From the April 2000 issue of Entrepreneur

The Department of Labor (DOL) will have to make some changes to its proposed "newborn leave with pay" program if it expects Republicans in Congress to let it go through. The GOP expressed strong opposition after groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers raised a ruckus. They object to employers having to continue to pay the salaries of employees who voluntarily leave their job, albeit temporarily, to care for a newborn or just-adopted child.

Backed by President Clinton, the proposal would allow states to set up this program using unemployment insurance (UI) funds. States would have the discretion to determine the length of the leave, the level of pay for parents and a way to finance the program. Chances are good states would simply increase existing UI taxes for employers whose employees take advantage of that leave, according to Rich Hobbie, director of unemployment insurance for the Interstate Conference of Employment Security Agencies (the state UI agencies) in Washington, DC. UI taxes are currently "experience" rated, with a company's rate dependent on the number of workers it laid off in the past year. Newborn leave taxes are expected to work much the same way.

Some businesses already provide this kind of benefit voluntarily, while others allow that kind of leave without pay. But business groups object to the DOL enshrining the Birth and Adoption Unemployment Compensation (BAA-UC) Experiment in federal regulation without congressional approval. Moreover, the U.S. Chamber doesn't like the idea of businesses being taxed to pay the salaries of workers who are out of a job only temporarily, of their own accord; nor does it like the idea of potentially weakening the financial health of state unemployment insurance funds.

"The Clinton Administration is willing to jeopardize the financial integrity of an important program for laid-off workers just for a feel-good sound bite," says Randel Johnson, U.S. Chamber vice president of labor and employee benefits issues. "This is politics at its worst, and if the administration proceeds down this course, we will see them in court."

But Judith L. Lichtman, president of the National Partnership for Women and Families, says, "It's time to catch up to the rest of the industrialized world and recognize women work for pay, and their time for caregiving can't be taken for granted anymore. The new regulation is a significant advance toward updating our nation's policies to fit the realities facing today's families."

The BAA-UC Experiment would stretch federal law, which states that anyone receiving unemployment must be "able and available" to go to work immediately. In the past, exceptions have been made for people on jury duty, in job training and out ill. But Hobbie says those previous exceptions have been for small numbers of workers. The Clinton BAA-UC would open the door to the parents of 4 million babies born each year. "The states see this as potentially very costly," says Hobbie.

Opposition from states and business groups has caught the attention of congressional Republicans. Senior GOPers on both the House Ways and Means Committee and the Committee on Education and the Workforce have written to President Clinton denouncing the proposal. A letter from members of the Education Committee reads, "Draining the unemployment compensation trust fund with family leave benefits will create a financial and administrative mess and endanger the unemployment compensation system. Making this rule an option for states does not lessen the consequences of using unemployment funds for family leave benefits."

Congressional Republicans haven't publicly threatened to pass a bill stopping the rule from going into effect, but if the DOL goes forward without making significant changes to the proposal, congressional GOPers are sure to throw a big legislative roadblock in its path.


Stephen Barlas is a business reporter who covers the Washington beat for 15 magazines.

Contact Sources

Department of Labor,http://www.dol.gov

Interstate Conference of Employment Security,http://www.icesa.org