Gov. Bill Lee changes course on how to extend paid family leave to 38,000 state employees

Despite issuing an executive order last month aimed at providing 12 weeks of paid family leave to 38,000 state employees, Gov. Bill Lee has changed course, saying he needs to instead pass legislation to implement the proposal.

Lee made the announcement Wednesday.

“After consultation with legislative leaders, we feel the best course of action is to implement paid family leave via legislation rather than executive order," the governor said. "We will propose legislation that is retroactive to March 1, 2020, so that no state employee is negatively impacted by this change in course."

The decision came one day after Senate lawmakers pressed the Lee administration on the financial impact of the policy change.

The governor's latest move suggests Lee may not have had the authority to make the policy change via executive order because of the costs to taxpayers.

An administration official said they felt it was more constructive to instead pursue the policy change with legislation.

The change in course comes just days before Lee's executive order was set to take effect, delivering a setback to the governor. More broadly the move could perpetuate questions about the administration's relationship with the legislature.

Analysis: Gov. Bill Lee is offering state workers 12 weeks paid family leave. How does that stack up?

After Lee announced his decision, Lt. Gov. Randy McNally and House Speaker Cameron Sexton said in separate statements it was a wise move.

McNally noted executive orders can be reversed by future governors.

"With legislation, if any changes to the policy are made, they would be permanent," he said. "The legislative process will ensure the costs and benefits of this policy can be thoroughly vetted."

Sexton said pursuing legislation will "allow everyone to have a voice in the process."

Lee announced FMLA policy change in January

Lee's initial announcement was praised by Democrats but drew concern among Republican lawmakers, in part due to the fiscal impact. Republicans were so lukewarm to the idea that when the governor highlighted his proposal in his State of the State speech, many lawmakers refrained from applauding.

The governor's proposed $40.8 billion budget did not set aside any money for the policy change, generating additional scrutiny from legislators who worried about having to set aside money or risk angering state employees if they scuttled the plan.

When he initially announced the policy change during a Jan. 7 news conference, Lee said it would come at no additional costs while making Tennessee the first state in the nation to adopt such the change.

Later in the day, Lee admitted the change could have some minor costs, estimated to be about $900,000.

"On comparison with the entire state payroll budget, it's not substantive," the governor told reporters in Nashville.

Policy change faced questions over costs

On Tuesday, in two separate Senate committees, lawmakers pressed officials from the Departments of Finance and Administration and Labor and Workforce Development about the financial implications of the new policy.

Lawmakers were told last year about 100 finance employees had utilized the state's leave policy, taking an average of about 11 days. The current policy allows state employees to take up to 16 weeks of unpaid leave.

Sen. Joey Hensley, R-Hohenwald, asked finance and administration deputy commissioner Eugene Neubert if the administration had any projections regarding the new policy.

"It's hard to predict the future," Neubert said. "I don't know that I have a crystal ball to predict whether we'd have more or less or the same number of employees that would take this."

Sen. Bo Watson, R-Hixson, the committee's chairman, pressed further, raising doubts about claims that the change would have no fiscal impact on the state.

“If you’re paying for FMLA and then you’re going to pay people for their vacation or sick (day), I don’t know how that doesn’t increase your costs,” Watson said. “That’s been what’s presented to us.”

The conversation about the FMLA policy, along with other issues raised during the committee meeting, ultimately led the panel to delay approving the agency's budget.

Watson continued his questions later in the day when the state Department of Labor and Workforce Development appeared in front of the Senate Commerce and Labor Committee.

After Watson noted the state did not need to hire temporary employees to fill in for staff who took advantage of the leave policy, commissioner Jeff McCord said the absences were covered with existing resources.

"That begs the question, does it not, that if you're able to cover that with efficiencies within your department, do you need the number of personnel that you have?" Watson asked.

McCord said the state can "hang in there for three or four weeks ... to get over a hump," later arguing Lee's policy change will help attract and retain employees.

Asked Tuesday about the questions raised during the two committees, Lee reiterated the fiscal impact would be a “relatively low cost to the state.”

“I’ve always thought that I have an obligation as the governor for the executive branch to create an environment that’s attractive to workers,” he said.

Lee's initial announcement of the FMLA policy change aimed to provide coverage to 38,000 of the state's executive branch employees. The roughly 3,000 remaining state employees would only be covered if the legislature adopted a bill.

It is not immediately clear how Lee will pursue the change via legislation. It is conceivable he will simply amend his already filed FMLA bill, which has yet to be considered in the legislature. Given the legislature's initial skepticism about the proposal, lawmakers are expected to amend Lee's plan.

Elizabeth Gedmark, vice president of A Better Balance, a national legal advocacy organization that has advocated for paid family and medical leave in Tennessee, said she was disappointed by Lee's change in course.

"Tennessee's working families, including those in the public sector, desperately need paid family and medical leave in order to care for themselves and their loved ones, without sacrificing their economic security," she said.

Gedmark said she looked forward to working with Lee and the legislature on the issue.

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Reach Joel Ebert at jebert@tennessean.com or 615-772-1681 and on Twitter @joelebert29.