Explainer: Paid Leave Benefits and Funding in the United States

Wage Replacement, Duration, and Funding in U.S. State Paid Family and Medical Leave Programs
Monkey Business Images / Shutterstock.com
Jan. 6, 2023

**This document has been updated multiple times since its original publication in June 2021 to reflect newly passed state paid leave programs, new data on state programs and modified parameters, benefit and contribution information. It will continue to be updated periodically as new information is available.**

As of January 2023, 11 states plus the District of Columbia (D.C.) have or will soon have statewide paid family and medical leave programs in place. Eight—California, Connecticut, D.C. Massachusetts, New Jersey, New York, Rhode Island, and Washington—currently make paid leave benefits available to workers. Two more states—Colorado and Oregon—are slated to begin offering paid leave benefits to workers in September 2023 and January 2024, respectively. And, in 2022, two additional states passed paid family and medical leave programs: Maryland and Delaware will create new programs that will start providing benefits to workers in 2025 and 2026, respectively.

Without a federal paid family and medical leave program like the U.S. House of Representatives considered and passed in 2021 as part of the Build Back Better Act, but that the U.S. Senate failed to take up, states are laboratories for innovation. More state paid leave action is expected in 2023.

This explainer is a companion to our explainer on Federal FMLA and State Paid Leave Program Usage and Coverage. It seeks to answer policymakers' questions about paid family and medical leave program design, including the benefits the programs offer and the methods states use to fund their comprehensive programs. It summarizes and compares the wage replacement people receive, the duration of time for which benefits are available, and the financing of the programs in each state's enacted program. It shows the benefits that state paid leave programs deliver for a small cost.

This explainer also touches on different, voluntary models in New Hampshire and Virginia, which are not comprehensive programs and do not guarantee access to private sector workers, but that—instead—encourage private employers to voluntarily buy private paid family leave insurance and offers insurers the chance to market paid family leave insurance products.

Graphic showing typical four-week costs of housing, gasoline, food at home, health insurance and student loans, to illustrate what four weeks of lost income means for a worker who needs a family or medical leave.

Paid leave prevents workers and their families from falling down a financial rabbit hole when breadwinners need time away from their jobs to care for a loved one or address their own serious health issue. In 2018, Brandeis University researchers estimated that a typical worker will forgo more than $9,500 in lost wages to take 12 weeks of family or medical leave without pay. While on leave, workers still need to afford basic expenses to keep their families afloat, and paid leave provides the security to meet these basic financial obligations.

Advocate and legislative staffer embrace at a rally outside the California state capitol after learning that SB 951, raising California's paid leave wage replacement rates, has become law.

The country’s first two paid family leave programs, in California and New Jersey, began by replacing a fixed percentage of a worker’s typical wages when the worker needed to take paid family or medical leave (55 percent and 67 percent, respectively); these two states have subsequently raised their wage replacement rates.

  • In 2017, California implemented a temporary increase in its rate to 60 percent for most workers and 70 percent for the lowest-wage workers—but research showed this still was not enough for lower-wage workers to make use of leave. In September 2022, California adopted SB 951, which—beginning in 2025—will raise wage replacement rates to 90 percent for California workers making less than 70 percent of the states average quarterly wage and 70 percent for other workers, up to a maximum benefit amount; the program improvement will be financed by eliminating a cap on taxable wages beginning in 2024, thereby making the contribution less regressive. This new blended rate will take effect in January 2025 and mirrors innovations in newer state programs' wage replacement, described below.
  • In July 2020, New Jersey implemented a suite of changes including to its wage replacement, raising it from 67 percent to 85 percent of a workers' typical wages and substantially increasing the maximum benefit amount, though still maintaining a flat rate.

Rhode Island (60 percent) and New York (67 percent) also take this fixed percentage approach and have not updated their wage replacement rates since their programs were implemented.

Most newer programs have adopted a sliding-scale approach to paid leave benefit payments and provide higher wage replacement to lower-wage workers; this helps to make leave more affordable and accessible to people who are often living paycheck to paycheck.

