Academic journal article Journal of Business and Entrepreneurship

The Impact of Federally Mandated Maternity/paternity Laws on Small Businesses

Academic journal article Journal of Business and Entrepreneurship

The Impact of Federally Mandated Maternity/paternity Laws on Small Businesses

Article excerpt

ABSTRACT

The authors sought to determine what impact proposed maternity/paternity laws would have on small businesses. Large and small businesses were surveyed. Only the smallest of businesses would be adversely effected; and they would be exempt.

INTRODUCTION

American businesses offer fringe benefits as part of an employment package to attract good employees. One benefit that is the subject of heated debate among businesses and legislators is maternity leave. The concern of the manner in which businesses handle pregnancy and childbirth is largely a result of the changing demographics of the work force; women now make up over half of the work force. Approximately 90% of those women will bear a child while employed.3

Federally mandated laws imposed on businesses end up costing businesses money. Historically it is the smaller businesses that experience the greater financial hardships.

During the Fall, 1988 Session, Congress debated the merits of federally imposed maternity/paternity leave requirements on employers. Both the House and Senate versions of the acts experienced considerable change and compromise since early 1987.12,29 Essentially, the Senate version required all employers of 20 or more workers to provide up to 10 weeks of unpaid leave within a 24-month period to male and female employees for birth, adoption, or care of a seriously ill child without risk of job termination or retaliation. The House provision required businesses of 50 employees (being reduced to 35 in three years) to provide up to 10 weeks of unpaid leave within a 24-month period for birth, adoption, or a child's serious health condition. The houses were unable to agree, and the session closed before the bills could become law.

The authors conducted a study to determine what impact this type of law would have on small businesses and whether it would create financial hardships.

BACKGROUND

These trends are behind the recent interest in maternity leave and child care policies: (1) women in the work force rose from 43% in 1970 to 60% in 1987; (2) the number of single-woman households increased by 88% between 1970 and 1982; and (3) 50% of all working women in 1987 were back at work before their children were a year old.38,16,21 Dealing with these trends in fair and nondiscriminatory ways has become a difficult challenge for employers, legislators, and the judicial system.

Is the exclusion of pregnancy from sick leave and disability benefits programs discrimination? First, pregnancy had to be defined in terms of either a sickness or a disability. Both issues were addressed by the Supreme Court in the 1976 case, General Electric v. Gilbert, 429 U.S. 125 (1976), when the court defined pregnancy as a disability.4,26

Justice John Stevens' dissenting opinion argued that GE's disability program's regulations placed pregnancies in a class by themselves and "by definition, such a rule discriminates on account of sex: for it is the capacity to become pregnant which primarily differentiates the female from the male."26 Justice William Rehnquist's majority opinion cited Geduldig v. Aiello, 417 U.S. 484 (1974), a decision that held that exclusion of pregnancy from benefit programs was not illegal discrimination.

Congress disagreed with both the holding and the reasoning of the Court in the Gilbert decisions. This disapproval was clearly expressed in 1978 by its passing the Pregnancy Discrimination Act (PDA), an amendment to Title VII of the 1964 Civil Rights Act prohibiting sex discrimination by employers on the basis of pregnancy and requiring pregnancy to be treated like any other disability.9,5,14,15,19 The PDA mandates that pregnancy and maternity be included in a company's disability plan if that employer has a plan. There is no stipulation though, that the organization must have such a plan.8

The PDA makes it illegal for an employer to make employee decisions on the basis of a woman's pregnancy. …

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