California Paid Family Leave Extension

As mentioned in last month’s Benefit Beat, California’s Governor Gavin Newsom signed a law on June 27, 2019 that extends the duration of the state’s current Paid Family Leave Program from 6 weeks to 8 weeks beginning July 1, 2020. 

Under current law, eligible employees are entitled to up to 6 weeks of wage replacement benefits when they take time off from work for baby bonding (birth, adoption or foster care placement) or to care for a seriously ill family member (child, parent, parent-in-law, grandparent, grandchild, sibling, spouse or registered domestic partner).  Beginning January 1, 2021, employees may take leave for a qualifying military exigency.

The law applies to any private sector employer who employs one or more employees in California.  Self-employed individuals can opt into the program.

To be eligible, the individual must work for the covered employer, contribute to the state disability insurance program through payroll deductions, and earned at least $300 in wages in the 5 to 18 month period prior to the leave.

The PFL program is funded solely through employee contributions, and is incorporated into the state’s temporary disability insurance withholding rate.   The maximum weekly benefit for 2019 is $1,252. In 2018, the maximum weekly benefit was $1,216. Employees with quarterly earnings less than $929 receive a weekly benefit of $50.

While the PFL program provides a compensation mechanism, it does not create the entitlement to leave.  The right to leave is governed by other laws, such as the federal Family Medical Leave law (FMLA), the California Family Rights Act, and the California pregnancy disability leave law.

Additional information about the PFL program is available from the California Employment Development Department website (http://californiapaidfamilyleave.com) including FAQs, employer obligations, as well as forms and publications.

Connecticut: Changes to State Family and Medical Leave Laws

As mentioned in last month’s Benefit Beat, a new paid Family and Medical Leave Insurance law was signed by Governor Lamont on June 25, 2019.  This law requires Connecticut employers to provide paid family leave, funded by a payroll tax beginning January 1, 2021. Covered employees will be eligible for paid leave benefits beginning January 1, 2022. Further, this law amends Connecticut’s existing Family and Medical Leave Act to align with the new paid family leave law. These amendments take effect January 1, 2022.  Following is a summary of these laws.

Connecticut Paid Family and Medical Leave

Under Connecticut’s Paid Family and Medical Leave Insurance law (Public Act 19-25 (S.B. 1):

• Employers subject to law are those who employ one or more employees working in Connecticut. State and local governments need only comply with the paid leave requirements for their non-union employees.
• A covered employee is one who:

1. Is presently employed by the covered employer and earns a minimum of $2,325 during the first four of the five most recently completed quarters (presumably immediately preceding the need for leave); and
2. Has been employed for 12 weeks for the covered employer prior to taking leave.

Self-employed individuals and sole-proprietors may opt-in to the program. Non-union state and local government employees are considered covered employees.

Amount and reasons for leave.  Beginning January 1, 2022, a covered employee is entitled to 12 weeks of leave in a 12-month period for the following reasons:

1. Baby bonding;
2. To care for one’s own serious illness, or to care for a family member with a serious illness;
3. A qualifying military exigency, or to care for a military service member;
4. Services or treatment relating to organ or bone marrow donation; or
5. To tend to matters pertaining to family violence.

A covered employee may take an additional two weeks of leave in a 12-month period for a serious health condition resulting in incapacitation that occurs during a pregnancy.

For this purpose, a family member includes a spouse, sibling, son or daughter, grandparent, grandchild or parent, an individual who stood in loco parentis to the covered employee when the employee was a child, or an individual related to the employee by blood or affinity whose close association the employee shows to be the equivalent of those family relationships.

Funding.  Beginning January 1, 2021, a payroll tax equaling 0.5% of each employee’s wages, up to the Social Security wage base is contributed to the Family and Medical Leave Insurance Trust Fund. The amount may be adjusted annually by November 1 of each year, applicable to the following calendar year. The paid leave benefit is fully funded by employee contributions.

Benefit Amount.  The benefit program will be administered by the state’s Paid Family and Medical Leave Insurance Authority (“Authority”) who will process benefit claims.  Employees are required to submit certification supporting the need for leave at the point of filing a claim for benefits.

The weekly benefit amount is calculated as follows.  If the employee’s wages are:

• Less than or equal to 40 times the minimum wage, the benefit amount is 95% of the employee's base weekly earnings, up to 60 times the minimum wage; or
• Greater than 40 times the minimum wage, the benefit amount is 60% of the covered employee's base weekly earnings, up to 60 times the minimum wage.

