Paid Family Leave Just Turned 20. Will Newsom Expand It?

Twenty years ago, California became the first state in the nation to enact partial wage replacement benefits that have since enabled millions of workers to take time off to bond with a new child or care for a seriously ill relative.

California’s Paid Family Leave was signed into law on Sept. 23, 2002, by then Gov. Gray Davis. With over $10 billion paid out to claimants in over 3.6 million claims filed as of 2021, the program has been linked to enormous gains in the well-being of families, such as reduced infant mortality and better maternal physical and mental health. 

And while opponents two decades ago argued the benefits would hurt small businesses if too many employees took leave, the Bay Area Council Economic Institute found it has actually reduced labor costs through worker retention.  

Most of the state’s 18.5 million workers contribute to the PFL program through 1.1% payroll deductions that are placed into a fund. In exchange, eligible claimants get a fraction of their regular wages — usually 60% — for up to eight weeks.

“Our nation-leading paid leave program is family- and small-business friendly, and it creates an equitable and inclusive model, we believe, for the rest of the country,” said Gov. Gavin Newsom, speaking at an event Thursday marking the program’s anniversary.

This comes as family advocates and working people are calling on the governor to sign a bill that would bolster access to paid caregiving time for families, especially lower-income residents.

Approved by lawmakers last month, SB 951 would boost the wage replacement rate to 90% for people earning less than $57,000 a year, and 70% for all other eligible workers, starting on Jan. 1, 2025. 

Supporters of the bill, which lacked any official opposition from the public, argue the rate increases are needed because often workers can’t afford to fully use the benefits they’ve paid for if they only receive slightly more than half their wages.

That pay cut was too drastic for Rosalba Contreras, who made $15 an hour when she had her second baby in late 2017. The then-administrative assistant said she simply couldn’t afford rent and bills under paid leave, and had to return to the office after bonding with her newborn at home for just two weeks.

Looking back at what she describes as a “heartbreaking” experience, she believes more time to breastfeed and fully care for her baby, who was born prematurely, would have prevented speech and other developmental delays her now 5-year-old endures.  

“I really, really wish I could have stayed at home with her to make sure that she was healthy before I returned back to work,” said Contreras, 37, who lives in San Bernardino County. “Because she wasn’t healthy. She wasn’t ready and I wasn’t ready. Neither of us were.”

Californians earning less than $20,000 made up 37% of workers eligible for PFL, but only 14% of those workers used the benefits, according to an analysis by the California Budget and Policy Center. Other states with similar programs now offer a higher wage-replacement rate than the Golden State, including Oregon, where workers earning $15 an hour receive $600 per week, compared to $367 in California.

Newsom, a parent of four children, campaigned for governor on an agenda that featured helping working families and expanding services for kids. In 2020, as the pandemic raged, he approved legislation that expanded job-protected family leave to 6 million more Californians working in the private sector.

Last year, Newsom vetoed a proposal that would have raised leave payment rates, citing “significant new costs not included” in the budget. To cover expected new costs, SB 951 would get rid of a taxable ceiling that caps contributions once a worker’s yearly income reaches the $146,000 threshold. 

Newsom has one week to sign or veto the proposal. If he vetoes the bill, which includes an extension of the current wage-replacement rate, payments will drop to 55% for all workers taking family leave. 

“The signing of SB 951 would be the most impactful thing the governor could do now to ensure that workers and families of all incomes can benefit from our Paid Family Leave program,” said Jenya Cassidy, who directs the California Work and Family Coalition, the leading advocate for the program’s creation and for expanding the benefits to more working Californians. “We really need him to do this if we want to realize the promise of California paid leave.”