Massachusetts workers are about to feel the pinch of a new payroll tax.
Starting in October, the state will begin collecting money from workers to fund the Massachusetts paid leave law, which (starting in 2021) will provide employees with 12 weeks of paid family or medical leave.
Currently, federal law guarantees 12 weeks of unpaid time off to care for a child or sick family member, or to recover from a serious illness. Under federal law, however, employers are not required to pay workers during their absence. Many eligible employees, therefore, do not take advantage of the law’s benefits — instead cobbling together sick days and vacation time in order to take leave with pay.
The new Massachusetts law is intended to bridge this gap. But, well-intentioned as it is, the law is rife with problems.
To begin with, the law forces all workers — including those who are already covered by paid leave programs — to subsidize leave for other workers. Suffice to say, unionized employees, who already receive paid time off as part of their collective bargaining agreements, are not happy.
Earlier this month, the National Association of Government Employees, which represents 22,000 Massachusetts state workers, slammed Governor Charlie Baker for imposing what it calls an “illegal tax.” The union of government workers is calling on the governor to exempt its members from the program and all tax implications.
Notably, employers who provide leave benefits equal or better than those provided by the law are exempt from paying their portion of the tax, but workers are not.
NAGE president David Holway says that, because leave benefits for unionized government workers are better than those provided by the state, “very few” members will benefit from the program. This, of course, is also true of private sector employees whose employers already offer paid leave.
In addition to forcing all workers to pay for benefits that many will never use, the law unnecessarily increases government bureaucracy, creating an entirely new state agency, the Department of Family and Medical Leave. As is typical of government agencies, this one couldn’t get its act together for prime time. As a result, the state, which had planned to start collecting payroll taxes on July 1, was forced to delay the collection until next month.
Massachusetts isn’t the only state to enact a paid leave payroll tax and create a government agency to administer it. Five other states also mandate paid family leave. The patchwork of varying state leave policies creates inconsistency and confusion for businesses that operate in more than one state, thus increasing the cost of doing business for employers.
Polling data overwhelmingly demonstrate that workers want paid leave benefits. But there is a better way to meet this demand.
At the national level, two bills — one sponsored by Republican Senators Marco Rubio of Florida and Mitt Romney of Utah, the other by Republican Senators Joni Ernst of Iowa and Mike Lee of Utah — give employees paid leave to care for a child without further taxing workers or burdening businesses.
These proposals allow new parents to take some of their Social Security retirement benefits early in order to stay home after the birth or adoption of a child. Parents could trade approximately three months of Social Security benefits at the end of their working lives for two months of parental leave payments. Presumably, a similar program could be developed for medical leave.
“Earned leave” plans, like these, are budget-neutral. Moreover, they are voluntary, and costs are paid only by those who access the benefits. Earned leave will help working families without expanding government or penalizing those who are already covered by employer leave policies.
Many, if not all, workers would benefit from a paid family or medical leave at some point in their careers. But adding yet another tax and creating a whole new government bureaucracy is not the way to do it.
Jennifer C. Braceras is director of Independent Women’s Law Center.