  • Washington state’s program, which began paying benefits in January 2020, pioneered progressive wage replacement, replacing 90 percent of wages for low-wage workers and a blended rate for everyone else.
  • D.C.'s program, which began making benefits available on July 1, 2020, also adopts this sliding scale model, providing low-wage workers with 90 percent of their typical wages and a blended rate for middle- and higher-wage earners.
  • Massachusetts' program, which made benefits available for most purposes on January 1, 2021 and all covered purposes on July 1, 2021, replaces 80 percent of wages for lower-wage workers and offers a blended rate for others.
  • Connecticut's program, which began accepting applications in December 2021 and paying benefits on January 1, 2022, provides 95 percent of wages for lower-wage workers and a blended rate for all others.

Three of the four newest, soon-to-be-implemented state programs also embrace this model—Oregon will provide low-wage workers with 100 percent of their wages; Colorado and Maryland will provide 90 percent. In these states, middle-wage workers typically receive roughly 60 percent to 70 percent of their wages, and higher income workers receive less. Delaware will follow the older model of using one wage replacement rate, but follows the best-practices recommended by researchers to set wage replacement at 80 percent of a workers' average weekly wage—a rate that will allow lower-wage workers to use the paid leave they need without falling into poverty and enabling middle-wage workers to continue to meet their basic household expenses.

The figure below shows the approximate benefit that workers at different wage levels, can expect to receive in each state's current or forthcoming program. Additional scenarios are illustrated in a supplementary table that shows approximate wage replacement for workers who are paid minimum wage, average weekly wages or fractions or multiples of the state average weekly wage in each state. (Notes [1]-[12] below provide more information about wage replacement rates and links to state-specific resources.)

In order to compare apples-to-apples, we calculate benefits using the 2023 minimum wage and the state average weekly wages that will be used to calculate paid leave, workers' compensation or unemployment benefits in 2023; this means that, for programs that have not yet been implemented, benefit amounts shown are lower than they will be at the time of implementation because of forthcoming scheduled minimum wage increases and likely increases in the state average weekly wage. Benefit amounts are also not exact since most states use a look-back period on recent wages rather than the exact wage a worker typically receives at the time they take leave.

Comprehensive state programs are funded through small, mandatory payroll deductions from employers, employees or both. Tax rates are no more than 1.5 percent in any state in 2023, and most are well below. In each state other than New York, the money is pooled into a statewide fund from which benefits are paid; in New York, private insurers and a state insurance fund, similar to a public option, exist side-by-side.[13]

In 2023, California, New Jersey, New York, and Massachusetts payroll contribution rates went down; in D.C., a substantial decrease in payroll contributions that took effect in 2022 stayed in place in 2023. In 2023, New Jersey actually eliminated workers' contributions to paid medical leave in addition to substantially reducing contributions to the family leave portion of the program. At the same time, in 2022 and 2023 payroll contributions in Washington state adjusted upwards to reflect increased demand during the pandemic.

The two tables below show (1) the contribution levels for employees and employers and the taxable wage base on which premiums are calculated; and (2) to provide context for what these contributions "buy" in terms of the paid family and medical leave available to workers, each state's duration of paid leave. (Notes [14]-[25] below provide more information about payroll tax rates, benefit caps and duration, along with links to state-specific resources.)

In brief, each state passed social insurance programs to provide paid leave; collect payroll contributions, and administer benefits to workers who are eligible for paid family or medical leave. States need to build up their funds before beginning to make wage replacement benefits available to workers, which means there is a lag between the passage of legislation, the collection of premiums and the availability of benefits to workers.:

