"Can You Help Me Design a PFML Plan that Satisfies All State Requirements?" Part III in our Paid Family Leave Trilogy

by Marti Cardi, Esq. - Vice President, Product Compliance

May 10, 2021

 

This is the third of a 3-part series on paid family and medical leave (PFML). Here are the prior posts:

  • This is the third of a 3-part series on paid family and medical leave (PFML). Here are the prior posts:
  • The FAMILY Act – Federal Paid Family and Medical Leave Coming Your Way? (Part II)

For those of you who stick with us through this post, we have a reward at the end – and you don't even have to send in your box tops to get it!

 

“Hey guys, can you help me design a PFML plan that will satisfy ALL the state requirements?”

We get this question a lot. The answer is, uh, no. Nor would you really want that! While there are some common features that make up a baseline PFML offering, every state that has a paid disability and/or paid family leave law – and I mean every state – puts its own special stamp on the scope of the benefits provided. Cover all of those universally and you may not have any workers left on the job site!

Ok, that’s maybe a bit of an exaggeration, but not as much as you might think. Let’s consider:

For an employer to comply with every state law in which it has employees, a universal plan will have to meet the provisions most favorable to the employee in any such state. That means the best benefits required by any state plan and the lowest cost or burden. Let’s take that apart to see what it means, element by element.

  1. You can never cover them all with one plan. This is because some state programs are administered only by a state agency, i.e. private plans are not allowed. So, for example, in Rhode Island and District of Columbia employers have no choice but to adhere to the state benefits scheme. One option, though, would be to layer on more benefits to bring your RI and DC employees up to par with all your other U.S. employees.
  2. Concurrency with FMLA and Stacking. “Stacking” means the ability of an employee to take leaves for the same reason – bonding, for example – sequentially rather than concurrently, thus stretching out the amount of time on leave. As you may recall, FMLA is never an employee’s choice – if leave is taken for a covered reason and an eligible employee has FMLA entitlement available, the employer must designate the leave as FMLA. Ideally, if an employee takes leave that is covered by FMLA and also covered by a state paid leave law we want both laws to apply at the same time. And in some states this works. In Massachusetts, for example, the employee’s leave is automatically covered by and applied to Mass PFML entitlements under the state plan (or a private plan) even if the employee doesn’t request such coverage. In New York, the employer can elect to have concurrent FMLA / NY PFL coverage by giving appropriate notice to the employee. But cruise on up to the Pacific Northwest: In Washington, it is the employee’s choice whether to take WA PFML at the same time as FMLA. So, an employee could choose to take 12 weeks of unpaid FMLA for bonding (but maybe get some pay through use of PTO) and then take another 12 weeks of WA PFML paid leave for bonding. Another, more reasonable, example of this rule would be if the employee needs time off now for surgery and takes FMLA, but saves the WA PFML entitlement to bond with an expected new child, or for an upcoming need to care for a family member with a serious health condition.

    Think of the implication in building a universal paid leave plan: To provide the better benefit – a Washington employee’s ability to defer usage of the state paid and job-protected leave to a later time – the universal plan would need to allow every employee to defer usage of the state leave benefit in all cases. Think of the stacking going on when employees grow savvy to this idea!

  3. All leave reasons, all family members, for the longest durations. Here’s the next consideration: A universally compliant plan would need to provide paid, job-protected leave for every leave reason offered by any state and, for leave to care for a family member, all family relationships covered by any state, and for the longest durations available. Here’s what it would look like:
    • Leave reasons: Employee’s health condition, care of family member, bonding, military exigencies, care of injured servicemember, safe leave, organ/bone marrow donation, bereavement . . . and any other leave reason added by amendment or through a new state PFML law.
    • Family members: Parent, spouse, domestic partner, child (any age), sibling, grandparent, grandchild, and all the permutations of these relationships such as step, foster, and in-law. Then there’s legal guardian or ward, in loco parentis, and the recent expansion to what we call “like a family member” – meaning anyone the employee considers to be like a family member, regardless of whether there is a blood or legal relationship. Sound squishy? Here’s an example: my grade school best friend’s mother who looked after me every day after school while my mom was at work and I was at her house, doing homework and playing with my friend. That might be stretching it, but not much under some of the laws.
    • Durations: Up to 52 weeks for your employee’s own serious health condition, and up to 12 weeks for family leave or other reasons.

     

  4. Costs & benefits. Here’s where the rubber meets the road. If you choose to withhold contributions from employee paychecks to pay for these leave benefits, under a universal plan you could withhold no more than the lowest rate allowed in any state. That’s 0.2% of the employee’s wages (Colorado, contributions effective in 2023). But you have to provide the highest benefit, which is California’s $1357/week in 2021 for both disability and family leave. California allows withholding 1.2% of employee’s wages to cover that – 6 times more than Colorado allows. So I’m just not sure the math works out, unless as an employer you are financially very fit and intending to carry a big portion of the cost of the program.

Other stuff. There are many other features you would have to factor in to have a universally compliant PFML plan, such as intermittent time in one hour or smaller increments (even for bonding); very limited information you can require of the employee to support the leave; and more. And give this some thought: More states are almost certainly on their way to passing PFML laws. Who knows what special twist the next one will have? Get ready to sharpen your pencils to figure out the additional cost of more family relationships (although they probably can’t get any broader than “everyone,” longer leaves, lower employee contributions, higher benefits . . . What about your employees in states that don’t yet have a statutory paid medical or family leave benefit? Or employees in jurisdictions where a private plan is not allowed? Do you really want to offer these broad, unilateral benefits to all employees?

Here’s your reward! Congratulations! You’ve made it through this analysis of One Plan to Rule Them All. I promised a reward and here it is: Statutory Disability and Paid Family Leave Laws. This link will take you to a document that summarizes in detail all of the state-mandated paid benefit and leave programs, complete with employee eligibility, leave reasons, contribution rates, and much more. This site is maintained in real time by Matrix and Reliance Standard so it is always up to date. We hope you will find it useful and keep it on your Favorites list. Just remember, it will be updated frequently as developments warrant, so always best to go to the site rather than print it out (who does that anymore, anyway?).

Matrix can help!

I am guessing by now you can see that even if a universal plan could be designed, it would not be a sustainable paid leave program. So how do you ensure compliance with all of the conflicting and overlapping leave laws? One easy solution is to engage Matrix and Reliance Standard to handle it all for you – from state voluntary paid leave and benefits plans to unpaid but job protected leaves such as the FMLA and state equivalents. Throw in your company leave policies and we’ve got you covered! For more information reach us at ping@matrixcos.com or contact your Matrix or Reliance Standard representative.