Can a law that exists in virtually every other industrial nation really cripple California's economy? That's what some employers fear. In July, the state became the first in the nation to offer paid family leave to all workers, allowing them to take time off to care, for example, for a newborn or seriously ill relative. The benefit covers up to 55% of a worker's salary for as long as six weeks, up to a maximum of $728 per week. It is funded in large part by a new payroll tax that averages $4 per month per employee.

Supporters call this a commonsense extension of the 1993 Federal Family Medical Leave Act. State senator Sheila Kuehl, who sponsored the bill, argues that since workers fund the program themselves, there is no added cost to the employer. And while all employees are eligible for paid leave, businesses with fewer than 50 workers are not obligated to take a worker back once his or her leave ends, under federal law.

Though opponents say that California businesses are at a disadvantage because the state is the only one to offer paid family leave, some version of the program exists in every industrialized nation except the U.S. and Australia. And three states -- Minnesota, Missouri, and Montana -- provide paid leave for low-income new parents.

Still, many business owners in the Golden State complain that the new law only adds to an already oppressive regulatory burden. "It's the same story," says Mark Louchheim, CEO of Bobrick Washroom Equipment, a Los Angeles-based manufacturer. "You have very well-intentioned legislators, and every one of these programs individually is a good thing, but people don't understand the collective consequences." Citing high workers' compensation costs, Bobrick has decided in the last year to expand capacity at its facilities in Tennessee rather than in its home state.

Published on: Oct 1, 2004