Biden, House Ways and Means Chair Offer Sweeping Universal Paid Leave Plans

April 30, 2021

House Ways and Means Chairman Richard Neal (D-MA) introduced legislation to provide universal paid family and sick leave benefits with more generous eligibility than the Family and Medical Leave Act.  Separately, President Biden unveiled a similarly expansive paid leave proposal in his American Families Plan.  

Biden’s proposal would phase in 12 weeks of paid parental, family, personal illness and safety leave by year 10 of the program, with three days of bereavement leave per year available starting in year one.   

The program would provide workers up to $4,000 a month, with a minimum of two-thirds of average weekly wages replaced, rising to 80 percent for the lowest wage workers.

Workers would be able to take leave to bond with a new child, care for a seriously ill loved one, deal with a loved one’s military deployment, find safety from sexual assault, stalking, or domestic violence, recover from their own serious illness, or take time to deal with the death of a loved one.

Chairman Neal’s Building an Economy for Families Act, meanwhile, would amend the Social Security Act to create new paid leave entitlements for workers. The benefits, which would become available in January 2023, are paid out of general revenues and not funded by a specific payroll tax on employers or employees. 

  • Employers that choose to continue offering paid family and medical leave benefits would be eligible for federal reimbursements of up to 40 percent.  
  • All workers would be covered: full-time and part-time, including gig workers and other self-employed workers, in both the public and private sector, and without regard to employer size or tenure on the job. 
  • For most workers, the benefits will replace at least two-thirds of their average monthly earnings, with lower-wage workers having a greater proportion of their wages replaced.  The generous benefit phases out as income rises with a maximum monthly benefit of about $7,500. 
  • Workers would be able to take leave to address a serious personal or family health issue; to care for a newborn, newly adopted child, or new foster child; or for circumstances arising from a loved one’s military deployment or serious injury. 
  • States with paid leave laws which provide benefits equivalent to the new federal benefits would be “grandfathered” in to continue operating their own programs and be reimbursed by the Secretary of the Treasury.

Funding for both proposals is a challenge.  The Biden plan comes with a projected cost of $225 billion over the first 10 years, and the Neal plan would likely be more costly, with a CBO estimate of a similar proposal by Rep. Rosa DeLauro (D-CT) and Sen. Kirsten Gillibrand (D-NY) coming in at $521 billion over 10 years. 

Biden’s plan has already sailed into political headwinds.  When asked if he is worried about the proposal, Sen. Joe Manchin (D-WV), who represents a critical moderate vote, replied, "Oh, most certainly. I am, and I want to see the details.” 

Key questions for large employers remain unresolved, including how the president’s plan would interact with existing paid leave requirements at the state level.  Both proposals would largely track the Family and Medical Leave Act, under which employers are already required to provide job-protected unpaid leave.  If enacted, employers who already provide some compensation during FMLA leave may decide to discontinue employer-provided benefits.  While the Neal bill provides for some reimbursement to those who continue benefits, neither proposal requires a maintenance of effort.

Outlook: It will come down to the Senate parliamentarian to determine if either proposal can move through reconciliation, a procedural move that only requires a simple majority to pass legislation (as opposed to overcoming a 60-vote filibuster) yet limits legislation to tax and spending policies.  Even then, passage would require unanimity among Democrats—including moderates such as Sen. Manchin and Kyrsten Sinema (D-AZ).