When discussing family leave, most people’s conversations center around The Family and Medical Leave Act (FMLA), which was enacted in 1993. FMLA applies to public and private employers with 50 or more employees. It lets eligible workers hang onto their insurance coverage and provides job protection while they take temporary leave for up to 12 weeks in any 12-month period. Covered events for employees include the birth of a child, leaving work to care for a seriously ill family member, or recovery from a personal health condition.
FMLA is good legislation, but the downside is that employees are not paid during the time they’re on leave. This situation can put a strain on finances for working families, and often results in an employee coming back to work when they’re not really ready.
Momentum continues to build for a federal paid-family-leave legislation. Nearly three-quarters (73%) of people surveyed (CBS News/You Gov) said they support federal funding for paid leave, which ranked higher than universal pre-K (67%) and free community college (61%). But we’re not quite there yet. Fortunately, states are realizing the challenge, and a handful have stepped in to take up the slack by providing paid leave to their citizens.
What Is Paid Family and Medical Leave (PFML)?
The Department of Labor (DOL) defines paid family and medical leave as an employee’s compensated absence from work because of medical conditions—personal or that of a family member—that necessitate more time away from work than the employer’s regular sick or PTO policies provide. PFML is made up of two segments:
- Paid family leave, which gives employees paid time off to take care of a sick family member or a new child. This type of leave is often called “caregiver leave” or “family leave insurance.”
- Paid medical leave, which gives employees time off for their own serious illness or injury. This type of leave is also called “temporary disability insurance” or “short-term disability.”
What Constitutes a Serious Health Condition for the Purposes of Paid Family Leave?
FMLA (and most states that have their own laws) define “a serious health condition” as an injury, illness, physical or mental condition that requires inpatient care in a hospital, hospice, or long-term medical care facility.
Federal, State, and Local Policies on Sick and Family and Medical Leave
The U.S. Department of Labor’s Bureau of Labor Statistics says that only 23% of private industry and 26% of state and local government workers had access to paid family leave insurance as of 2021. Eighty-nine percent of private industry and 94% of state and local government workers have unpaid leave benefits.
States with Paid Family Leave
The 12 states/municipalities that have a paid family leave program are:
- California (employee contribution paid along with mandatory state disability)
- Connecticut (employee contribution, no employer tax)
- Colorado (employer and employee contributions beginning in January 2023)
- Delaware (employer and employee contributions beginning in January 2025)
- District of Columbia (employer tax; no employee contribution)
- Maryland (employer and employee contributions beginning in October 2023)
- Massachusetts (employer and employee contributions based on employer size)
- New Jersey (optional state or private plan with payroll deductions)
- New Hampshire (voluntary participation in state plan beginning in October 2022)
- New York (private plan with payroll deduction from employees)
- Oregon (employer and employee contribution start date delayed to January 2023)
- Washington (employer and employee contributions)
California has its own unpaid leave plan under the California Family Rights Act that provides additional coverage above that of the FMLA.
Savvy employers offer paid family leave because they understand that it’s a major concern, especially for the Sandwich Generation, those employees who are both raising their own children and caring for older family members. This generation is predicted to represent more than 75% of the workforce within the next ten years, so it’s important to keep them happy.
States’ Family Leave Employment Laws Vary
Maryland and Delaware became the latest states to enact Paid Family Leave laws with a payroll tax component. Joining Oregon and Colorado as states with new Paid Family and Medical Leave programs on the horizon, Maryland will require employee and employer contributions to a state paid leave fund beginning in October 2023. The total rate of contribution and percentage split between employees and employers hasn’t yet been determined by the agency. Maryland residents will be eligible to begin receiving benefits in January 2025.
Delaware’s legislation calls for contributions from employers and employees beginning in January 2025, with benefits beginning in 2026. Similar to the Paid Family and Medical Leave program in Massachusetts, payroll taxes would be split between covered employers and employees with the option for employers to pay the entire cost. Delaware employers will pay 0.8% of their payroll into the fund with 0.4% going toward personal medical leave, 0.32% toward parental leave, and 0.08% toward military leave. Companies with 25 or more workers can elect to deduct half (0.4%) of their contribution from employees or pay the entire 0.8% themselves.
New Hampshire has also joined the mix with a unique voluntary insurance plan. Employers that choose to take part in New Hampshire’s paid family leave fund will be eligible for a corresponding tax credit on premiums paid. The state is in the process of selecting a private insurer to administer the program. October 1, 2022, is the current start date set for state government employers and private employers with more than 50 employees.
Wage replacement rates among the states range from 50–80%. California paid family leave provides a $1,216 per week maximum benefit and gives workers with lower earnings higher replacement rates. Washington DC’s program will have a maximum benefit of just $100 a week.
Workers’ Compensation and FMLA
Workers’ compensation provides for healthcare and income replacement in the event of a workplace injury, and it can overlap with FMLA. For example, an employee who suffers a workplace injury that is considered a “serious health condition” can be covered by both programs.
In this situation, the employer is required to provide leave under the law that provides the greater benefits to the employee. So, employers can’t require an employee to take time off under FMLA rather than getting Workers’ Compensation benefits if the injury makes them eligible.
As more and more states get on board with providing their own family leave programs, HR will have many additional regulations to ensure compliance with. Paycor’s HR and benefits administration platform can help you manage.