The Work/Life Squeeze – Focus on Caregiver Leaves

Posted on: August 6, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE 

 

It is not often that trends in life, legal issues, and employment practices coincide, but we are in that situation now.  Increasing numbers of employees have caregiver responsibilities for family members – children, elderly parents, family members with health needs, and others. The legal protections for caregiver employees are broad and numerous, and growing every year.  Some employers are trying to get ahead of these issues by implementing family-friendly policies and benefits to assist employees dealing with caregiver responsibilities.   With approximately 1 in 6 American workers concurrently serving as caregivers for family members, we are seeing:

  • An increase in state laws that provide workplace protections and benefits – think state paid family and
    medical leaves like California, New York, and others. Washington State, District of Columbia, and
    Massachusetts have passed PFML laws and are on the horizon.   Watch this blog for reports on developments.
  • An increase in family caregiver benefits offered voluntarily by employers – partly to be competitive in this
    tight hiring market but also because it is the right thing to do. You can take look at what leading companies
    are doing regarding voluntary paid maternity, parental, and caregiver leave benefits in this resource from the
    National Partnership for Women and Families:
    Leading on Leave: Companies With New or Expanded Paid Leave Policies (2015-2018).
  • Increased employee success in lawsuits and EEOC charges based on caregiver responsibilities. For an excellent
    summary, check out   Caregivers in the Workplace – Family Responsibilities Discrimination Litigation Update 2016.

The Work/Life Squeeze: Policies and Protections for Caregiver Employees.  The DMEC’s Annual Conference is being held in Austin August 6-9.  I will have the pleasure of presenting on workplace caregiver issues during the conference.   My share of the presentation will focus on the legal protections (FMLA, ADA, Title VII, state laws, etc.).  My co-presenter is Jim Tierney, Sr. Program Manager, Total Absence Management, Corporate Benefits from Medtronic. He will discuss Medtronic’s new industry-leading caregiver paid leave program – providing not just paid maternity and bonding leave, but also paid leave for many other caregiver reasons, such as caring for an ill family member.

Please join Jim and me at the DMEC conference if you will be there – 1:30-2:30 Wednesday, August 8.

Medtronic, based in Minneapolis, is a global leader in medical technology, services, and solutions.

Disability Management Employer Coalition (DMEC) is a national association dedicated to providing focused education, knowledge, and networking for absence and disability professionals.  Visit their website at http://dmec.org/.

We previously wrote about caregiver workplace protections in this blog postIt is still up to date except for the expansion of states that now or in the near future will provide paid family and medical leave benefits.

MATRIX CAN HELP!  Matrix provides leave, disability, and accommodation management services to employers seeking a comprehensive and compliant solution to these complex employer obligations. We monitor the many leave laws being passed around the country and specialize in understanding how they work together. For leave management and accommodation assistance, contact us at ping@matrixcos.com.

The Needle in the Tax Bill Haystack – A Paid Family & Medical Leave Tax Credit

Posted on: January 4, 2018 0

BY MARTI CARDI, VP-PRODUCT COMPLIANCE & GAIL COHEN, DIRECTOR-EMPLOYMENT LAW/COMPLIANCE 

 

One might think that the Trump administration would trumpet (ahem . . . ) the supposed family-friendly and employer-friendly provisions of the new Tax Cuts and Jobs Act.  Not so.  A little-publicized provision of the new Act establishes a tax credit for employers who provide paid family and/or medical leave to employees within certain parameters.  Your guess is as good as mine as to why this provision has flown under the radar.  But not under the Matrix Radar!

The tax code provision is based on a bill previously introduced into the House and Senate as the Strong Families Act, which has received strong criticism from pro-family groups.  Google it and you can find websites criticizing and supporting the Strong Families Act.  Politics aside, let’s take a look at what is now the law.  (But please remember, we at Matrix are not tax advisors – consult your own attorneys or tax advisors for specific details!) 

You can review the specific provisions of the law at the link above – the “Employer Credit for Paid Family and Medical Leave” starts at page 221 of the bill (page 223 of the PDF). 

Summary.  The Tax Cuts and Jobs Act (the “Act”) provides employers with a partial tax credit for wage benefits paid to employees during leave taken for reasons covered by the federal Family and Medical Leave Act (“FMLA”).  But note this:  The credit is in effect only for tax years 2018 and 2019, and then automatically sunsets unless Congress takes further action. 

