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Bill proposes Delaware paid leave insurance fund

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A new bill would create a state insurance trust fund for paid leave for employees at most Delaware businesses. | PHOTO COURTESY OF SCOTT GRAHAM/UNSPLASH

DOVER – Democratic lawmakers unveiled sweeping legislation on Wednesday that would require employers to provide up to 12 weeks of paid family and medical leave through a state-administered program.

The Healthy Delaware Families Act would guarantee up to 12 weeks of paid leave for parents bonding with a new child, patients seeking medical care, family members caring for a sick loved one, military families adjusting to deployment or survivors of domestic violence.

Sen. Sarah McBride

State Sen. Sarah McBride (D-Wilmington), lead sponsor of Senate Bill 1, said the legislation “lies at the heart of both our current public health crisis and our budding economic recovery.”

“While COVID spread, we recognized that protecting our families and our lives should not result in working people losing their livelihood,” McBride said during a virtual press conference Wednesday.

McBride said the program would be “little or no cost” to businesses, amounting to about a cup of coffee a week per employee. Lawmakers backing SB1 also said a paid leave program will save money for employers in the long run by reducing turnover, retaining workers and their expertise, cutting training investments and avoiding recruitment and hiring costs.

“With more and more large employers providing this benefit, a paid family and medical leave insurance program will level the playing field for small businesses that would otherwise struggle to provide this benefit on their own,” McBride said.

Paid leave in Delaware would operate as a social insurance program with payroll contributions collected by the state Department of Labor, similar to how Social Security and unemployment programs work.

Eligible Delaware workers could receive up to 80% of their average weekly wages through the state insurance program.

The labor department would collect a paid leave premium of 0.8% of an employee’s gross wages, and employers can split those contributions evenly with their workers. For example, if a Delaware employee makes $50,000, they and their employer would each contribute $200 annually.

Businesses with fewer than 20 employees can opt out of the employer portion, but their workers will still be eligible for paid leave through the state program. A private company with its own policy can opt out if their benefits are at least equal to the state program’s offering.

“This is by far the most economical way to deliver the benefit, with those automatic payroll contributions being less than the cost of a private insurance plan or just continuing to pay out salary,” McBride said.

To qualify for the state program, a person will need to work for their employer for at least 120 days, meaning many seasonal and casual workers won’t have access to the benefit. Part-time workers can take paid leave as long as they have earned at least $3,000 in wages.

If passed, the state would not begin collecting payroll contributions until 2023, and workers could start accessing paid leave benefits in 2024.

“The subject Senator Sarah McBride has taken on is very complicated and gets exponentially more challenging as smaller businesses are brought into the discussion,” Delaware State Chamber of Commerce President Michael Quaranta said in a statement. “Many of these businesses do not have full-time, dedicated human resource managers, or benefits policy experts.”

The chamber has not yet taken a position on the legislation and will continue assessing the potential impacts on the private sector while communicating with its members and McBride over the proposal.

The announcement of SB 1 comes one week after President Joe Biden revealed his plans to create a national paid family and medical leave program, providing workers with 12 weeks of paid leave and up to $4,000 a month in partial wage replacement. Biden’s proposed program, part of his American Families Plan, is estimated to cost $225 billion across 10 years.

SB1 has been assigned to the Senate Health and Social Services Committee, which is chaired by McBride.

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