters, ending four months before the quarter in which a claim is filed. Benefits are available to federal, state, and local employees and self-employed people.

The connection between work and access to paid leave is paramount. This is a program for working people who have a recent connection to the workforce and intend to return to work. Future eligibility depends on maintaining a work history. State program eligibility rules also use a combination of work history and earnings to determine eligibility.

(3) Commitment to gender equity.

Paid leave will be available on a gender-equal basis to all parents, family caregivers, and workers. This recognizes that men are important caregivers for new children and seriously ill or injured loved ones. When paid leave is available, men are more likely to be able to take the leave they and their loved ones need, and fathers are more likely to be involved in their children’s care over the longer term. Gender equity in providing leave also helps to guard against implicit or explicit gender biases that often harm women’s employment due to unfounded negative stereotypes associated with caregiving.

(4) One month of paid family and medical leave.

The House proposal includes four work weeks, or 20 working days, of paid leave benefits for providing or receiving care in a year. The time can be used all at once or intermittently (banked in one-hour increments called a “caregiving hour”). A minimum of four caregiving hours in any given week is required in order to receive a benefit for that week.

Four weeks is substantially less time than what the original Ways & Means proposal and previous paid leave bills contemplated, but — given the U.S. standard of zero weeks, which applies now to workers in 41 states — even a month of paid leave is significant. According to the most recent Bureau of Labor Statistics data, it will make a substantial difference for the 77% of workers who do not currently have paid family leave at their jobs and the 60% who do not have personal medical leave through an employer’s short-term disability program. It will especially make a difference for lower-wage workers who are even less likely than others to have paid sick leave at their jobs.

To apply this abstract number to people’s lived experiences, four weeks means that the two-thirds of pregnant people who work during pregnancy will have at least that amount of time to heal and bond; that new fathers and adoptive parents who are unlikely to have paid leave now and typically take fewer than two weeks of leave if any at all will have at least a month to bond with their new child; and that all working people with personal or family health crises will have a month to help hospitalized loved ones return home or to face their own serious health issue, recover from surgery, or seek treatment. It also means that small businesses owners who might otherwise be stretched when workers are out can more easily hire temporary help or pay existing employees for extra hours to fill the gap.

(5) Scaled, means-targeted benefits that make leave-taking affordable for low- and middle-wage workers and use federal dollars wisely.

The Build Back Better Act proposal makes a worker’s level of benefits contingent on their average earnings so that benefits are targeted to workers’ typical wages. With means-targeted benefits provided on a sliding scale, a low-wage worker ($290 in average weekly wages) receives 90% of their typical wages; a worker with average wages receives about two-thirds of their typical wages, and higher-wage workers receive less; benefits are capped at $814/week or $3,256 for all four weeks. See this chart for more details.

Scaled benefits were part of the original Ways & Means proposal, the Biden-Harris American Families Plan and are part of most newer state paid leave programs. This approach to wage replacement incorporates best practices from state paid leave programs and international experience, which shows that lower-wage workers need most of their wages replaced to be able to take the leave that is available to them. In contrast, low wage replacement rates would mean that people who live paycheck to paycheck on low hourly wages will not be able to make ends meet and will be more likely to forgo needed leave, thus missing out on the health, work retention, and indirect economic benefits associated with paid leave.

(6) Recognition that “family” includes more than just parents, spouses, and children.

The proposal recognizes that some workers may need to care for a family member related by blood or affinity or for adult children, grandparents, grandchildren, siblings, and in-laws as well as parents, spouses and younger children. Access for extended family members who need care is critical for the full inclusion of people across regions, community type, demographics, and disability and is now part of every state paid leave program. The federal government has a long history of recognizing a range of family relationships in its policies for funeral leave and other family-friendly benefits, including the recent, temporary paid sick leave provisions of the Families First Coronavirus Response Act, which allowed eligible workers to take leave to care for another “individual” who needed their care for much of the COVID-19 pandemic.

(7) Administered through the Social Security Administration, an agency accustomed to providing individual-level benefits, processing claims, and engaging in public education and outreach.

The Build Back Better paid leave proposal places responsibility for the new program with the Social Security Administration (SSA), the one agency in the federal government that has experience administering broadly applicable benefits programs reaching large numbers of Americans. The proposal dedicates new federal funds annually to the agency to administer the paid leave program.

SSA will receive workers’ applications for claims and their weekly benefit reports, coordinate with the Treasury Department to make benefit payments, and hear appeals. It will also conduct outreach and education and interface with “legacy states” and employers who choose to continue providing benefits in an alternative way. In addition, SSA has access to the data, systems, and field offices to help make the paid leave program a success. Placing the program at SSA also provides the agency new resources to do its work and new relevance to a wide range of younger people in the United States.

SSA is the agency identified initially as best suited to paid leave administration in the Family and Medical Insurance Leave (FAMILY) Act, the bill that was the forerunner of current proposals, and by the Biden-Harris administration in the American Families Plan and their proposed fiscal year 2022 budget.

(8) Continued operation of state paid family and medical leave programs.

