PAID PARENTAL LEAVE: A Work Plan for Implementing Paid Parental Leave at King County November 12, 2015 EXECUTIVE SUMMARY On April 27, 2015, the King County Council passed Motion 14348, declaring that it is County policy to establish a Paid Family Leave program, including Paid Parental Leave, for King County employees. The motion directs the Executive to report on the costs and benefits of implementing and providing a Paid Family Leave program (which was transmitted September 15, 2015) and to develop and transmit a work plan for implementing a Paid Family Leave program. Initially due October 15, 2015, Paid Family Leave Paid Parental Leave A Work Plan for implementing Paid Parental Leave at King County As outlined in the September 15, 2015 report to Council titled, “Paid Parental Leave and Paid Family Leave: A Report on the Costs and Benefits of Implementing and Providing a Paid Parental Leave Program, in addition to Paid Family Leave, at King County,” the Executive is committed to ensuring employees have paid time off when they or their immediate family members suffer a serious illness or injury; however, the Executive does not recommend implementing Paid Family Leave at this time. King County currently has a competitive paid sick and paid vacation leave package that employees use for family and personal medical leave. To add additional employer-funded Paid Family Leave to the existing leaves package is cost prohibitive. More research is needed to understand if there is, in fact, a shortage of As requested by Motion 14348 paid time off to reasonably address employee needs for medical leave. If research November 12, 2015 suggests additional leave offerings are advisable, then further study would be Paid Parental Leave A Work Plan for Implementation Page 2 necessary to identify the means to best finance such leave to ensure it is both practicable and sustainable. Moreover, a Paid Family Leave program would be most effective if it were addressed at the state-level. Paid Parental Leave The County is about to begin total compensation negotiations with the Coalition of Unions and every other labor organization that represents County employees, for contracts to take effect on January 1, 2017. Total compensation includes wages, all leaves, medical and health benefits, and other rewards. The County and unions will use an interest-based approach to bargain predictable and sustainable total compensation. Therefore, the Executive recommends addressing Paid Parental Leave through a pilot program in 2016, so that elements of the program can inform these negotiations. Partnering with the unions to pilot this option would allow the County to test the assumptions laid out in the report. A Paid Parental Leave benefit beyond 2016 would need to be bargained in the total compensation framework. For the pilot, it is recommended that King County provide a supplemental leave to ensure that all leave-eligible employees have the ability to take up to a total of twelve weeks of paid time off to bond with a new child. Paid Parental Leave will supplement existing paid leaves to ensure that an employee will receive the equivalent of the employee’s salary for up to a total of twelve weeks, while on a qualifying approved leave following the birth, adoption, or foster-to-adopt placement of a child. Employees must exhaust all paid leaves, except one week of sick leave and one week of vacation leave, prior to receiving any supplemental Paid Parental Leave. This recommendation comes after considering a number of options, as well an analysis of the administrative burden and costs associated with each. The necessary components of the implementation plan are outlined on the following pages. COVERAGE AND BENEFIT DETAILS OF THE 2016 PAID PARENTAL LEAVE PILOT PROGRAM Paid Parental Leave will supplement an employee’s accrued paid leaves so that the employee will receive the equivalent of his or her full salary for up to a total of twelve weeks while on approved parental leave. A. Eligibility   The pilot will be available to all leave-eligible employees, who have been employed with the County for at least six months of continuous service at the time of the birth, adoption, or foster-to-adopt placement (“qualifying event”). Participants must be either a non-represented employee, or an employee represented by a union that has signed the Paid Parental Leave Pilot Memorandum of Agreement. Paid Parental Leave A Work Plan for Implementation Page 3   The qualifying event must have occurred in 2016. To receive any supplemental Paid Parental Leave, an employee must first exhaust all accrued paid leave, except one week of sick leave and one week of vacation leave (or the equivalent for Benefit Time). B. Benefit Amount   The supplemental Paid Parental Leave combined with the employee’s accrued leaves at the time of the qualifying event (less one week of sick and one week of vacation) shall not exceed twelve weeks. Paid Parental Leave is not subject to cash out. C. Benefit Period, Frequency, and Concurrency     Paid Parental Leave must be used within twelve months of the qualifying event. Employees may use Paid Parental Leave on a part-time basis, so long as it comports with an established, consistent PeopleSoft schedule, is approved by the business unit prior to the leave, and is completed within twelve months of the qualifying event. Employees are eligible for Paid Parental leave once during the pilot period. Paid Parental Leave will run concurrently with the County’s family and medical leave, as well as federal and state family and medical leave laws, to the fullest extent