California Policy Options 2012

Page 91

employees who quit in a given period. In response,

Asked if the introduction of the PFL program had

92.8 percent of employers surveyed reported that PFL

resulted in “any cost increases,” 86.9 percent of employers

had a “positive effect” or “no noticeable effect.” And

responding indicated that it had not. Moreover, some

with respect to employee morale, 98.6 percent said that

employers (8.8 percent of those responding to this

the effect was either positive or not noticeable.

question) indicated that the PFL program had generated cost savings for their organizations, by reducing employee

Contrary to the pre-enactment claims of business

turnover and/or by reducing their own benefit costs when

groups that the PFL program would place a particularly

employees used the program instead of (or in combination

severe burden on small businesses, our survey found

with) employer-provided paid vacation, sick leave, or

that, among the minority of employers that did report

disability benefits. Indeed, for employers that do offer

negative effects, the larger establishments—those with

such benefits, the state PFL program often functions as

more than 100 employees—were actually overrepresented,

an indirect subsidy to their payrolls. Although only 8.8

as Table 1 shows.

percent of employers reported cost savings, the real figure is probably higher: 60.0 percent of employers surveyed

Table 1. Employer Assessments of PFL’s Effects,

reported that they coordinated their own benefits for exempt employees with the PFL program, and nearly as

by Number of Employees, 2010

many (58.4 percent) did so for non-exempt employees.

Less than 50 “No Noticeable Effect or Positive Employees Effect” On:

50–99 Employees

100+ Employees

All Employer Respondents

Productivity

88.8%

86.6%

71.2%

88.5%

Profitability/ performance

91.1%

91.2%

77.6%

91.0%

Turnover

92.2%

98.6%

96.6%

92.8%

who were out on leave. However, the great majority

Morale

98.9%

95.6%

91.5%

98.6%

of employers reported no such cost increases. They

The minority of employers who reported cost increases (13.1 percent) in most cases incurred additional hiring and training expenses to cover the work of employees

typically covered the work of employees on leave by

N=175

assigning the work temporarily to other employees.

Note: The number of employees shown refers to the stratum of firms from which the establishment was drawn and in some cases may not match current firm size due to the ef fects of the 2008-2009 recession.

Labor law makes a distinction between “exempt” and “nonexempt” employees. The latter are typically paid

Another concern business groups had raised when the

on an hourly basis and must be given overtime pay for

legislation was being debated was that PFL would be

work beyond a certain limit in accordance with federal

subject to abuse, with workers filing claims that were

and state requirements. In contrast, the former are

not medically legitimate. However, asked if they were

generally paid on a salary basis and are not covered

“aware of any instances in which employees that you

by overtime regulations. 7 For covering the work of

are responsible for abused the state Paid Family Leave

exempt workers on leave, temporary reassignment

program,” 91.2 percent of all employers surveyed

of work to other employees was the most common

replied “No.” And among the 9 percent of employers

method, cited by nearly all (96.6 percent) employers

who did report abuse, it was a relatively rare

surveyed. And nearly two-thirds (63.3 percent) of

occurrence: 27.2 percent of all employer respondents

employers surveyed used this method most often

who were aware of abuse reported they knew of only

in covering the work of non-exempt employees on

one instance, and nearly all (99.5 percent) knew of no

leave. Most of the rest reported that the most common

more than five instances in which abuse of PFL

method was to hire temporary replacements to cover

had occurred.

the work.

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