The Build Back Better proposal honors state leadership and innovation. It recognizes that state paid leave programs are or will soon serve workers in nine states and the District of Columbia. It allows states that have previously passed their own paid leave programs as of the date the BBB Act is enacted to apply to be designated as “legacy states.”

Legacy states would receive grants for the cost of providing the benefits that otherwise would have come through the federal program. Legacy states would be required to provide at least four weeks of benefits at wage replacement rates that meet or exceed the federal benefit rates and agree to a data-sharing agreement with the federal program to help maintain program integrity. Legacy states would also be permitted to provide benefits that exceed the federal program’s standards, as most already do.

(9) Partial reimbursement for employer-provided paid leave programs that meet rigorous standards.

The Build Back Better paid leave proposal recognizes that some employers that have operations in non-legacy states already provide paid leave benefits or may choose to provide paid leave benefits in the future. It would reimburse employers for no more than 90% of the actual costs of providing or insuring paid leave benefits to workers who would otherwise receive benefits from the federal program.

To qualify for reimbursement, employers must submit an application and attest that they will: (1) provide paid leave to all employees (regardless of tenure, seniority, job type, or any other classification); (2) provide paid leave benefits that meet or exceed all of the major federal program requirements, including covering all reasons for leave that the federal program covers without regard to pre-existing conditions, wage replacement rates, and permitting intermittent leave; (3) restore the employee to their same position or an equivalent position; (4) maintain group health insurance coverage; (5) provide appeal rights for the denial of leave; (6) provide an annual notice of coverage and appeal rights; (7) not impose fees or cost-sharing on employees for ensuring or receiving coverage; (8) not interfere with, restrain, deny the exercise of an employee asserting the right to take leave or discharge or discriminate against workers who oppose any practice prohibited by the statute; (9) maintain programs through the end of each calendar year in which a program has been approved.

The private plan option provided by the bill will likely affect only a small share of employees and firms: just 23% of workers have paid family leave at their jobs now, and only 40% have personal medical leave. Even in firms that offer paid family and medical leave, benefits are often less than what the federal proposal provides and are stratified within workplaces so that only some workers have access to benefits. For example, currently, only 13% of employees in the U.S. work in workplaces that offer paid paternity leave to all new dads but 26% work in workplaces where at least some employees are offered paid paternity leave. Likewise, 19% of employees are in workplaces that offer paid maternity leave to all new moms, but 36% are in workplaces where some employees have paid maternity leave. In order for these worksites to qualify, they would have to extend benefits to all workers and cover all of the reasons the federal program includes. Inequitably offered and partial benefits would not suffice. In addition, private insurance in non-legacy states covers personal medical leave through short-term disability, but not family caregiving leave — and to create products that employers could purchase, insurers will need to get state-by-state approval from insurance commissions.

(10) Sustainable funding for the program provided by tax fairness measures aimed at corporations, wealthy individuals, and prescription drug pricing reform.

The Build Back Better Act, including the paid leave provisions, will be paid for through a mix of tax reforms that ensure corporations and very wealthy people pay a fairer share of taxes and through reforms to Medicare’s ability to negotiate prescription drug prices. These reforms will provide revenue for the first and second decades of the program if it is authorized as a permanent program.

Should policymakers desire to create a dedicated funding stream for paid leave, there is always the possibility that Congress could revisit funding for paid leave in the future, for example, by establishing a shared employer-employee contribution system or a mix of revenue from employers, employees, and the government. Some members of Congress may prefer this approach in the long term, and there is nothing to stop them from adjusting the funding for the program just as they might choose to expand program benefits to make the duration of the program more consistent with the FMLA and state paid leave programs.

* * *

What's next if the Build Back Better Act enacts paid leave?

Congress is on the cusp of enacting a historic, permanent national paid family and medical leave program, which will ensure that every member of the U.S. workforce has access to paid leave when they need to take time away from their jobs to provide care, receive care, or heal. Paid leave addresses some of the country’s most pressing challenges: economic and health disparities, gender and racial injustice, labor force participation, caregiving challenges, global competitiveness, and small business success.

If Congress enacts paid leave through Build Back Better, advocates will close the first chapter of their work — work that has endured, grown, and succeeded since the work to pass the FMLA began in 1984; the FMLA’s passage in 1993; the enactment, implementation and even expansion of state paid leave programs starting in 2002; the passage of a federal law guaranteeing paid parental leave for federal employees passed in 2019 and the emergency paid leave provisions addressing the COVID-19 pandemic in 2020 and 2021.

The work to guarantee full access to secure paid family and medical leave to all working people in the United States will continue even after the Build Back Better Act passes. Successful implementation of the new federal program will require partnerships among public, private, and nonprofit entities and a commitment to ensure that the workers who need paid leave the most understand their right to access benefits. In addition, advocates will work to secure job protections for all workers who can access paid leave benefits by expanding the FMLA and expanding the duration of paid leave to at least the 12 weeks established by the FMLA. Innovation will beget innovation, and the culture changes the new federal program promotes will make future progress more possible.

It is past time for the U.S. to pass paid leave. Building back better requires it.