Paid Family Leave is Good for Babies – and Business – in Tennessee

TQEE Applauds Passage of 2023 Paid Family Leave Legislation

Tennesseans for Quality Early Education applauds the General Assembly and Governor Bill Lee for passing legislation to provide six weeks of paid family leave to state employees (including public educators) and a new state tax credit to help businesses provide paid family leave to employees. The new tax credit matches the existing federal tax credit, doubling the incentive.

Read on to learn more about why paid family leave is important, and what the new laws mean for babies, workers, employers, and the economic competitiveness of Tennessee.

The Case for Paid Family Leave: What the Research Says

A Baby’s Developing Brain

Research confirms what parents know: the first weeks and months with a new baby are critical for bonding, and so much more. Early parent-child interactions are building blocks for a child’s physical, cognitive, language, and emotional development. According to the Harvard Center for the Developing Child, babies need just one safe and responsive relationship with an adult parent or caregiver to develop both a healthy brain and lifelong resilience skills.

Children’s brains grow most rapidly in their earliest months and years. In fact, seventy percent of brain development happens by a child’s first birthday. That means that early experiences build the foundation for everything that follows  – and that foundation can be sturdy or fragile.

Skills needed to build resilience, such as the ability to plan and regulate behavior, are best developed early, when a child’s brain and biological systems are most adaptable. These “soft skills” develop when babies are in safe, predictable environments with responsive adults.

Resilience skills built in infancy help children overcome adversity throughout their lives.

Babies who do not develop a secure relationship with a caregiver are more vulnerable to the negative long-term impacts of “toxic stress,” the prolonged trauma that can result from neglect, abuse, extreme poverty, and other environmental factors. Repeated exposure to toxic stress has been shown to weaken the architecture of a child’s brain, leading to long-term negative health, behavioral, and learning outcomes.

The Economic Case for Paid Family Leave

When employees have access to paid leave, they are more likely to stay in their jobs and have higher morale and productivity. A recent review of research by Vanderbilt University’s Prenatal to Three Policy Impact Center found that, when women had paid family leave, they were more likely to return to their prebirth employer, and more likely to still be employed by their child’s first birthday. By their child’s second birthday, women with paid family leave ended up working a total of 7 weeks more than women who did not have paid family leave.

Given today’s labor shortages, paid family leave is an important tool for attracting women to – and keeping them in – the workforce, which has a positive ripple effect on families’ incomes and the state’s economic productivity. Vanderbilt’s analysis found that paid family leave grows maternal labor force participation by 8 percentage points – a significant impact.

What the New Laws Mean for State Employees, Public Educators, and the Private Sector

State Employees and Public Educators

Thanks to the 2023 legislation, most Tennessee state employees and public educators can now access six weeks of paid parental leave (PPL) to care for or bond with a newborn or adopted child. To be eligible, employees must have worked full time with an eligible state entity or local education agency for at least 12 consecutive months. Eligible employees can take PPL within 12 months of the birth or adoption but must provide their employer with at least thirty days’ notice.

  • For more guidance for state employees, click
  • For more guidance for public educators, click

Private Business Tax Credit

Beginning this year, Tennessee companies can take advantage of a new tax credit for paid family leave. The new state tax credit matches the Federal tax credit for paid family leave, which offers:

  • A 12.5% tax credit if the employer pays 50% of wages during up to 12 weeks of leave; or
  • A 25% tax credit if the employer pays 100% of wages during up to 12 weeks of leave.

The tax credit means more businesses of all sizes will be able to follow the example set by of some of Tennessee’s largest employers, such as BlueCross BlueShield, Kroger, and Nissan.

The new state tax credit is effective for tax years ending Dec 31, 2023 through Dec 31, 2025, which means it will need to be extended in future years.

Guidance for Tennessee businesses on the new tax credit can be found here.

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