A Wary Welcome

Many employers applauded President Trump's proposal for a national standard for parental leave, but some worry his plan could end up costing them money.

Tuesday, July 11, 2017
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President Donald Trump got a break from headlines about Russia on May 23, when he unveiled a plan spearheaded by his daughter Ivanka to provide six weeks of paid leave to new mothers and fathers, including those who adopt.

Only two days later, coincidentally, one American company dramatically raised the ante by announcing a package of new benefits that includes at least 12 weeks of paid maternal and paternal leave for its 40,000-plus workers worldwide. Bloomfield, Conn.-based health insurer Cigna also will offer paid time off to workers to care for ailing family members or to bond with a new child.

Cigna's policy rivals those offered in the Silicon Valley, where some major employers provide 15 weeks or more of parental leave.

The standard six weeks of sick leave does not meet the needs of new parents, says John Murabito, Cigna's executive vice president for human resources and corporate services.

"I think what companies are starting to realize is that's not enough time for the care a baby might need," he says. expects to see other employers adopt more generous leave policies for new mothers and fathers. "It would surprise me if we don't see more of this," Murabito says.

For the time being, however, only an estimated 12 percent of workers nationally are eligible for paid parental leave through their employers. So Trump's proposal got a generally warm reception.

Trump's 2018 proposed federal budget would require states to use vaguely defined savings in their unemployment insurance programs to bankroll the parental leaves. The estimated total cost over a decade: $18.5 billion.

Many employers were pleased to see a serious national effort to help provide a benefit that is popular with workers.

 "Any day you have the president putting forward a paid-leave plan, that's a positive," says Lisa Horn, director of Congressional Affairs at the Society for Human Resource Management and co-leader of the organization's workplace flexibility initiative. "It's an issue that's important for our members."

Dan Yager, president and CEO of the HR Policy Association, agrees that offering parental leave helps employers attract and keep talent. The association represents chief HR officers of large U.S. companies on Capitol Hill. "What I hear the most is: ‘This is something companies have to do to compete," Yager says.

But employers also are wary. They point out that Trump's plan, not yet in bill form, is still light on details and faces an unknown reception in Congress. As a matter of principle, many employers also distrust its sweeping big-government nature.

Despite the benefits, "we have a problem with a one-size-fits-all government mandate," Horn says.

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On a practical level, some employers also worry that eventually they will have to cover the program's cost if state unemployment-insurance funds, supported by corporate payroll taxes, buckle under the strain of Trump's plan. And if unemployment funds run out of money, Horn and others point out, unemployed workers also would suffer.

The president's proposal does set minimum levels for the state unemployment funds, to ensure they remain solvent. But it also counts on an uncertain source of revenue to offset costs: unspecified savings through unspecified reforms to reduce fraud in unemployment insurance programs.

Another plan to provide parental leave is winning stronger support from business leaders. A proposal by U.S. Rep. Mimi Walters, R-Calif., not yet introduced as a bill, also would set a national standard for parental leave but protect employers from being punished by overlapping state and local mandates on paid leave.

"Our priority is to get some kind of safe harbor," Yager says. Under the Walters bill, for example, "you still have to do something, but there's a single set of rules."

SHRM, which also supports the Walters bill, still hopes to do some arm-twisting with White House aides to improve the president's proposal.

But as the Trump plan now stands, "we don't think it's the right approach," Horn says.

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