  • The programs in California, New Jersey, New York and Rhode Island have funded personal medical leave programs through Temporary Disability Insurance (TDI) through payroll contributions for decades, and each added paid family leave benefits funded in a similar way in 2002 (California), 2008 (New Jersey), 2013 (Rhode Island), and 2016 (New York). These programs began paying benefits to workers in 2004 (California), 2009 (New Jersey), 2014 (Rhode Island) and 2018 (New York).
  • In July 2019, Washington state and D.C. started collecting the payroll deduction premiums to fund their new programs that were created from scratch. Washington’s began paying benefits in January 2020 and D.C. began paying benefits in July 2020.
  • Massachusetts premium collections began in October 2019 and benefits became available to workers in 2021 over a six month phase-in: personal medical leave, military exigency leave, and new child bonding leave began in January, and family caregiving leave began in July 2021. Connecticut began collecting premiums for its new program in 2021 and paying benefits in 2022.
  • Oregon was originally scheduled to begin collecting premiums in 2022, but revenue collection was delayed until January 2023; the program is set to begin delivering benefits to workers in September 2023.
  • Colorado began collecting premiums in January 2023 and will begin delivering benefits in 2024.
  • Maryland will begin to collect premiums in October 2023 and start paying benefits in January 2025. Delaware's contributions will begin in January 2025 and the state program will begin paying benefits in January 2026.

The family caregiving portion of nearly all state paid leave programs allows workers to take paid leave to care for a range of family members—parents, spouses, children, and grandparents in all; and grandchildren, siblings, parents-in-law, and domestic partners in most—and four newer or newly expanded laws also include “chosen” family members to whom the worker is related by blood or affinity.

The funding for the programs is (or, for new programs is anticipated to be) sufficient to cover all the caregiving purposes and relationships that the laws include. Experience shows the inclusion of extended family members does not add appreciably to program costs and that broad family coverage is particularly important to ensure that people of color who disproportionately have extended family care responsibilities, LGBTQ people, and people with disabilities and their caregivers can realize the promise of paid leave programs.

Comprehensive, universal state paid leave models show that paid family and medical leave provides substantial financial security to working people, at minimal individual cost, usually for an adequate number of weeks. Federal lawmakers can use these parameters to help design a national paid family and medical leave program.

Voluntary Approaches

2023 also brings two new approaches to paid family and medical leave policy; whether they meet the needs of workers or employers remains to be seen.

In New Hampshire, the Governor created a program that will cover public sector workers with six weeks of paid family leave at 60 percent of their typical wages—this is substantially less time and lower rate replacement than in the vast majority of programs in states with comprehensive, universal policies. Private employers in New Hampshire are also able to purchase paid family and medical leave insurance through this plan if they choose to do so, and workers whose employers do not offer paid family leave insurance can purchase insurance privately and have premium contributions deducted from their paychecks. Only one insurer bid for a contract with the state to provide this insurance product, and the rates they estimate charging employers are higher in most cases that payroll contributions in states with paid family and medical leave programs.[26] Enrollment in the voluntary New Hampshire program began at the end of 2022, so no data is available yet on coverage or the efficacy of the program in meeting workers' or employers' needs. Vermont is in the process of adopting a similar program.

In Virginia, in 2022, the state legislature authorized its State Corporation Commission's Bureau of Insurance to approve the sale of family leave insurance products in the state; there are no specific parameters that insurance products must offer in terms of duration, wage replacement, family members covered or any other specific details. As of this writing in January 2023, not a single insurer has applied to offer a family leave insurance product, which means that no workers have benefitted yet from this new law.


New America's Naomi Morduch Toubman assisted with the creation of graphics for this brief. Former Better Life Lab staff Haley Swenson and Jahdziah St. Julien, research assistant Kelly Rolfes-Haase and intern, Leah Crowder, assisted with the development of an earlier version of this explainer.


[1] In California, the benefit amount depends on highest quarter of earning during a Base Period (first four of last completed calendar quarters before starting date of claim). If the highest quarterly earnings are less than $928.99, weekly benefit is $50; between $929 and around $7,350 is 70 percent of earnings; workers receive 60 percent of earnings if they have higher quarterly wages. The maximum benefit in 2023 is $1,620. See https://edd.ca.gov/en/disability/paid-family-leave/ and a table of benefits by prior quarterly earnings. Wage replacement rates will increase substantially in 2025 due to the passage of SB 951 in 2022.