possible. D. Job Protection, Benefits, and Seniority    Paid Parental Leave is protected leave and, as is the case for Family Medical Leave, an employee’s job cannot be eliminated while the employee is on leave. However, in the case of required budget cuts or layoffs, an employee’s job may be eliminated while on leave. Employees will continue to receive all benefits; additionally vacation and sick leave will continue to accrue during the period of Paid Parental Leave. Employees will retain and continue to accrue seniority pursuant to whatever is specified in their collective bargaining agreement. E. Requesting Paid Parental Leave and Calculation of the Supplemental Leave   In all but a small minority of cases, employees will have advance notice of their need for parental leave. Therefore, employees must provide at least thirty days’ notice of their intent to use Paid Parental Leave. In the rare case when the need for leave is not foreseeable, employees must provide notice as soon as practicable. The amount of Paid Parental Leave that an employee is eligible for will be calculated at the time of the qualifying event. Any paid leave other Paid Parental Leave A Work Plan for Implementation Page 4 than Paid Parental Leave taken subsequent to the qualifying event will reduce the employee’s Paid Parental Leave allotment. F. Required Forms   All employees wishing to receive Paid Parental Leave must complete the Protected Family and Medical Leave Request Form, and provide a copy of the birth certificate, adoption paperwork, or foster-to-adopt placement paperwork. If an employee voluntarily separates from County employment within six months of returning to work after a Paid Parental Leave, the amount of supplemental compensation received will be treated as a loan. All employees who receive compensation under the Paid Parental Leave program must execute an agreement providing for repayment in the case of such voluntary separation. HOW PAID PARENTAL LEAVE ALIGNS WITH CURRENT KING COUNTY LEAVES PACKAGE With a competitive leave package that includes twenty-three different types of leaves, County employees currently have a range of leave opportunities. In 2011, the County asked our benefits consultant, Mercer, to conduct a study of the value of the benefits King County provides to its employees. The study compared the King County benefits package to other local governments, as well as the private sector. The study found that the County’s benefits package is generous when compared to the private sector. It is comparable to other local governments, although there are differences depending on the type of benefit. King County was above the median in paid time off for both sick and vacation leave. The current leaves plan is structured so that it provides wage replacement during significant life events and serious illness. Unlike most employers, King County employees are permitted to carryover 480 hours (twelve weeks) of vacation leave from year-to-year, and to accrue and carryover an unlimited amount of sick leave. Employees accrue twelve sick days per year. Additionally, it is the County’s policy that employees are paid out the value of their vacation leave and compensatory time upon separation, and are paid out 35% of the value of accrued sick leave upon death or retirement. The County’s total liability for accrued paid leave subject to cash out at the end of 2014 was $170,000,000. The current liability, or the amount estimated to be payable within one year, is $15,000,000. When examining the average year-end vacation and sick leave balances per capita from 2012-2014, the leave balances are very stable across the years. On average employees have large accruals. In fact, combined, the two leave (sick and vacation) accruals average nearly 480 hours (twelve weeks) of paid leave that is carried over each year. Sick leave Average Year-End Leave Balances (in hours) 2012 2013 291 286 Paid Parental Leave A Work Plan for Implementation Page 5 2014 287 balance Vacation leave balance Totals 173 172 173 464 458 460 These high carry-over balances are not because employees do not take leave. On average, approximately 80% of the sick leave that is earned is taken each year. Additionally, employees are taking (or cashing out) approximately 172 hours (more than four and a half weeks) of vacation each year. Average Annual Leave Taken or Cashed Out (in hours) 2012 2013 2014 Sick leave usage 75.87 75.09 77.66 Vacation leave 172.09 171.11 176.72 usage Totals 247.96 246.20 254.38 Furthermore, even with the County’s unusually high carryover allowance of 480 hours (twelve weeks) of vacation time, approximately 10,000 hours were deleted in 2014 because employees exceeded the 480-hour limit. Paid Parental Leave will supplement these existing paid leaves to ensure that all leave-eligible employees have the option to receive the equivalent of their full salary for up to a total of twelve weeks to bond with a new child. Additionally, the County will continue to provide benefits and leave accruals during the period of Paid Parental Leave. IMPLEMENTATION DATE The Paid Parental Leave pilot program will take effect as soon as our systems groups are able to comply. Their current workload includes the heavy lift of implementing the new Affordable Care Act requirements, at the same time that they have to process benefits for Open Enrollment and Healthy Incentives. Despite all that, work is being done at this time to ensure that the Paid Parental Leave program is up and running as soon as possible in the first quarter of 2016. Despite not being able to have the program fully functioning