Paid family and medical leave laws are pending and passing in more states every year. Employers and policy makers alike believe that PFML is both a powerful recruitment tool and the right thing to do for employees.
Many states have passed or are developing laws on paid leave. Washington state’s paid leave law goes into effect on Jan. 1, 2020, and in Massachusetts on Jan. 1, 2021. Connecticut and Oregon also recently passed PFML legislation.
Preparation for paid leave laws should start at least a year ahead of time. Employers need ample time to notify employees, deduct and report premiums and implement other administrative functions. Here are some best practices for when PFML comes to your state.
Understand which employees are impacted. If all of your employees are based in a single PFML state, navigating the law can be relatively simple. But if you have employees working in multiple states with varying or no paid leave laws, you will need to account for laws which apply to employees in each state.
Learn definitions of eligibility. Defining a covered employee can add another layer of complexity. This is defined in a state regulation as a minimum number of hours worked over the previous four quarters, and can apply to your company or a previous employer. There are separate considerations for 1099 contractors. As soon as you hear that your state has a pending paid leave law, check for early definitions of employee eligibility.
Evaluate your short-term disability plan. Short-term disability coverage complements PFML benefits by ensuring workers do not enter periods of leave without income protection. Integrating short-term disability with PFML protects higher-wage earners by supplementing a leave benefit and provides continued coverage for workers who may need a longer leave than available under the state law.
Decide to use the state’s plan or opt for a private offering. Review your company’s existing PTO policies to determine which benefits you want to offer employees. You are required to comply with the law in your state — and any mandated state where you have employees — and deduct no more premium than the law allows. But you could choose to provide a richer benefit with enhanced features such as longer leave times or coverage extended to a broader definition of family through a private paid leave solution. This allows you to offer leave benefits that meet the unique needs of your employees.
Consider offering the benefit to all employees in multiple states. As you begin meeting the statutory requirements, consider whether you want to extend the same leave benefits to employees in other states. Although you’re not legally obligated, offering the same benefits to all employees regardless of location can boost morale and productivity, and foster a culture that encourages people to take leave.
Meet your compliance requirements. Some state requirements are fairly consistent — such as providing notice to employees about the law, displaying required posters, deducting premium from employee pay (unless you choose to fully fund your leave program) and determining whether you will apply for a private plan or rely on the state to administer. States typically post deadlines for each of these requirements on their websites. Missing these deadlines could result in a fine, damage to the company’s reputation or a poor experience for employees.
Choose a provider partner. More employers are looking for help to manage paid and unpaid employee absences. The complex web of state and federal laws requires compliance expertise to administer programs related to PFML, short- and long-term disability, FMLA, ADA and employers’ own leave programs. Consider a partner who can manage your full benefits administration process, not just paid family and medical leave.
Connect the dots on paid and unpaid leave for better outcomes. Take this opportunity to review your FMLA, ADA and other leave practices, to ensure they’re aligned with the paid benefit structure. If you’re working with a benefits provider, they can help you customize your programs and leave management practices to provide the desired experience for employees while ensuring leave is accurately documented and processed. This will help employees feel supported when they take leave, and improves the likelihood that they will return to work.
Paid family and medical leave will continue to grow. You may find that your company is losing the war for talent by not offering comprehensive leave benefits. Paid family and medical leave programs are good for people, and are the right thing to do for your employees. People are most productive when they feel supported by their employer and can take the time to care for themselves, an ill family member or bond with a new child. How you manage leave laws goes beyond a compliance requirement — it helps define your workplace culture and the message you send to employees.