[2] In New Jersey, as of July 1, 2020, claimants are paid 85 percent of their average weekly wage. In 2023, the maximum weekly benefit is $1025per week. See https://nj.gov/labor/assets/PDFs/Legal%20Notices/Notices%20of%20Proposal/PRN%202022-117%20(54%20N.J.R.%201684(a)).pdf. Prior to July 2020, claimants were paid two-thirds (2/3) of their average weekly wage, up to a maximum of $667 per week.

[3] In Rhode Island, the wage replacement is equal to 4.62 percent of the wages paid to employee in the highest quarter of Base Period. In 2023, the maximum benefit is $1,007. See https://dlt.ri.gov/sites/g/files/xkgbur571/files/2021-12/quickref_0.pdf.

[4] In New York, as of 2021 after four years of scaling up, the wage replacement rate reached its full amount: 67 percent of employee's weekly wage up to 67 percent of the state average weekly wage (SAWW). The maximum benefit in 2023 is $1131.08. See https://paidfamilyleave.ny.gov/benefits. Temporary disability insurance has different wage replacement in New York, and the maximum benefit is just $170/week; this is the only state in which the TDI and PFL programs have different payment rates. Advocates are working to update TDI in New York.

[5] In Washington, the wage replacement rate is 90 percent of employee's wage up to 50 percent of SAWW plus 50 percent of employee's wage over 50 percent of SAWW. Maximum benefit in 2023 is $1,427 (90 percent of SAWW). See https://paidleave.wa.gov/question/how-much-money-will-i-receive/.

[6] In the District of Columbia, the wage replacement calculation is based on the minimum wage. The replacement rate is 90 percent of employee's wage up to 150 percent of DC's minimum wage x 40 plus 50 percent of employee's wage over 150 percent of DC's minimum wage x 40. Maximum benefit is $1,049/week for 2023. See https://dcpaidfamilyleave.dc.gov/announcements/2022-notice-to-employees/.

[7] In Massachusetts, the wage replacement rate is 80 percent of employee's wage up to 50 percent of SAWW plus 50 percent of employee's wage over 50 percent of SAWW. Maximum benefit for 2023 is $1,129.82, which is 64 percent of SAWW. See https://www.mass.gov/orgs/department-of-family-and-medical-leave.

[8] In Connecticut, the wage replacement calculation is based on the minimum wage. Replacement rate is 90 percent of employee's wage up to minimum wage x 40 plus 60 percent of employee's wage over minimum wage x 40. Maximum benefit is minimum wage x 60, which is $840 through May 2023 and rises to $900 on June 1, 2023, with an increase in the state's minimum wage. See https://ctpaidleave.org/s/employee-landing-page?language=en_US.

[9] In Oregon, the wage replacement rate will be 100 percent of employee's wage up to 65 percent of SAWW plus 50 percent of employee's wage over 65 percent of SAWW. Maximum benefit is 120 percent of SAWW and minimum benefit is 5 percent of SAWW. The maximum benefit when the program begins to compensate workers for paid leave in September 2023 will be $1,469. See https://paidleave.oregon.gov/employees/Pages/default.aspx.

[10] Colorado's wage replacement formula follows Washington state's: 90 percent of employee's wage up to 50 percent of SAWW plus 50 percent of employee's wage over 50 percent of SAWW. The maximum benefit will be calculated at 90 percent of SAWW after January 1, 2025. For the program's first year, the maximum benefit will be $1100; the statute does not specify a minimum benefit. See https://famli.colorado.gov/individuals-and-families.

[11] Maryland's wage replacement rate is 90 percent for workers with an individual average weekly wage that is 65 percent or less of SAWW plus 50 percent of wages that are above 65 percent of SAWW. The maximum benefit will be $1,000/week for 2025 (the program's first year) and will be adjusted annually beginning on January 1, 2026;the minimum benefit is $50/week. See https://mgaleg.maryland.gov/2022RS/bills/sb/sb0275E.pdf (pages 22-23).

