Details released on $75m emergency sick leave program

THE HOUSE WAYS and Means Committee Tuesday evening released a bill that would create a $75 million program to expand emergency paid sick leave during the pandemic and would reduce businesses’ unemployment insurance costs by temporarily freezing rates in the unemployment system.

House Speaker Ron Mariano, Senate President Karen Spilka and the chairs of the Ways and Means Committees announced that they had reached an agreement Monday, but the bill text provides the first look at the specifics of what the new policies could look like.

The bill now goes to the full House, which is next scheduled to meet on Thursday.

Paid sick leave

The bill would set up a new COVID-19 emergency paid sick leave program, in which large employers are reimbursed by the state to provide up to 40 hours of paid sick time to someone who needs time off due to COVID-19.

The bill is intended to supplement the federal government’s existing coronavirus sick leave program, which provides paid sick leave to employees who work for businesses with fewer than 500 workers. (An extension of that program through September is included in a federal stimulus package expected to pass Congress the week.)

The state program applies to businesses with more than 500 workers – so those who are not covered by the federal bill.

It is expected to cost the state $75 million, which may be reimbursed by federal money.

The bill also requires smaller businesses to offer their workers COVID-related paid sick time, which the businesses can then get reimbursed by the federal government. The federal program makes it optional for businesses to offer the paid time off.

The bill would provide one week of paid sick leave to a full-time employee working 40 hours a week. A part-time employee would be eligible for some time off, based on how many hours they work in a typical week. The payments would be capped at $850 a week.

Someone could take the sick time if they need to isolate or seek medical care due to COVID-19, to care for a family member with COVID-19, to get vaccinated for COVID-19, or if they or a family member are ordered to quarantine due to COVID-19 exposure.

Advocates from the labor, clergy, and liberal community organizing coalition Raise Up Massachusetts had been pushing for two weeks, rather than one week, of emergency sick leave.

While the bill is a slightly less generous version of their proposal, advocates note that the emergency time off would be in addition to any sick time an employer already provides, such as the accrued 40 hours of paid sick time that employers must provide under the state’s general paid sick leave law.

The program would continue until the funding runs out or until Sept. 30, 2021.

Elizabeth Whiteway, a senior attorney at Greater Boston Legal Services, who has worked on the issue on behalf of the Coalition for Social Justice, said the policy is a way to recognize that there are gaps in existing sick leave laws and all workers need job-protected, paid time off to deal with the effects of COVID-19.

“This way they remain attached to the workforce, to their employer, and they can take care of their COVID-related health needs,” Whiteway said.

Whiteway said it is a “public health measure as well as a labor bill” because it will prevent low-wage workers who need the money from coming to work while sick, and potentially spreading COVID-19.

Unemployment insurance

The bill mirrors a proposal made by Gov. Charlie Baker to freeze the rate paid by employers into the unemployment insurance system for the next two years.

According to the Baker administration, the average per employee cost for businesses would rise from $539 in 2020 to $635 in 2021 under his bill, instead of the $866 that is anticipated without any changes. Baker estimated that businesses would save $1.3 billion in unemployment insurance costs over the next two years if the legislation passes.

Because the unemployment insurance system is funded by the money paid by employers, the state will have to borrow money to pay for the rate freeze and keep the fund solvent.

The bill would authorize the borrowing of up to $7 billion to repay the unemployment insurance trust fund and cover debts to the federal government related to the borrowing through 2025.

Businesses would pay for that borrowing through a new payroll tax, at a rate that would be set annually. The terms of the bond would be defined by the treasurer’s office, but essentially the borrowed money would allow businesses to pay the unemployment fund back over 30 years instead of over the next few years, when they are still struggling due to the pandemic.

Evan Horowitz, executive director of the Center for State Policy Analysis at Tufts University, called the bill “a perfectly reasonable, short-term fix for our unemployment insurance shortfall,” though he said it misses the opportunity to address systemic underfunding of the unemployment system.

The bill also includes some tax benefits for unemployed individuals.

Typically, unemployment insurance benefits are taxable. The bill would allow anyone who got unemployment benefits and whose household earned less than 200 percent of the federal poverty level ($43,440 for a family of three) in 2020 or 2021 to claim a tax credit equal to 5 percent of their unemployment benefits. Essentially, the approach would mean the unemployment benefits are not taxed by the state.

The tax credit is refundable – which means that if someone owes no taxes or owes only a small amount in taxes, the person would still get refunded the 5 percent.

Late fees will also be waived for taxes on unemployment benefits paid out in 2020.