Back in June, we reported on the enactment of the Paid Family Medical Leave Act. The Act provides that beginning on January 1, 2021, nearly all private sector employees will be eligible annually for up to 12 weeks of paid, job-protected family medical leave and up to 20 weeks of paid, job-protected personal medical leave. Benefits will be paid out of a trust funded by joint employer/employee payroll contributions. Employers must begin collecting contributions to the fund on July 1, 2019.
Recently, the newly-formed Department of Family and Medical Leave launched a website that includes sets of FAQs for employers and employees. The following is a summary of the guidance that may be most relevant for employers and employees, respectively (please follow the hyperlinks to view all the FAQs).
- Which employers are required to comply with the Act? All private employers with at least one employee are covered by the Act. Municipal employers and self-employed workers are exempt from the Act unless they opt in. Employers that already offer paid family and medical leave at least as generous as provided for in the Act may apply for an annual exemption.
- How are benefits funded? Covered employers are responsible for collecting and contributing a maximum of 0.63% of the first $128,400 of each employee’s annual earnings.
- How are contributions split between employers and employees? Employers may deduct from each employee’s pay up to 40% of the personal medical leave contribution and up to 100% of the family medical leave contribution. Employers of 25 or more employees must contribute the difference up to 0.63% for each covered employee. Employers of fewer than 25 employees need not make any contribution beyond its employees’ share.
- How are contributions apportioned between family leave and personal leave? The Department has yet to determine the split between family and personal leave contributions. The apportionment will be based on projected costs for each benefit year. Guidance concerning the first year’s apportionment will be forthcoming in the next several months.
- When must employers begin collecting contributions? As indicated, employers must begin collecting contributions on July 1, 2019—just over seven months from the date of this advisory.
- Which employees are eligible to collect PFML benefits under the Act? Almost all federal, state, and private employees are covered by the Act. Municipal employees should check with their employer to see whether it has opted into the program. To be eligible for benefits, applicants must have worked at least 15 weeks and earned at least $4,700 in the 12-month period before applying for benefits. Unemployed individuals may collect benefits if they have been unemployed for 26 or fewer weeks and otherwise meet the eligibility criteria set forth in the Act.
- When may employees take PFML? Generally, employees may take PFML to receive care for their own serious medical condition, to care for a family member with a serious medical condition, or to bond with a child in the 12 months immediately following the child’s birth or placement for adoption or foster care. The Act also provides for leave to attend to an exigency caused by a family member’s call to active duty in the armed forces.
- When may employees expect to see PFML deductions from their paychecks? The Act requires employers to begin making PFML contributions on July 1, 2019. Covered employees should expect to see deductions beginning that pay period unless their employer chooses to cover the full contribution.
- When will employees begin to receive PFML benefits? Although contributions to the fund will begin in July, 2019, no benefits will be paid out until January 1, 2021.
- How much will employees be required to contribute from each pay check? Employee contributions are based on a percentage of salary on the first $128,400 of annual earnings. Employee contribution rates will depend on whether the employee’s employer elects to contribute more than statutory minimum, along with the to-be-determined apportionment between personal and family medical leave contributions.
- How much will employees receive in PFML? Employee benefits will be calculated as a (currently unspecified) percentage of earnings, not to exceed $850 per week. Eligible employees may collect for a maximum of 12 weeks of annual family medical leave, 20 weeks of personal medical leave, or 26 weeks of combined family and personal medical leave.
The Department plans to issue regulatory guidance on the Act no later than March 31, 2019, likely with specific information for employers on how to calculate employee and employer PFML contributions. In the meantime, employers should review internal medical leave policies to ensure that they are (or soon will be) in compliance with the Act. Employers and employees also may think about whether the Act obviates the need for employer-sponsored short-term disability insurance as an employment benefit, as the Act may provide greater short-term benefits than those expected from private insurance carriers. Stay tuned for updates here as the Department fills in the details of the Act.