Paid Family & Medical Leave update: what employers need to know in 2022
Like tulips and daffodils, this spring brought leave of absence activity popping up across the country, plenty of which was related to Paid Family and Medical Leave (PFML) programs. As a refresher, there are 10 states with established or upcoming PFML programs, including California, Colorado (benefits payable beginning in 2024), Connecticut, Massachusetts, New Hampshire (benefits payable beginning in 2023), New Jersey, New York, Oregon (benefits payable beginning in 2023), Rhode Island, and Washington, plus the District of Columbia. Below we have summarized some of the noteworthy PFML developments we saw over the past few months.
Colorado’s PFML program, which will begin paying wage replacement benefits to Coloradans in 2024, has recently seen some courtroom drama. The Colorado PFML program was approved by voters in the 2020 election cycle. Under the law, the leave benefits available from the state are funded through employer and employee contributions in the form of payroll deduction premiums. Payroll deductions are scheduled to begin on January 1, 2023, but, notably, employers with fewer than 10 employees are not required to pay the employer premiums, and certain other employers (e.g., local governments, independent contractors, sole proprietors, partners, and joint venturers) are not required to participate in the program at all. Other employers may choose to provide their employees with PFML benefits directly through a company-sponsored voluntary plan and may cover or subsidize employee premiums.
Given these differences in contribution obligations, a Colorado-based company, Chronos Builders, LLC, brought suit against the Colorado Department of Labor & Employment, Division of Family and Medical Leave Insurance, arguing that the PFML program violates the Colorado Taxpayer Bill of Rights (TABOR). The company maintains that the PFML program is actually an income tax law change, creating differentiated rates on taxable income, which violates TABOR.
The case was initially dismissed by lower courts, and after review, the Colorado Supreme Court agreed. The Supreme Court dismissed the suit on June 21, 2022, holding that premiums collected to fund paid leave under the Colorado PFML Act do not violate state income tax laws. The PFML program and payroll deductions will move ahead as scheduled.
What employers should do
Employers should prepare for their obligations to remit premiums come January 2023.
Delaware joins the PFML club! On May 10, 2022, Delaware’s Governor John Carney signed into law the “Healthy Delaware Families Act,” creating Delaware’s Family and Medical Leave Insurance Program. The program will provide wage replacement benefits and job protection to Delaware employees when they take time off work when they take leave for covered reasons. Contributions to the program are set to begin January 1, 2025, with benefits beginning January 1, 2026. Here’s what the law entails:
- The new program provides:
- Up to 12 weeks of leave in an application year for Parental Leave.
- Up to 6 weeks of leave in any 24-month period for Family Caregiving, Medical, and/or Military Exigency Leave.
- Maximum amount of leave in an application year is 12 weeks total.
- Leave may be taken intermittently or on a reduced leave schedule, subject to certain requirements.
- Some of the law’s eligibility rules (i.e., length of service, hours of service) reflect some of the federal FMLA, as do the definitions of serious health condition, healthcare provider, military exigency, application year (12-month period), and some relationships, including child, parent, spouse.
- Employers can participate by contributing to the state program via payroll contributions or by offering paid leave through a self-insured or insured private plan approved by the Delaware Department of Labor.
- Employer participation requirements depend on the number of employees primarily reporting for work at a worksite in Delaware during the previous 12 months:
- 1-9 employees: Employers can opt-in to Parental, Family Caregiving, Medical, and Military Exigency Leave
- 10-24 employees: Employers must provide employees Parental Leave but can opt-in to Family Caregiving, Medical, and Military Exigency Leave
- 25+ employees: Employers must provide Parental, Family Caregiving, Medical, and Military Exigency Leave
- Employers are responsible for collecting and retaining claims information, claims adjudication, and reporting claim approvals to the Delaware Department of Labor.
What employers should do
Employers with workers in Delaware should pay close attention to this new PFML program, particularly given the obligations for claims information retention, adjudication, and reporting. Additionally, employers should consider whether to participate in the state program or to offer their employees these benefits through a private plan.
Another new member of the PFML club! On April 9, 2022, Maryland’s legislature passed MD Senate Bill 275 after overriding the Governor’s veto of the bill, enacting the “Time to Care Act of 2022.” Contributions are slated to begin October 1, 2023, and benefits are set to become available on January 1, 2025. Here are some highlights of the law:
- The program offers:
- 12 weeks of leave and benefits in an application year for caring for a new child, caring for a family member with a serious health condition, an employee’s own serious health condition, caring for a service member who is the employee’s next of kin, and/or for qualifying military exigencies.
