Paid Leave Expansion Could Mean NJ Workers Pay Higher Payroll Tax
TRENTON — The state Senate is scheduled to vote Monday to give final legislative approval to a plan to expand New Jersey’s paid family leave – more time off, with more pay, for more reasons.
The change, if signed into law by Gov. Chris Christie, would likely lead to a tax increase on workers, who fund the program through a payroll deduction. If use of the program were to increase as much as legislative analysts are projecting, the annual cap on the tax would jump from $34 to $80.
Better use of the benefit is a goal of the plan’s sponsors. Assembly Speaker Vincent Prieto said paid family leave was used in only about one-fourth of births in New Jersey last year.
“While it’s worked great, it’s been underused,” Prieto said.
If the changes take effect, workers would be able to take 12 weeks of paid leave, up from the current six weeks. They could get 90 percent of their pay, up from two-thirds. The cap on the weekly benefit, now $633, would go to $932.
They could also go on leave for more reasons, such as to take care of sick siblings, parents-in-law, grandparents or grandchildren or assist a family member who is a victim of domestic or sexual violence.
Business groups are lobbying against the change, even though they don’t pay for the program. They worry that could change if an expanded program runs a deficit. But they also say the program can cause headaches for businesses that need to cover employee absences that could double to 12 weeks. The program would also increase the amount of intermittent leave a worker could take.
“What that does is send a message to everyone again, as always, that New Jersey is not open for business, that we cannot be competitive with other states,” said Christina Renna, vice president of the Chamber of Commerce of Southern New Jersey.
“That would be disruptive to adequate staffing. Customer service is paramount in our industry,” said Mary Ellen Peppard, assistant vice president for government affairs for the New Jersey Food Council, the association for supermarkets and others in the food industry.
The proposal has broad support among labor unions and other organizations that typically push for progressive public policies.
“It funds what we think is really important, which is giving people the time to care for loved ones when they’re sick or they have new children that they’re welcoming into their homes,” said Dena Mottola Jaborska, associate director of New Jersey Citizen Action.
However, some of those supporters say the plan doesn’t go quite as far as they’d hoped.
For instance, the changes would ensure, starting next July, that anyone could take paid family leave without retaliation if they work at a company with 20 or more employees – better than the current threshold of 50 workers, but still not sufficient, said Eric Richard, legislative affairs coordinator for the New Jersey AFL-CIO.
“Even under the proposed amendments, entirely one-fifth of the workforce could lose their job for taking a benefit that they pay for,” Richard said.
The Assembly passed the bill Thursday by a 49-23 vote, with three voting to abstain.
In 2016, workers received $88.7 million in benefits. The Office of Legislative Services projects that if payments were increased and lengthened, those benefits could have risen to around $236 million – a 166 percent increase. And that doesn’t account for whether more people would use the benefit.
Paid-leave payroll deductions are taken from the first $33,500 a worker earns this year. The rate is currently 0.09 percent, for a maximum tax of $34.
The rate gets adjusted annually to raise 120 percent of what’s expected to be paid in benefits, plus administrative costs, minus the fund's balance. If it needs to raise $147 million more, the rate would be 0.24 percent, making the maximum tax $80.40.