on January 1, 2016, we will devise a way to ensure that all employees who give birth, adopt a child or have a foster-to-adopt placement at any point in 2016 receive this important benefit. FLEXIBLE RETURN-TO-WORK OPTIONS According the Council of Economic Advisors’ June 2014 report, 1 many families face conflicts between their work and their personal lives due to the growing number of 1“Work-Life Balance and the Economics of Workplace Flexibility,” https://www.whitehouse.gov/sites/default/files/docs/updated_workplace_flex_ report_final_0.pdf Paid Parental Leave A Work Plan for Implementation Page 6 two-earner households. Women comprise nearly one-half of the labor force, and in more than sixty percent of households with children, all adults are working. This creates a need and a desire for more flexibility in the workplace. This is particularly true following the addition of a new child. Only a small percentage of professionals who quit their jobs after having a child had always intended to do so. The vast majority do so because they are forced out by inflexible or all-or-nothing schedules. Flexibility can refer to when one works, where one works, or how much one works. Flexible return-to-work options allow new parents to continue making productive contributions to the workforce while also attending to family responsibilities. The benefits of adopting flexible return-to-work options for employees can outweigh the costs by reducing absenteeism, lowering turnover, improving the health of workers, and increasing productivity. The Human Resources Division will work with the County’s departments and divisions to figure out the most effective ways to prioritize flexible return-to-work options for employees returning to work from Paid Parental Leave, as it will vary by the type of work and line of business. ESTIMATED COST The estimated annual cost for this pilot is $2,900,000. While not cost neutral, this proposal is the least expensive proposal that allows the County to provide all employees the ability to take up to a total of twelve weeks of paid leave to bond with a new child. This cost is for an estimated 241 employees, which was determined using federal data on expected birth rates for the King County employee population, and confirmed by looking at the number of actual dependents added to employee benefits over the last three years. This assumes a 1.0 backfill for all employees, knowing that certain employees may not need to be backfilled and others will need to be backfilled at 1.5 times their normal rate of pay. However, this estimate does not include the cost of lost revenue from employees being off of work, and does not include the costs associated with creating and implementing a Paid Parental Leave program. Therefore, the actual annual cost will likely be higher. Because the pilot is being implemented mid-biennium, agencies will need to absorb the costs within their existing budgets for 2016. The 2016 pilot program will allow the County to gather more information and test the usage and cost estimates laid out above. Actual participation in the program and the associated costs will be tracked in 2016. This information combined with a better understanding of the impact of this benefit will help inform the Total Compensation negotiations. Paid Parental Leave A Work Plan for Implementation Page 7 WORK PLAN TO IMPLEMENT PAID PARENTAL LEAVE PILOT Implementation Steps Determine the details of the Paid Parental Leave benefit to be provided. Work with County’s systems administrators at BPROS and BRC to communicate what the payroll and PeopleSoft systems need to do and lay out timeline for implementation. Develop budget for PeopleSoft implementation and roll-out to employees. Draft Memorandum of Agreement (MOA) regarding Paid Parental Leave pilot participation for employees represented by labor organizations. Outreach to unions regarding participation in the Paid Parental Leave pilot. Completed MOA with signatures for represented employee participation in the 2016 pilot program. Legislation to Council for non-represented employee 2016 pilot program benefit. Draft Paid Parental Leave policy. Implement procedures for applying for, approving, and returning from Paid Parental Leave. Message new benefit to employees, including website, Frequently Asked Questions, and call line for questions. Provide training to supervisors, HR practitioners, and timekeepers. Work with the County’s departments and divisions to figure out the most effective ways to prioritize flexible return-to-work options for employees returning to work from Paid Parental Leave, as it will vary by the type of work and line of business. Implement Paid Parental Leave in payroll and PeopleSoft. Timing COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED Q4 2015 Q4 2015 Q4 2015 through Q1 2016 Q4 2015 Through Q1 2016 Q4 2015 through Q1 2016 Q1 2016 WORK PLAN REGARDING PAID FAMILY LEAVE Research Steps Research whether there is a shortage of paid time off to reasonably address employee needs for medical leave. Timing Q4 2015 through Q1 2016 If the above research suggests additional leave offerings are advisable, then study means to best finance such leaves. Q2 2016 through Q3 2016 Assess all current leaves with our labor partners to determine how we might restructure our leaves package to better meet the needs of our employees throughout their lifecycle, make it easier Q4 2015 through Q1 2016 Paid Parental Leave A Work Plan for Implementation Page 8 for our employees to understand and ease administration burdens. Paid Parental Leave A Work Plan for Implementation Page 9