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Survey: Mixed small business support for paid family leave

Many feel tax incentives and/or pre-tax payroll contributions are needed to pay for it.

The debate over requiring small businesses to provide paid family leave is heating up as New York recently joined California, New Jersey, and Rhode Island in providing statewide mandatory paid family leave for eligible employees.

The District of Columbia and the state of Washington have also passed recent paid family leave legislation, with scheduled benefit effective dates in 2020.

According to a recent Paychex Small Business Survey, nearly half (48%) of small business owners say they would, on some level, support legislation requiring paid family leave – but reactions are mixed as to how to pay for this benefit.

Paychex, Inc., which is a payroll and human resources services provider, said the recent tax reform plan signed into law by President Trump back in December provides tax credits to some employers that provide "paid family and medical leave" to their employees that range from 12.5% to 25% of wages paid to qualifying employees.

This provision is available with respect to applicable wages paid in 2018 and 2019, the firm said.

"No matter how large or small the organization, most employers want to create a workplace culture that supports employees in times of need," said Martin Mucci, Paychex’s president and CEO, in a statement.

"However, for small businesses, mandatory paid leave may present challenges,” he added. “Whether it's having a key member of a small team out of the office for an extended period of time or the back-end administration of such a program, mandatory paid leave will introduce new dynamics small business owners will have to navigate.”

The federal Family and Medical Leave Act (FMLA) already requires all covered employers with 50 or more employees to provide unpaid family and medical leave to eligible employees, Paychex noted.

Of those respondents to the firm’s survey – administered by Bredin, a third-party research firm specializing in small business – who indicated they would be either strongly supportive (29%) or somewhat supportive (19%) of mandatory paid family leave legislation, exactly who business owners feel should establish the requirements are mixed.

Some 43% feel the federal government should make the rules, 40% feel it should fall on private employers/individual businesses, and 17% say it should be up to state governments.

Those survey respondents who expressed support for mandatory paid family leave legislation are also mixed on how such a program should be funded:

  • 26% said tax incentives should be offered to companies that voluntarily provide paid family leave;
  • 26% believe paid family leave should be funded through pretax payroll contributions from employees;
  • 15% think a combination of employer and employee pretax contributions is the best way to fund such leave;
  • 12% feel new or higher taxes on higher income people will be required;
  • 11% said a combination of new or higher taxes on higher income people and corporations are needed;
  • 9% think pretax payroll contributions from employers would be the best method.
  • 1% believe new or higher taxes on corporations are needed.
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