Lawmakers issue guidance for paid family leave policy

LINCOLN, Neb. — 

Employees of small businesses may now be able to take advantage of paid family leave, and a guidance document was released to help employers receive a tax benefit for allowing the leave.

The U.S. Department of the Treasury and the Internal Revenue Service released the guidance on Monday for employers to offer Americans paid family leave through a tax incentive championed by U.S. Senator Deb Fischer in the Tax Cuts and Jobs Act. The program enacted is the first-ever U.S. nationwide paid family leave policy. 

Through the voluntary program, employers can offer up to 12 weeks of paid family leave. The leave can be used to take care of a family member or utilized for maternity or paternity leave with biological or adopted children. In exchange for offering the leave, employers will receive as much as a 25 percent tax credit for the amount of wages replaced. As the policy is targeted to hourly employees who would not otherwise have access to paid family leave, employees who participate cannot make more than $72,000 per year.

Under current law, the program is a two-year tax credit. It is intended to give Congress the opportunity to determine its effectiveness. Because the guidance on using the credit was not issued until Monday, Fischer along with Senators Angus King (I-Maine) and Dean Heller (R-Nev.) have introduced new legislation: The Paid Family Leave Pilot Extension Act. The bill would extend this program for three more years through 2022. This extension would give businesses more time to implement a program, expand paid family leave for employees, and allow lawmakers to access sufficient data to assess the effectiveness of the program.

Senator Deb Fischer released the following statement on the matter:

Now that this guidance is out, I encourage employers, especially small businesses, to take advantage of this opportunity to offer paid family leave. The program provides working families more flexibility as they balance caring for their loved ones with work obligations. Extending this tax-credit would give businesses more time to establish paid family leave and ensure this program is working for families.