- The law additionally provides for 12 weeks of leave and benefits in the same application year if one of these two scenarios apply:
- The employee received benefits to care for a newborn or newly placed child AND then became eligible for benefits for their own serious health condition; OR
- The employee received benefits for their own serious health condition AND then became eligible for benefits to care for a newborn or newly placed child.
- Employers with 1+ employees in Maryland are covered by the law, however, only employers with 15+ employees will be obligated to pay the employer’s share of contributions.
- Employers may opt out of participation in the state plan by offering an approved private plan consisting of employer-provided benefits, insurance, or a combination of both.
What employers should do
Given that contributions begin in just over a year, employers with employees in Maryland should make a determination whether to offer benefits to employees through a private plan. This determination should be made soon, as employers need to file the private plan with the Maryland Department of Labor for approval.
After being delayed by legislation last year, Oregon’s PFML program is anticipated to begin with premium contributions on January 1, 2023, and employees may begin filing claims for benefits on September 3, 2023.
This spring, on April 27, 2022, in preparation for the program’s roll-out, the Oregon Employment Department (OED) filed proposed administrative rules, which detail the specifics of the program. The OED is currently hosting multiple virtual rule-making hearings to consider batches of rules, which are open to the public. Registration to attend these Zoom hearings can be done at the Advisory Committee website. Most recently, the OED adopted OR 47303 2022, which amends administrative provisions related to PFML program employer equivalent plans. Specifically, these rules establish that an employer may apply to offer an equivalent plan for PFML benefits for its employees and sets requirements for the application process, provision of benefits, reporting and recordkeeping, and withdrawal and termination of an equivalent plan.
Additionally, Oregon’s Governor signed into law OR Senate Bill 1515 on March 7, 2022, which modifies the definition of “benefit year” for purposes of PFML program. Under this amendment, the “benefit year” under the PFML program will be 52 consecutive weeks beginning on the Sunday immediately preceding the date on which family leave, medical leave, or safe leave commences.
What employers should do
As the OED adopts the rules for the PFML program, like those in OR 47303 2022, employers in Oregon should pay attention to ensure that they are fully aware of the obligations set forth by the rules before the program’s start date. All rules are scheduled to be adopted and established by September 2022. The OED intends to begin reviewing employers’ equivalent plans in October 2022.
In early April, Virginia enacted sister bills VA House Bill 1156 and VA Senate Bill 15, which establish private family leave insurance as a class of insurance. The bills define “family leave insurance” as an insurance policy issued to an employer related to a benefit program to pay for the employee’s income loss to take leave for specified reasons. Under the bills, family leave insurance may be written as an amendment or rider to a group disability income policy, included in a group disability income policy, or written as a separate group insurance policy purchased by an employer. This law becomes effective July 1, 2022.
What employers should do
Given this new opportunity for an insured PFML product in Virginia, employers may want to consider offering their employees such benefits. Although Virginia does not yet have a state mandated PFML program, Virginia legislators did introduce VA Senate Bill 1 in January 2022, which would establish a state paid family and medical leave program. However, only a month later in February, the legislature continued this legislation to the 2023 session.
At the end of March, Washington enacted WA Second Substitute Senate Bill 5649, which directly modifies the Washington Paid Family and Medical Leave Act in multiple ways, effective June 9, 2022, as follows:
- The bill amends the definition of “family leave” to add a child bereavement leave during the 7 calendar days following the death of a child in two scenarios:
- For an individual who would have qualified for Medical Leave for the birth of the child; or
- For an individual who would have qualified for Family Leave to bond with the child during the 12 months after the child’s birth, or the first 12 months after the placement of the child under the age of 18.
- The Washington Paid Family and Medical Leave department has confirmed that child bereavement leave would be available to an employee who experiences the loss of a child due to pre-term miscarriage, at-term stillbirth, or death of a child within the first 12 months of birth.
- The bill creates the presumption and requirement that the first 6 weeks following the birth of a child (“postnatal” period) be considered Medical Leave unless the employee expressly elects to take Family Leave. Additionally, the bill states that the Medical Leave in this scenario should be permitted without requiring certification of a serious health condition.
- Under the current law, PMFL does not apply to an employee who is subject to a collective bargaining agreement (CBA) that was in existence on October 19, 2017, until the CBA was reopened, renegotiated, or expired. However, the bill places an expiration date of December 31, 2023 on this exception.
What employers should do
There is a quick turnaround for the Washington PFML amendments (less than one month as of the publishing of this post), so employers should become familiar with these changes and determine how the changes impact them and their employee population. If an employer has an established voluntary plan, the voluntary plan will need to be amended to include the new bereavement leave benefits and address the postnatal medical leave presumption. Additionally, employers with CBA-covered populations should be ready for the above-described CBA exception to expire at the end of 2023.
What Guardian is doing
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