Paid Family and Medical Leave Updates: California, Connecticut, District of Columbia and Massachusetts
Two states, namely Connecticut and California, recently enacted laws relating to paid family and medical leave benefits. Below is a snapshot of these new laws. Watch for the August edition of the Benefit Beat for a more detailed summary of these laws.
- In Connecticut, Governor Ned Lamont signed a paid Family and Medical Leave Insurance law (Public Act 19-25 (S.B. 1) on June 25, 2019. Under this law, covered employees will be entitled to accrue and take up to 12 weeks of family and medical leave per 12-month period for baby bonding, care of their own or a family member’s serious health condition, for a qualified military exigency, or for organ or bone marrow donation purposes. This law also provides for an additional 2 weeks of compensation if the covered employee develops a pregnancy-related incapacitation. The law takes effect on January 1, 2022.
- In California, Governor Gavin Newsom signed a 2019-2020 state budget package on June 27, 2019 that incorporates the provisions of a bill (SB 83), In a nutshell, SB 83 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 to care for a seriously ill family member, or for baby bonding.
Meanwhile, the state agencies of the District of Columbia and Massachusetts recently issued final regulations and guidance relating to their existing state paid medical and family leave laws. Following is a summary of these updates.
District of Columbia’s Universal Paid Leave Act – Final Regulations
Just in time for the commencement of the Universal Paid Leave payroll tax, regulations were issued clarifying the tax collection procedures for the Act.
As a reminder, the Universal Paid Leave Act provides, beginning July 1, 2020, up to 8 weeks of parental leave for baby bonding; up to 6 weeks of family leave for a family member’s serious health condition; and up to 2 weeks of medical leave for one’s own serious health condition, for a cumulative amount of 16 weeks in any 12-month period. For a summary of this law, see our prior CBIZ Benefit Beat article, District of Columbia’s Paid Family Leave Law, (May 2019).
As a reminder, employers subject to this law include private sector entities, regardless of size, who employ or exercise control over the wages, hours, or working conditions of an employee, and are required to pay unemployment insurance on behalf of their employees. Self-employed individuals can opt into the paid leave program. Employers not subject to the law include the federal government, the District of Columbia, and employers in the District of Columbia to which the District is not authorized to tax under federal law or treaty.
Each covered employer with 5 or more covered employees is required to register with the Department of Employment Services (DOES) through the Employer Self-Service Portal. Covered employers with 4 or fewer covered employees who do not have access to a computer may request to register via paper form. A covered employer is responsible for maintaining current information it provides through the online portal. Communications between DOES and the covered employer will be made through this portal.
Beginning July 1, 2019, a covered employer must make a quarterly contribution, in an amount equaling 0.62% of the wages of each of its covered employees to the Universal Paid Leave Implementation Fund, regardless of any other benefit program offered by the employer. The paid family leave tax is 100% employer-funded and cannot be deducted from an employee's paycheck.
A covered employer is required to report wages and pay contributions that have accrued for covered employees during the quarter. This must be accomplished no later than the last day of the month following the close of each calendar quarter. Failure to make contributions or file wage reports prior to the first day of the second month following the close of the relevant calendar quarter could result in a penalty assessment of 10% of the amount due, or, $100, whichever is greater. The DOES may waive the penalty for good cause.
Covered employers are required to post a paid leave program notice at each worksite, in a conspicuous place where employee notices are customarily posted. For those employees working remote, the employer is required to send the notice to them for posting at their individual worksites. The model workplace notice is available in both English and Spanish from the DOES website.
In addition to the workplace posting, employers are also required to provide the notice to employees at the following times:
- Within 30 days of the employee’s hiring;
- Annually to all employees; and
- At the time the employer receives direct notice from an employee that leave for a qualifying event is needed.
Employers can provide this notice via email or similar digital transmission, as long as it receives and retains receipt or signed statement by the employee acknowledging delivery.
Failure to provide or post these notices could result in a civil penalty of up to $100 per employee, or $100 per day for each violation.
Record keeping requirements
Covered employers must keep records for a minimum period of three years that contain the following information:
- Names and social security numbers of each covered employee;
- Beginning and ending dates of each pay period;
- Wages for each pay period;
- Method of payment;
- Earnings of covered employees;
- Dates wages were paid;
- Dates of parental, medical, and family leave taken by employees;
- Copies of employee notices of leave furnished to the employer; and
- Copies of all written notices given to employees.
The Department of Employment Services provides additional information for both employers and employees about the paid leave law on the DC Paid Family Leave website.
Massachusetts’ Paid Family and Medical Leave: Final Regulations
Just in the nick of time, the Massachusetts paid family leave law has been amended, primarily extending the payroll deduction commencement date. In addition, regulations have been issued clarifying certain aspects of the law. For background about recent changes of this law, see our prior Benefit Beat articles: Certain Massachusetts PFML Provisions Extended (May 2019), and Updates: Massachusetts Paid Family and Medical Leave, Take Two, (April 2019).