[12] Delaware's wage replacement rate is 80 percent of the individual's average weekly wage, up to a cap of $900 per week in the program's first two years (2026 and 2027), with annual adjustments thereafter. The minimum benefit is $100/week (including full wage replacement for workers who make less than $100 per week but are otherwise eligible for the program). See https://legis.delaware.gov/SessionLaws/Chapter/GetPdfDocument?fileAttachmentId=541384 (page 5).

[13] Some states permit employers to self-insure or to purchase third-party insurance; the state regulates and enforces this process but, with the exception of New York, very few employers participate in these voluntary plans and participate in the state fund.

[14] In California, the law was passed in 2002, implemented in 2004, and has been amended multiple times, including in 2022 to greatly increase wage replacement beginning in 2025 via SB 951 (https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220SB951). The maximum length of family leave increased from 6 to 8 weeks on July 1, 2020. See http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB83. For tax rate and wage base information, see https://www.edd.ca.gov/Payroll_Taxes/What_Are_State_Payroll_Taxes.htm. On January 1, 2021, individuals became eligible to receive up to 6 weeks of military exigency leave. See https://www.edd.ca.gov/pdf_pub_ctr/de2530.pdf. In 2023, payroll tax contributions came down from 1.1 percent to .9 percent; beginning in 2024, in order to fund the benefit expansions passed in SB 951, all wages will be taxable.

[15] In New Jersey, 2019 legislation made changes to the state paid family leave program. Some changes took effect in January 2020 and others took effect on July 1, 2020. For tax rate and wage base information for family leave, see https://myleavebenefits.nj.gov/worker/fli/ and for TDI, see https://myleavebenefits.nj.gov/worker/tdi/ and https://myleavebenefits.nj.gov/labor/myleavebenefits/employer/index.shtml. Note that the TDI contribution for employers varies based on how often their workforce uses TDI ("experience rating"); New Jersey is the only state to experience rate its TDI contributions. In 2023, for the first time, workers were exempted from paying any portion of the TDI premium and family leave insurance contributions were reduced from .14 percent in 2022 to .06 percent in 2023.

[16] In Rhode Island, for tax rate and wage base information, see https://dlt.ri.gov/sites/g/files/xkgbur571/files/2021-12/quickref_0.pdf. Rates came down between 2021 and 2022, from 1.3 percent to 1.1 percent of an employee's wages, up to the taxable cap and remain there for 2023. Note that Rhode Island allows for a maximum of 30 weeks of combined annual disability and family leave. See http://www.dlt.ri.gov/tdi/tdifaqs.htm.

[17] In New York, for tax rate and wage base information for family leave, see https://paidfamilyleave.ny.gov/cost. The taxable wage base cap is equal to the state average weekly wage. Employers are required to provide TDI and may take up to a 0.50 percent payroll tax from employees to cover benefits (but only up to $0.60 per week). See http://www.wcb.ny.gov/content/main/offthejob/db-overview.jsp. New York's paid family leave can be used for military exigency leave. Workers' family leave contribution rate came down in 2023, from .511 percent to .455 percent, a 10-percent decrease.

[18] In Washington, for tax rate and wage base information, see https://resources.paidleave.wa.gov/premiums. The taxable wage base cap is the Social Security cap. Small businesses with fewer than 50 employees are not required to contribute to premiums but are incentivized to do so. In terms of duration, some individuals can qualify for up to 16-18 weeks combined leave (e.g., individuals who experience complications in pregnancy may be eligible for 18 weeks of leave). Washington's law includes military exigency leave. See https://paidleave.wa.gov/find-out-how-paid-leave-works/. In 2023, Washington began to allow seven days for a pregnancy loss or loss of a child. Washington's contribution rate rose by .2 percent in 2023, from .6 percent to .8 percent; there is some evidence that their initial actuarial analysis may have been flawed and that, plus the pandemic utilization levels, led to the need to recalibrate.

[19] In the District of Columbia, for tax rate information, see https://dcpaidfamilyleave.dc.gov/employers/. D.C. extended the duration of paid family and medical leave to a total of 12 weeks beginning in October 2022, up from an interim increase in 2021 and the program's initial offering of just 2 weeks of paid medical leave, 6 weeks of paid caregiving leave and 8 weeks of paid parental leave. DC also offers 2 weeks of pre-natal leave, as of October 2021. See https://dcpaidfamilyleave.dc.gov/workers/. DC reduced the employer payroll contributions from .62 percent to .26 percent in 2022 and kept the premiums there for 2023.

