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The challenges and benefits of state PFML programs for employers

For employers operating in multiple states — and even in single states — it’s become more challenging to effectively manage employee benefits. Many bills have been introduced that have components impacting paid leave benefits, such as changes or additions to the people who are included or the reasons that the leave time can be used. The latest changes in paid family leave regulations have come in multiple states and jurisdictions, including Connecticut, the District of Columbia, Massachusetts and Oregon. But the changes are ongoing.

 So, what does that mean for employers?

While it can be difficult for employers to keep up with what is happening at the state level, the biggest challenge has been incorporating all of the new paid leave laws with existing leave of absence rights and employer policies. While most state programs are aligned with the qualification standards in the federal Family and Medical Leave Act (FMLA), some include different relationships, like siblings and domestic partners, different types of paid leave and more than the 12 weeks allowed in the FMLA entitlement. When this benefit is added to other time off benefits like sick time, vacation or parental leave, it can be a complicated process for employers to stay in compliance with state and federal laws, as well as their own internal policies.

Some state programs allow exceptions for employers that have existing paid programs, although they may require them to be more generous than what the state offers. In those situations, the employer must present a private or voluntary plan to the state for approval. There are different rules associated with the financial aspects of these programs and each state is different. To stay compliant, employers are encouraged to partner with disability and absence experts or lawyers specializing in employment benefits who can interpret the impact based on the employer’s existing programs. If you have specific questions about state leave programs or proposed legislation, please contact your client services representative or consult with your corporate legal counsel. We’ll continue to update our website and share client bulletins with the most recent information.

Updates on new state programs

Several regions have added paid family and medical leave programs or announced changes in recent months. Below is a summary of the updates in Connecticut, the District of Columbia, Massachusetts and Oregon.

Connecticut Paid Family and Medical Leave program

Starting in 2022, Connecticut will offer paid family and medical leave benefits to workers. The state’s new Paid Family and Medical Leave (CT PFML) program will be funded by an employee payroll tax, and it will allow employees to take between 12 and 14 weeks of paid time to treat a serious illness, care for a sick relative, care for a newborn child, serve as an organ or bone marrow donor or address issues related to family or domestic violence. The law also expands the covered individuals and reasons for coverage under the existing Connecticut Family and Medical Leave Act (CT FMLA) effective January 1, 2022.

As directed by the legislature, premium payments begin on January 1, 2021 and benefits can be taken starting January 1, 2022.

Sedgwick is currently monitoring the rulemaking process and will provide our feedback to the regulators, as directed. We will keep clients apprised of matters regarding the CT PFML program as they arise.

District of Columbia Paid Family Leave program

As previously communicated, starting on July 1, 2020, the District of Columbia will offer paid family leave benefits to workers. The District of Columbia Paid Family Leave (DC PFL) program will be funded entirely by employers, and the program and benefits paid will be administered by the DC Department of Employment Services (DOES).

Rulemaking for the new law was broken down into two chapters, separating the employer contributions and paid leave benefits. The rulemaking process regarding employer contributions is complete and information is now available on employer responsibilities on the DC PFL website

The second chapter, regarding the administration of paid leave benefits, is currently in rulemaking. However, the paid leave benefits will be administered fully by DOES and employers do not have the option to opt out or set up a private plan. Therefore, Sedgwick intends to administer DC PFL as an offset to any benefit an employee may be concurrently eligible to receive under their employer’s paid leave policies.

Sedgwick’s disability and absence compliance group continues to review the proposed regulations and will provide additional details on how this will impact the administration of disability and absence management programs toward the end of 2019. For more information, see the DOES website.

Massachusetts Paid Family and Medical Leave program

The Massachusetts Paid Family and Medical Leave (PFML) program is now in effect after a three-month delay was implemented last year to allow businesses enough time to prepare for the new program. The legislature also announced that it will adopt technical changes to clarify program design. Under the new timeline, payment withholdings began on October 1, 2019 for contributions due January 31, 2020. Most benefits will be available beginning on January 1, 2021, with the remaining becoming available on July 1, 2021.

The delay gave regulators additional time to complete regulations and address the numerous issues that had created confusion with the paid leave program. The state has also provided a PFML Fact Sheet, offering new direction for employers.

Oregon Paid Family and Medical Leave program

Starting in 2023, Oregon will offer paid family and medical leave benefits to workers. The Oregon paid family and medical leave (OR PFML) program will be funded by an employee and employer payroll tax. It will allow employees to take 12 weeks of paid time to treat a serious illness, care for a sick relative, care for a newborn child or address issues related to family or domestic violence (safe leave). Two additional weeks are available for leave related to pregnancy, childbirth and related conditions. The law is in addition to the Oregon Family Leave Act (OFLA), which is an unpaid leave of absence law; the two laws run concurrently when applicable. There is a maximum entitlement of 16 weeks of any combination of leave under the OR PFML program or the OFLA.

As directed by the legislature, premium payments will begin January 1, 2022 and benefits can be taken starting January 1, 2023.

Rulemaking for the new law is expected to start soon. Regulations must be finalized and adopted by the Oregon Director of the Employment Department no later than September 1, 2021. Sedgwick is currently monitoring the rulemaking process and will provide our feedback to the regulators, as directed. We will keep clients apprised of matters regarding the OR PFML program as they arise.

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