As a reminder, the Massachusetts paid family leave law provides, beginning January 1, 2021, up to 12 weeks of paid family leave for the birth, adoption, or foster care placement of a child, or due to a qualifying military exigency. A covered employee is also eligible for up to 20 weeks of paid medical leave to care for his/her own serious health condition. Beginning July 1, 2021, a covered individual is eligible for up to 12 weeks of paid family leave to care for a family member with a serious health condition.
Employers must begin making contributions to the Trust Fund beginning October 1, 2019, at a contribution rate of 0.75% (increased from 0.63% due to delayed start date) on the first $132,900 (indexed for 2019) of an individual’s annual earnings. The 0.75% contribution rate is split between a 0.62% medical leave contribution and a 0.13% family leave contribution.
- Employers with 25 or more Massachusetts employees must remit the entire 0.75% contribution to the Trust Fund. Such employers may deduct 100% of the family leave contribution, and 40% of the medical leave contribution from employees. The employer must pay the remaining 60% of the medical leave contribution.
- Employers with 24 or fewer Massachusetts employees are not obligated to pay the 60% employer share of the medical leave contribution. Such employers need only remit the remaining 40% employee share of the medical leave contribution, and 100% of the employee’s family leave contribution, all of which may be deducted from the wages of employees.
Additional information about contribution rates and calculation of them is available on the DFML website. In the event an employer overpays contributions, the final regulations clarify that such amounts will be refunded to the employer.
The final regulations also confirm that employers may deduct different percentages from the wages of different groups of employees, as long as the deductions do not exceed the maximum percentages described above.
An employer who fails or refuses to make contributions is subject to penalty assessment. The final regulations allow the Department Family and Medical Leave (DFML) to waive or modify a penalty if an employer can show good cause for failure to comply.
Workplace poster and employee notification
The law requires employers to post a mandatory workplace poster in a conspicuous place at their business locations by July 1, 2019 (note: this date, unlike the notices, has not changed). The DFML issued a revised workplace poster with updated deadlines, for an employer’s use. The revised model poster is currently only available in English, however, the DFML intends to make the notice available in other languages soon.
In addition, employers are to provide written notice to covered individuals of their rights and obligations under the law by September 30, 2019 (extended from June 30, 2019). The DFML issued new template worker notice forms for an employer’s use.
The DFML also indicates that employers who have already provided written notices to their workforce will need to provide them with an updated rate sheet that explains the revised program dates and contribution rates. These updated rate sheets are available from the DFML website, in accordance with employer size. Covered individuals do not need to sign these sheets, but employers must keep a record of the distribution.
An employee may take family or medical leave on an intermittent or reduced leave schedule as follows:
- To bond with a child during the first 12 months following birth, adoption, or foster care placement of a child, if mutually agreed upon by both the employer and employee;
- To care for a family member with a serious health condition when determined medically necessary;
- To care for one’s own serious health condition when determined medically necessary; and
- For a qualifying military exigency.
The employer can require the individual to take leave in employer-designated increments, but these increments can be no longer than four hours. The initial seven-day waiting period for intermittent leave or reduced schedule leave is seven consecutive calendar days, not the aggregate accumulation of seven days of intermittent leave.
Continuation of health benefits
During leave, an employer must continue to provide for, and contribute to, the employee’s employment-related health insurance benefits, at the same coverage level as if the employee had continued working for the duration of leave. The employee must continue to remit his/her share of the health insurance premium during leave.
An employee returning from leave is entitled to be returned to the same or an equivalent position. An employer does not have to reinstate an employee after leave if the employee was hired for a specific term or to perform work on a discrete project, if the employment term or project is over and the employer would not otherwise have continued to employ the employee.
Private plan exemption
In lieu of paying the tax, an employer can provide a private plan which meets or exceeds the requirements of the law. In order to use a private plan, the employer must seek an exemption. The deadline for requesting an exemption is December 20, 2019.
If the private plan is insured, it must be issued through a Massachusetts licensed insurer. If the plan is self-funded, it must comply with surety bond requirements. The surety company issuing such bonds must be authorized to transact business in the Commonwealth. The DFML provides additional information, as well as an exemption bond form, on its website.
If the exemption is denied and the employer believes in good faith that its private plan meets or exceeds the requirements for exemption, the employer may re-submit the same plan for supplementary review by the Department.
The final regulations clarify that if an employer has received approval for a private plan exemption and subsequently fails to maintain or renew its private plan exemption prior to January 1, 2021, the employer may be responsible for retroactive contributions to the public Trust Fund.
The final regulations also establish a three-year record keeping requirement for employers with approved private plans with respect to any records relating to the plan, including those relating to paid medical and family leave benefit claims made under the plan.
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.