As more states enact paid family leave laws, compliance is becoming more complex for multi-state employers.
Last year, we predicted that the trend across U.S. states to enact paid family leave programs would continue to gain momentum in the coming years. The U.S. does not currently have a federal mandate for employers to provide paid family or medical leave, and employee interest in this type of benefit appears to be increasing.
Overview of PFML Programs
An increasing number of U.S. states have been creating mandatory paid family and medical leave programs. These programs provide workers with a portion of their wages during time off so they can bond with a new child, care for a family member with a serious health condition, and is sometimes used to take time off for a family member’s active military service.
These programs are structured as state-administered wage replacement benefits that are typically funded by employee or employer contributions.
Before this year, only four states had active paid family and medical leave programs for employees in the U.S.: California, New Jersey, Rhode Island, and New York. In 2019, three more states will be added to the list, and below we will explore the details of the new programs. If you want to dig deeper into an overview of the benefits and structure that paid family leave programs typically have, read more here.
What’s happening in 2019?
Washington’s new Paid Family & Medical Leave program began on Jan. 1, 2019 with premium collections to fund the program. The total premium is 0.4% of the gross wages paid to an employee, split out according to certain percentages between the employee and employer for the family and medical portions. Claims for benefits can be submitted starting Jan. 1, 2020.
In March of 2019, the Washington Employment Security Department announced that the deadline to submit reports and premium payments for the WA Paid Family & Medical Leave program has been extended from April 30 to July 31, 2019. Employers will report and remit premiums for quarters one and two between July 1 and July 31. You can learn more about this program at the agency’s website.
District of Columbia:
In 2019, the District of Columbia is establishing a paid family and medical leave system. This program is unique because it will be funded entirely by an employer payroll tax (with no employee contributions). Covered employers are required to contribute an amount equal to 0.62% of the wages of each of its covered employees to the D.C. Universal Paid Leave Implementation Fund. Benefits will be available beginning July 1, 2020.
D.C. recently clarified the timing of this new tax on the D.C. Office of Paid Family Leave website. According to the website:
- Beginning Apr. 1, 2019, private sector employers must begin recording workers’ wages.
- The first collection of paid family leave employer contributions begins July 1, 2019, for wages paid to covered workers from April 1 through June 30.
Massachusetts is also establishing a new paid family and medical leave program in July of 2019. Premium collection for the new program will begin July 1, 2019. Similar to Washington state, employers and employees in Massachusetts will split the cost of the premiums. Most benefits under this program will be available by Jan. 1, 2021.
The Massachusetts agency has not issued final regulations for all the details related to this program yet. Employers can learn more about it here.
In addition to the above paid family and medical leave programs that are active in 2019, we’ve seen many state legislators continue to introduce new bills to create similar programs.
Colorado, Florida, and Illinois are the latest states to propose paid family and medical leave programs.
At the federal level, President Trump’s budget includes a proposal for paid parental leave. This proposal calls for six weeks of paid leave to new mothers and fathers and would be administered at the state level.
What does this mean for employers?
Employers will want to continue to monitor new laws relating to paid family and medical leave in the U.S. Employers can check in periodically with state legislature activity for locations where you have employees to see if new bills are introduced for these types of programs.
Further, employers can consider getting involved with industry groups to get an inside scoop on these new laws, such as the American Payroll Association.
If a new law is passed and will apply to your employees, you’ll want to prepare for the new withholdings/taxes and any related reporting requirements.
Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.
Learn more from our compliance team about hot and trending compliance and legislation topics at INSIGHTS 2019.
Kelly Dougherty is Senior Compliance Counsel at Ceridian with years of employment law counseling and litigation experience. At Ceridian, Kelly enjoys tackling employment-related compliance issues in the HCM world and working to help develop cutting edge products.View Collection