According to recent legislation, the state’s minimum wage is $12 per hour (effective August 1, 2021), increasing to $13 per hour beginning July 1, 2022.

A covered employee may receive paid family leave benefits concurrently with any employer-provided employment benefits, provided that the total compensation received during such period of leave does not exceed the employee's regular rate of compensation. An employee receiving other wage replacement benefits, such as unemployment or workers compensation, is not entitled to receive paid family leave benefits.

Employer notice obligations, Beginning July 1, 2022, an employer is obligated to provide written notice to each employee of the entitlement to family and medical leave at the time of hiring, and annually thereafter.  At this time, the law does not impose any specific posting obligations for employers.

Private plan option.  An employer may offer a private plan in lieu of paying into the Family and Medical Leave Insurance Trust Fund. Employers must apply to the Authority for approval of the private plan.  An employer’s private plan will satisfy the paid family leave obligations as long as the plan meets the following requirements:

1. Confers all of the same rights, protections and benefits provided by the paid family leave law including the same number of weeks, wage replacement, and coverage for the same reasons;
2. Imposes no additional conditions or restrictions on the use of the leave beyond those explicitly authorized under the law;
3. Does not cost employees more than the state program;
4. Provides coverage for all employees throughout employment;
5. Provides for inclusion of future employees;
6. Does not adversely select members and does not threaten the state fund or endanger the solvency of the fund;
7. Was approved by a majority of employees; and
8. Meets any additional requirements established by the Authority.

If the private plan is self-funded, the employer must furnish a bond issued by a surety company authorized to transact business in the state. If the plan is insured, the plan must be approved by the Insurance Commissioner and issued by an insurer authorized to transact business in the state.

Coordination with other leave laws.  Leave taken pursuant to this law runs concurrently with other permitted leave laws such as the federal Family and Medical Leave Act and Connecticut’s Family and Medical Leave Act (described below).

Amendments to Existing Family and Medical Leave Act in Connecticut

Currently, Connecticut’s Family and Medical Leave law requires employers employing 75 or more employees to provide eligible employees unpaid leave for family and medical leave purposes.  Beginning January 1, 2022, the law applies to employers employing at least one employee.

Under current law, to be eligible for leave, the employee must have been employed by the covered employer for at least 12 months, and worked 1000 hours with such employer during the 12-month period preceding the need for leave. Beginning January 1, 2022, the length of employment of an eligible employee is reduced from a minimum of 12 months to a minimum of 3 months.

Eligible employees are entitled to take up to 16 weeks of unpaid leave in a 24-month period for baby bonding, to care for a serious illness of employee; or to care for a child, spouse or parent with a serious illness.  Beginning January 1, 2022, these employees will be entitled to take a total of 12 workweeks of leave during any 12-month period.  Further, an eligible employee is entitled to take up to two additional weeks of leave during the 12-month period for a serious health condition resulting in incapacitation that occurs during a pregnancy.  In addition, the reasons for taking leave have expanded such that beginning January 1, 2022, leave may be taken for organ or bone marrow donation purposes, or for a qualifying military exigency.  

If an employer currently provides less than 12 work weeks of paid leave, any additional weeks of leave necessary to attain the 12 work weeks of leave may be provided with or without compensation through the Family and Medical Leave Insurance Program (described above).  An eligible employee may elect, or an employer may require the employee, to substitute any accrued paid vacation, personal, sick or family leave for any part of the 12-week period of leave, provided such eligible employee retains at least two weeks of leave.

Oregon Enacts Paid Family and Medical Leave

On July 1, 2019, Oregon became the latest state requiring employers to provide paid family and medical leave. Under H.B. 2005, the paid leave program is funded by both employer and employee contributions, the benefits are scheduled to begin January 1, 2023.

Employers subject to the law include all Oregon employers, including state and local governments, employing one or more employees working in the state. The federal government and tribal governments are exempt from the law.

An employee eligible for the leave is one who works for the covered employer and earns a minimum of $1,000 in wages during the base year.  An employee whose earnings are less than $1,000 during the base year but has earned at least $1,000 in wages during the alternate base year is also eligible. Independent contractors, participants in a work training or work-study program, individuals exempt under the federal Railroad Unemployment Insurance Act, and volunteers are not eligible for the benefit.

For purposes of determining eligibility, a base year refers to the first four of the last five completed calendar quarters preceding the benefit year.  An alternate base year refers to the last four completed calendar quarters preceding the benefit year. And, a benefit year refers to the 12-month period, as determined by the state’s Director of the Employment Department.

