A Clause on Clawbacks: Bill Aims to Close ‘Loophole’ in FMLA

West Virginia Rep. Riley Moore and Utah Sen. Mike Lee recently introduced the Fairness for Stay-at-Home Parents Act, a bill that the Republican lawmakers say would “close a loophole” in the Family and Medical Leave Act (FMLA) by exempting new parents from paying back health insurance premiums to their employers in situations where those employees choose not to return to work (temporarily or permanently) after maternity or paternity leave. Under current federal law, employers can “claw back” premiums from new parents if they decide to stay home following such leave.

The House of Representatives bill (HR 2732) was introduced on April 8 and subsequently referred to three committees — Education and Workforce, Oversight and Government Reform, and House Administration. The Senate bill (S 1348) was introduced on the same day and referred to the Committee on Health, Education, Labor and Pensions. Similar legislation was introduced in October 2023 by then-Ohio Sen. JD Vance.

“With health insurance premiums for family coverage averaging $25,000 per year, this current loophole can compel parents to return to work even if they feel unready or would prefer to stay home,” Moore said in a statement on his website. “This bill strengthens families by giving new parents the option to raise their children without having to worry about their employer clawing back their healthcare premiums.”

Background on the FMLA and Related Issues

Under the FMLA, certain working parents can receive up to 12 weeks of unpaid, job-protected time off per year. Employees are eligible for leave if they:

Have worked for their employer at least 12 months;
Worked at least 1,250 hours over the past 12 months; and,
Work at a location where the hiring entity employs 50 or more employees within a 75-mile radius.

Fair Labor Standards Act (FLSA) principles determine whether an employee has worked the minimum 1,250 hours of service.

Research by government agencies, universities and nonprofit organizations shows new parents — mothers, in particular — feel pressured to return to the workforce as quickly as possible after childbirth. A 2023 study by Abt Associates found nearly 1 in 4 women return to work within two weeks of giving birth, with three-quarters of these women citing financial need as the reason why they return to work.

Data from the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) lends credence to the financial issue. According to the BLS, only about 13% of American workers have access to any form of paid family leave. Agency data showed the highest-paid workers are most likely to have paid family leave — more than 1 in 5 of the top 10% of earners have this benefit, compared to 1 in 20 in the bottom 25%.

Well-being concerns go beyond financial, though. A clinical study published in the American Journal of Obstetrics & Gynecology showed cases of new mothers experiencing mental well-being issues such as postpartum depression have increased since 2010. A study published in the Journal of Applied Developmental Psychology showed less than 12 weeks of maternal leave is associated with “higher maternal depression, lower parental preoccupation with the infant, less knowledge of infant development, more negative impact of birth on self-esteem and marriage, and higher career centrality.”

“Our legislation rectifies a problem with the Family and Medical Leave Act,” Lee said in a statement on his website. “Each additional financial burden we can remove from growing American families is a victory, and this bill will make it easier for hundreds of thousands of new parents to care for their kids.”

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