[20] In Massachusetts, for tax rate and wage base information, see https://www.mass.gov/info-details/family-and-medical-leave-contribution-rates-for-employers. Small businesses with fewer than 25 employees are not required to contribute to premiums. The taxable wage base cap is the Social Security cap. Note that the maximum length of leave is capped at 26 weeks per year (and maximums of 12 weeks of family leave, 20 weeks of medical leave, and 26 weeks to care for a wounded service member). See https://www.mass.gov/guides/workers-guide-to-paid-family-and-medical-leave#-worker-contribution-rates-. Massachusetts' contribution rate dropped from .68 percent in 2022 to .63 percent in 2023.

[21] In Connecticut, for tax rate and wage base information, see https://www.cga.ct.gov/2019/ACT/pa/pdf/2019PA-00025-R00SB-00001-PA.pdf. Employees began making contributions on January 1, 2021 and the Connecticut program began accepting applications for leaves in December 2021 for leaves that were to begin on or after January 1, 2022. The taxable wage base cap is the Social Security cap. Note that the maximum annual length of leave is 12 weeks plus an additional 2 weeks for a health condition resulting from pregnancy. Connecticut's law includes both military exigency leave and "safe" leave for survivors of family violence. Connecticut caps military exigency leave at 26 weeks per two-year period.

[22] In Oregon, for tax rate and wage base information, see https://paidleave.oregon.gov/Pages/resources.aspx. The taxable wage base cap is the Social Security cap. Oregon’s law includes “safe leave” for survivors of domestic violence, sexual assault and stalking. Small businesses are not required to contribute to the program, similar to Washington state and Massachusetts.

[23] In Colorado, the statute prescribes tax rate and wage base information. The taxable wage base is the Social Security cap. Small businesses are not required to contribute to the program, similar to Washington state, Massachusetts and Oregon. Colorado's law includes both military exigency leave and "safe" leave for survivors of domestic violence, stalking and sexual assault. https://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2019-2020/283Final.pdf.

[24] In Maryland, the statute directs the Secretary of Labor and other state officials to set an initial tax rate of between .25 percent and .75 percent each for individuals and businesses with 15 or more employees. Rates will be published by June 30, 2023 and payroll contributions begin in October 2023. Businesses with fewer than 15 employees are exempted from contributing to the fund. In addition, for the first two years of the program, the legislature's intent is for the state to contribute to the fund for workers who are paid $15/hour or less - this is a unique feature that is distinct from other paid leave programs. The taxable wage base is the Social Security cap. Maryland's law covers military exigency leave. https://mgaleg.maryland.gov/2022RS/bills/sb/sb0275E.pdf.

[25] In Delaware, the statute prescribes the tax rate but does not specify a limit on the taxable wage base. Delaware's contribution amounts are subdivided by statute for each type of leave - parental, medical and family care - and the statute includes a trigger that would reduce benefit levels if contribution amounts exceed 1 percent. In addition, Delaware's coverage and eligibility rules are restrictive: businesses with fewer than 10 employees are not covered, either for contributions or for benefits to workers; businesses with 11 to 24 workers only contribute for parental leave and their employees are only covered for parental leave. Even within covered businesses, only workers who meet FMLA eligibility criteria (one year of job tenure and at least 1,250 hours of work in the prior year) are eligible for paid family and medical leave benefits. Delaware's law includes military exigency leave. See https://legis.delaware.gov/SessionLaws/Chapter/GetPdfDocument?fileAttachmentId=541384.

[26] MetLife's filings in New Hampshire are available here ( tracking numbers META-133327697 and META-133327714). A spreadsheet submitted with likely rates for employers in different industries and with different workforce demographics shows a huge variation in expected rates, many exceeding the cost of paid leave in states with universal, mandatory contributions.

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