Amount and Use of Leave.  Beginning January 1, 2023, an eligible employee is entitled to 12 weeks of family or medical leave for:

• Baby bonding;
• Care for the employee or his/her family member’s serious health condition.  Family member includes the employee’s spouse or domestic partner, child, parent, sibling, grandparent, grandchild, or any individual related by blood or affinity whose close association with a covered individual is the equivalent of a family relationship.
• For attending to matters relating to domestic violence. 

The maximum combined leave cannot exceed a total of 16 weeks of leave per year. If the employee experiences a pregnancy-related serious health condition resulting in incapacity, the employee is entitled to two additional weeks of leave, for a combined total of 18 weeks of leave per year.

Amount of Benefits.  Benefits begin January 1, 2023.  These amounts are based on a percentage of the employee’s average weekly wage calculated against the state’s average weekly wage, which are determined annually, as follows:

• If wages are 65% or less than the state’s average weekly wage, the benefit amount is 100% of the employee’s average weekly wage; or
• If wages exceed 65% of the state’s average weekly wage, then the benefit amount would be the sum of 65% of the state’s average weekly wage, plus 50% of the employee’s average weekly wage that exceeds the state’s 65% wage limit.

An employer can allow an employee to use paid sick time, vacation leave or any other paid leave earned by the employee, in addition to receiving paid family and medical leave benefit to replace the employee’s wages, up to 100% of the employee’s average weekly wage during a period of family or medical leave.  An employee receiving workers’ compensation or unemployment benefits is disqualified from receiving family and medical leave benefits.

Job protection.  An employee returning from leave is entitled to be returned to the same or an equivalent position only if the eligible employee was employed by the employer a minimum of 90 days prior to the leave. Employers with 24 or fewer employees may restore the employee to a different position with similar job duties but same employment benefits and pay, if the employee’s position no longer exists upon return from leave.

Maintenance of health care benefits.  During a leave period, the employer is required to maintain the same level of employer-sponsored health care benefits the employee had prior to taking leave,

Funding.  Both employer and employee contributions are made to the Paid Family and Medical Leave Insurance Fund, beginning January 1, 2022.  The total rate of contributions cannot exceed 1% of an employee wages, up to $132,900 (which for 2019, is the Social Security wage base).

• Employers with 25 or more employees may deduct 60% of the contribution from employees, with employers paying the remaining 40% of the contribution.
• Employers with 24 or fewer employees are not obligated to pay the 40% employer share of the contribution. If the small employer elects to pay the employer share, then the employer may apply to receive a grant from the state’s Employment Department. To be eligible for the grant, the employer must provide written documentation to substantiate the costs associated with providing the leave.  A grant of $3,000 may be awarded to hire a temporary worker to replace the employee on leave for 7 days or more; or, a grant of up to $1,000 may be awarded to reimburse wage-related costs associated with the employee’s leave.  Grant applications are limited to 10 per calendar year and cannot be sought more than once for each employee on leave.

Notice Requirements

• Employer notice obligation.  Employers are required to provide written notice to each employee of their duties and rights under the law.  The notice must be provided in the language in which the employer typically uses to communicate with its workforce and at minimum, contain the following information:

1. The right to receive family and medical leave insurance benefits;
2. Procedures for filing a claim for benefits;
3. The employee’s notice obligations to the employer and associated penalties for failure to do so
4. The right to job protection and benefits continuation, and that any discriminatory and retaliatory actions against an employee are prohibited;
5. The right to appeal a decision or determination made by the state’s employment department.

• Employee notice obligation.   An employer may require an advanced 30-day written notice of the intent to take leave, as well as an explanation of the need for the leave.  The advanced 30-day request for leave may be waived when the need for leave is unforeseeable.  In this event, the employee must give oral notice to the employer within 24 hours of the commencement of the leave, followed by written notification within 3 days after the leave period begins.  Up to a 25% reduction in the first weekly benefit amount may be imposed if the employee fails to give notice of the leave.

Record retention.  Payroll records documenting employee contributions, total hours worked by employees, and amounts of taken leave must be kept for 4 years.

Coordination with employer’s existing plan.  Employers may opt out of the state program if they have a comparable plan in place, and pay a $250 fee to have the plan evaluated by the Director of the Employment Department to ensure it is truly comparable.

Coordination with other leave laws.  Leave taken pursuant to this law runs concurrently with other permitted leave laws, such as Oregon’s Family Leave law and the federal Family and Medical Leave Act (FMLA).

Implementing regulations are expected to be issued by September 1, 2021.

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.