What Is the HR 4695 Paid Family and Medical Leave Act?

Proposals for a national paid leave program, such as the Family and Medical Insurance Leave (FAMILY) Act, represent a legislative effort to create a social insurance system for American workers. The objective is to provide partially paid time off for specific family and medical reasons. This would establish a uniform standard for paid leave, moving beyond the unpaid, job-protected leave provided by the Family and Medical Leave Act of 1993 (FMLA). By offering wage replacement, the initiative aims to alleviate the financial strain that can accompany unpaid leave for significant life events.

Employee Eligibility and Qualifying Leave

To qualify for benefits under such a proposal, an individual’s work history is a primary consideration. A worker must have a sufficient record of earnings and contributions into the system. The requirements involve having earned a minimum amount of income over a defined period, often assessed over four of the last five completed calendar quarters.

The proposed legislation specifies several qualifying reasons for taking paid leave. These provisions are designed to support bonding between parents and new children. Leave could also be taken to care for a family member with a serious health condition, defined as a spouse, child, or parent. Other qualifying events include:

• The birth of a child and caring for that newborn within the first year.
• The placement of a child for adoption or foster care, with leave in the first year of placement.
• An employee’s own serious health condition that renders them unable to perform their job.
• Exigencies arising from a family member’s active military duty.
• Caring for a covered servicemember with a serious injury or illness.

Benefit Amount and Duration

Under the proposed legislation, eligible employees would be entitled to up to 12 weeks of benefits within a 12-month timeframe. This duration aligns with the unpaid leave currently available under the FMLA but adds partial wage replacement. The 12-month period is a rolling window, ensuring that the total leave taken does not exceed the annual limit.

The monetary benefit an employee would receive is calculated based on their prior earnings. The formula is progressive, meaning it replaces a higher percentage of income for lower-wage workers, and might be calculated as two-thirds of an employee’s average monthly wages. The proposal would establish a cap on the total monthly payment, with some versions setting this maximum at $4,000 per month. To illustrate, an employee with an average monthly income of $3,000 would receive a monthly benefit of $2,000, while an employee earning $6,000 or more would be limited by the $4,000 maximum.

Funding Mechanism and Payroll Taxes

The financial foundation of the proposed program is a self-sustaining insurance model. It would establish a new Federal Family and Medical Leave Insurance Trust Fund, managed by the U.S. Treasury. All funds collected through dedicated payroll taxes would be deposited into this fund, and all benefit payments would be disbursed from it.

Financing for the trust fund would be generated through a new payroll tax. One prominent legislative proposal suggests a rate of 0.2% for employees and 0.2% for employers on all wages, with the cost shared equally. The tax would apply to a wage base, similar to Social Security taxes, meaning only income up to a certain annual limit would be subject to the tax. For an employee, this would appear as a new deduction on their pay stub, while for employers, it represents a new tax liability to remit their matching contribution.

Program Administration and Employer Obligations

To manage the new benefits program, the proposal calls for the creation of a new federal body. This entity, often proposed as an Office of Paid Family and Medical Leave, would likely be established within the Social Security Administration. This office would be responsible for processing applications, determining eligibility, disbursing payments, and handling appeals.

Beyond the payroll tax, employers would face several direct, non-monetary obligations. A primary duty would be to provide clear notice to all employees about their rights and benefits under the program. Employers would also be required to maintain an employee’s group health insurance coverage during their paid leave period under the same terms as if they were actively working. The proposal includes job protection provisions, which mandate that an employee returning from leave be restored to their original position or an equivalent one with the same pay and benefits.