White Paper Proposes Federal Guarantee for Earned Paid Time Off

Noting that the United States is “the only advanced economy in which workers are not guaranteed a paid day off,” economist Betsey Stevenson is proposing a federal guarantee for earned paid time off (PTO) for all qualified employees.

Stevenson, a professor of public policy and economics at the University of Michigan, recently summarized the details of her proposal for The Hamilton Project.

“The Fair Labor Standards Act (FLSA) forms the basis for American workers’ basic rights, but it does not require employers to offer any vacation, holiday or sick pay,” wrote Stevenson, who sits on the executive committee of the American Economic Association and served as the chief economist of the U.S. Department of Labor from 2010 to 2011.

“In recent years cities and states have enacted earned paid leave programs, most of which are focused on sick leave. While these laws provide a needed benefit for workers, they still leave many workers behind and create a patchwork of policies that increase the regulatory burden for businesses that operate across state or city lines.”

Stevenson proposes modernizing the FLSA to “set a new baseline for the American labor market: the 40-hour workweek, overtime protections, the federal minimum wage and the right for all qualified workers to earn paid time off.”

Stevenson’s proposed federal earned paid time off program ensures workers can earn up to 80 hours (10 days) of paid time off per 12-month period, accrued at a rate of 0.04 (2.4 minutes per hour of work). The policy would also allow preemption of state leave policies that set a lower standard for paid time off while allowing for cities or state to require more generous paid leave policies.

“Earned time off is simple. It uses the time someone has spent working as the determinant of their eligibility, and paid time off is only given after it has been earned,” wrote Stevenson, offering a summary of the program’s key points:

• Earned paid time off sets the baseline for all jurisdictions
• Earned paid time off works for all workers
• Earned paid time off is accrued hourly
• Earned paid time off is available for use quickly
• Earned paid time off can be used for anything
• Earned paid time off works with notice and without retaliation

“A federal earned paid time off program through a modernized FLSA could encompass existing laws, reduce the administrative burden for businesses, and ensure that all working Americans, part-time and part-year workers and independent contractors, as well as full-time, full-year workers, have the right to earn time off,” wrote Stevenson.

“A guarantee of earned paid time off could boost worker well-being and productivity, and it can better align U.S. workplace rules with those of other advanced economies, all of which mandate some form of paid leave for workers as part of a fair workplace.”