Paid Family Leave Revs Up in New Jersey

Is it bad for business or a weapon against retention battles?

That’s the question New Jersey recruiters are asking this week, after the State Senate voted to provide all workers with six week’ paid leave for the care of a newborn baby, adopted child, or sick relative, essentially expanding the state’s temporary disability insurance program.

Business advocates attempted to derail the plan, contending that companies would bear the financial brunt through higher operating costs and the necessity to hire temporary workers. Proponents of the measure offered a more progressive theory of “what’s good for employees is good for business.”

New Jersey Governor Jon Corzine calls the legislation, scheduled to take effect on January 1, 2009, “an important step in the right direction for working families in New Jersey.”

What’s Covered?

Though not funded at 100%, the measure would provide workers with six weeks’ pay at two-thirds of their salary, up to a maximum of $524 a week. Employee payroll deductions would finance the program, shaving about $33 a year off an employee’s earnings.

Under the federal Family and Medical Leave Act, an employee at a company with more than 50 employees is allowed to take up to 12 weeks’ unpaid leave to care for a newborn or sick relative. Upon their return, that employee is legally entitled to return to their old job, or a similar position within the company.

Smaller companies do not have that same provision, which is why the New Jersey ruling is creating opponents among small business supporters.

Unnecessary Tax or Modern Worker Benefit?

The New Jersey Chamber of Commerce, New Jersey Business and Industry Association, and The Chamber of Commerce Southern New Jersey oppose the legislation, afraid it might prevent companies from choosing to do business in the state.

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The Chamber of Commerce Southern New Jersey, for example, opposes the tax increase on workers. Instead, it thinks that individual employers should determine what works best for their own workforce.

The Chamber says this “one-size-fits-all” model unnecessarily imposes government control over the way businesses operate and removes all flexibility. Businesses should develop their own methods of how work is covered during family leaves, says the Chamber, noting that “employers do the right thing as part of their efforts to retain good employees.”

Supporters of the legislation include AARP New Jersey, the New Jersey AFL-CIO, New Jersey Policy Perspective, and the New Jersey Partnership for Working Families.

The AFL-CIO calls it “family values” legislation. In an official statement, AFL-CIO president John Sweeney said, “Slowly, state by state, we are inching toward a policy the rest of the industrialized world embraced long ago. Now it is time to pick up the pace and ensure everyone in America has the freedom to practice their own family values.”

Last week the New Jersey Labor Department reported that New Jersey lost 9,500 jobs in January 2008. In 2007, it created 4,700 positions, below its expectation of 29,400 new jobs.

If it passes, New Jersey would become the third state to offer paid leave. California already offers paid leave, and next year, Washington State will enact its own version of paid family leave.

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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