Employee and employer coverage.  The tax credit coverage is not limited to employees and employers covered by the FMLA.  Benefits paid to full time and part time employees are covered by the tax credit.  However, to qualify for the tax credit, payments must be to employees who:

  • Have been employed by the employer for at least 1 year
    • The Act does not specify whether that has to be 12 consecutive months of employment
      or whether, like FMLA eligibility, the employee only needs to have worked an aggregate
      total of 1 year
  • Make no more than $72,000 per year

Employers may voluntarily provide paid family leave to employees who are not eligible for FMLA leave (called “added employees” in the Act) and receive the tax credit for such payments as long as the employer has a policy that complies with the Act.  So, for example, an employer could provide paid leave benefits to an employee who has not worked 1250 hours in the past 12 months, or who has already exhausted their FMLA entitlement, and still get the tax credit.  “Added employers” with fewer than 50 employees or those with small worksites not covered by the FMLA can also make paid leave benefits available to employees and use the tax credit. 

Policy requirements include a minimum of 2 weeks of paid leave benefit, a provision against interference with the employee’s policy rights to paid leave, and a provision against termination of an employee for complaining about a violation of the policy.

Leave reasons.  Leave benefits must be paid for one or more of the leave reasons available under the FMLA – the employee’s own serious health condition, a family member’s serious health condition, birth or placement of and bonding with a new child, military exigencies, and caring for a seriously ill or injured servicemember.  An employer’s policy does not need to cover all of the FMLA leave reasons to qualify for the tax credit.  For example, an employer may provide paid leave only for bonding with a new child and still qualify for the tax credit if all other conditions are met. 

Amount of leave.  The employer’s policy must provide at least 2 weeks of paid leave.  The maximum amount of paid leave that qualifies for the tax credit is limited to 12 weeks per employee in a 12-month period (the same as FMLA leave rights).

Percentage of pay provided.  The employer must provide a paid leave benefit of at least 50% of the employee’s wages (as defined in the tax code – I’m not going there!).

Amount of tax credit.  An employer providing paid family and/or medical leave benefits can receive a tax credit ranging from 12.5% to 25% of the amount paid to the employee.  The credit starts at 12.5% of benefits paid at the 50% level and caps at a 25% credit for benefits paid at full wage replacement.  For every percentage point over 50% of wages that the employer pays in benefits, the tax credit increases by one-quarter of a percent.  Examples:

Percentage of Paid Leave Benefit Percentage Points above 50% Multiplied by 0.25% Employer’s tax credit percentage
50% 0 0 x 0.25% = 0 12.5%
70% 20 20 x 0.25% = 5% Base 12.5% + 5% = 17.5% tax credit
90% 40 40 x 0.25% = 10% Base 12.5% + 10% = 22.5% tax credit
100% 50 50 x 0.25% = 12.5% Base 12.5% +12.5% = 25% tax credit

 

Applicable tax years.  The paid family leave tax credit is available only in tax years 2018 and 2019, unless extended by Congress.  Otherwise, it expires automatically on December 31, 2019.

Relationship to state/local paid family leave.  The Act provides that any leave which is paid or required by a state or local government is not taken into account in determining the amount of the tax credit.  Thus, the credit applies only to benefits paid voluntarily, not required by state or local law. 

PINGS FOR EMPLOYERS

  • Consult your tax advisor. As with all things tax-related, you should consult with your tax advisor
    to determine whether your existing plan is covered by the new paid leave tax credit.
  • Consult your financial advisor. If you don’t have a paid leave plan for your employees, consult
    with your financial (and tax) advisor to determine whether the incentive provided by the tax credit
    is enough to justify offering a paid leave benefit to your employees.
  • Consider benefits beyond monetary. In this day of strong competition for good employees,
    remember that a superior benefits package can be a lure.  But, with the tax credit scheduled to
    last only two years, also consider whether your company can continue the benefit if the tax
    credit expires on December 31, 2019.  Taking away the benefit might not be a good employee
    relations move at that time.

MATRIX CAN HELP!  At Matrix we offer a full suite of leave of absence and disability management tools.  This includes management of employer-specific leave plans, as well as FMLA, state leave laws, leave (and more) as an ADA accommodation, and disability plans.  To learn more, ping us at ping@matrixcos.com.