NCPA - National Center for Policy Analysis


June 10, 2009

The Family and Medical Leave Act of 1993 (FMLA) requires employers to allow employees to take 12 weeks of unpaid leave annually for a serious illness, to care for an immediate family member, or following an adoption or birth.  The FMLA now applies to companies that employ 50 or more workers, but during the campaign President Obama supported expanding it to cover businesses with as few as 25 employees.

The FMLA was enacted with good intentions:  to help employees strike the right balance between their personal lives and careers without being penalized.  Unfortunately, it adds to the cost of employment, reduces the ability of employers and employees to make flexible workplace arrangements, and makes small businesses less competitive in the marketplace.  Expanding the FMLA will have many unintended consequences that will hurt, not help, working families, say Terry Neese, a distinguished fellow, and Michelle Heinen and Daniel Wityk, research assistants, all with the National Center for Policy Analysis.

Businesses and their employees bear the cost of the FMLA.  According to the Employment Policy Foundation, direct FMLA compliance costs totaled $21 billion in 2004.  Specifically:

  • The FMLA cost businesses $4.8 billion due to lost productivity, particularly intermittent leave for such activities as doctor's appointments.
  • $5.9 billion for health benefits employers are required to continue providing employees on leave.
  • $10.3 billion to temporarily replace workers.

Rather than relying on costly mandates like the FMLA, the government should consider policies that increase workplace flexibility, say Neese, Heinen and Wityk:

  • For instance, many employees would prefer to receive compensatory time off in lieu of overtime pay, but the Fair Labor Standards Act (FLSA) requires overtime work to be compensated with time-and-a-half cash wages.
  • This means that employees who work extra hours one week are unable to offset those hours with comp time in a subsequent week.
  • Since the 1970s, federal and state employees have been allowed to substitute comp time off in lieu of overtime wages; private sector workers should have similar options.

Source: Terry Neese, Michelle Heinen and Daniel Wityk, "Workplace Flexibility versus Unpaid Leave," National Center for Policy Analysis, Brief Analysis No. 661, June 10, 2009.

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