National and multistate employers have a lot to think about when it comes to administering paid leave in a compliant manner. In the ever-changing landscape of statutory leaves, employers are forced to monitor new laws and changes to existing laws and be ready to implement those changes around their existing benefits. I previously faced these challenges directly while working on the employer side for two large, national employers, and now focus on analyzing these regulations to help clients operationalize compliant leave and disability processes.

If you are an employer with a national footprint, or even one with employees in multiple states, it can be quite a challenge to keep up. Many mandating states make annual changes that impact employer and employee contribution rates, benefit amounts, notice requirements, and other statutory changes that impact eligibility and entitlements under each state’s program.

Employers must be aware of these potential impacts to all employees, including those who work on-site at an employer location, as well as remote employees who live (and work) in all of the following states with statutory Paid Family and Medical Leave (PFML) programs - CA, CO, CT, DE, HI, MD, MA, ME, MN, NJ, NY, OR, RI, WA, and Washington, DC¹, not to mention all of the states with accrued time off programs.  And these lists continue to grow!

Recent Changes and Upcoming New Additions to Paid Family and Medical Leave Programs Around the US

Colorado is the most recent addition to the above list, with employee benefits under the Colorado paid Family and Medical Leave Insurance (FAMLI) program available as of January 1, 2024. This state-run program provides most eligible employees with up to 12 weeks of paid leave, and those who experience pregnancy or childbirth complications may receive an additional four weeks.

Just prior to that, Oregon went live with Paid Leave Oregon (PLO) in September 2023, which provides eligible employees with up to 12 weeks of paid leave, and two additional weeks for some situations related to pregnancy.

Looking forward, employers need to be aware of the start dates for payroll contributions by employers and employees, and the separate effective date for benefits in the following state programs:

• Delaware Paid Leave (DPL) – Contributions begin January 1, 2025, and employees can begin applying for benefits on January 1, 2026. In addition, any employer seeking to opt out of the state plan and use a private benefit plan to provide equivalent paid leave benefits must do so by December 1, 2024.

• Maine Paid Family and Medical Leave (PFML) – Contributions begin January 1, 2025, and benefits begin May 1, 2026.

• Maryland Family and Medical Leave Insurance (FAMLI) – Contributions were initially set to begin in 2023 but have been delayed and begin on October 1, 2024. The start date for benefit availability was also delayed and benefits are now set to become available for employees January 1, 2026.

• Minnesota Paid Leave (MPL) – Both contributions and benefits are set to begin on January 1, 2026. Employers are expected to submit wage detail reports beginning in mid-2024.

These new programs are similar to the existing state programs in many ways, but each state program has potential variation in requirements such as:

• Categories of employee eligibility
• Process and timing of employee eligibility
• Reasons and criteria for covered leave  
• Determination of payroll contributions
• Determination of benefit amounts
• Myriad other potential variations

For example, Delaware’s Paid Leave program uses the same eligibility criteria as the unpaid federal FMLA but provides different durations of leave depending on the leave reason (up to the maximum of 12 combined weeks per year).

Maine’s new Paid Family & Medical Leave program is straightforward, but for now includes language that differs from other states in that it may allow an employer to deny a leave that causes an undue hardship.

All covered employers will be automatically enrolled in Maryland’s Family and Medical leave Insurance program, under which employee eligibility is based on hours worked for any employer in the prior 12 months.

Finally, the Minnesota Paid Leave program, which includes family and medical leave, goes beyond most other states to provide up to 20 weeks of leave per year, for employees who meet the earnings requirements that define eligibility.

Tactical Considerations

Employers with employees in any of these states will need to determine the impact of contributions and understand the costs for both the company and each employee. The overall cost, along with many other factors, may impact whether an employer utilizes the state plan or applies for a private plan as an alternative (in locations that allow this option).

Many states allow an employer to opt out of the state-run program through an application process if the employer-provided benefits are equivalent to the state plan (or provide greater benefits to employees).

In addition to potential cost savings, a private plan allows for a more streamlined and consistent process of administering claims, which can provide a better overall employee experience. However, depending on the demographics of your employee population, it is sometimes more cost-effective and efficient to utilize the state plan.

If an employer offers (or is considering offering) their own benefits that overlap with these statutory benefits, most commonly in the areas of paid pregnancy leave or paid parental/bonding leave, they will need to analyze how the statutory benefits will interact with the company’s leave policies and paid benefits.

Key Factors: what benefits to provide, and how to provide them.

What benefits to provide: The two most common approaches are: i) create a “highest and best,” uniform plan for all employees across all states; and ii) create a “baseline plan” for all states and level up as needed in states with differing mandates.

The “highest and best available” strategy involves creating a benefits package which matches the highest, most generous benefit of respective mandating states and provide that to all employees. While this approach would ultimately provide excellent paid leave benefits, there would be significant costs and other challenges.

For example, there are significant variations in leave and benefit durations provided under the various state paid leave offerings. Many statutory programs provide 12-16 weeks of leave, but others may provide up to 26 weeks in certain scenarios.

Similarly, the benefit amount (income replacement percentage) can vary within an individual state plan based on income levels, and there is also a lot of variation across the different states, as many state plans are 60% income replacement, but some states offer 90-100% of income in certain scenarios.

There are other factors, but those variations alone can make it difficult to offer the “best available” options to all employees across multiple states.

The other common approach is the “baseline plan.” This strategy determines the minimum, standard benefit an employer wishes to provide, and offsets in cases where statutory mandates are applicable.

This approach ensures that all employees have access to a baseline paid leave benefit, including those working in states without a statutory paid leave benefit.

Employees in states with a statutory benefit will be required to apply for both benefits, with the company-provided benefit being offset by the statutory benefit when leave is covered under both plans.

In addition, if the state benefit exceeds the company-provided benefit, employees in that particular state will receive a higher percentage of income replacement or a longer leave entitlement under the state plan.  

Important Administrative Considerations

Employers will need to assess how to provide these benefits, and how the company-provided benefits will interact with statutory benefits.

In many cases, existing company-provided short-term disability (STD) benefits, paid pregnancy, and/or paid parental/bonding benefits will be offset (reduced) by the amount the employee is entitled to receive from the state.

Employers will need to understand the amount and duration of statutory benefits and coordinate those offsets with their payroll process.

Employees will need to apply for both company-provided benefits and apply for statutory benefits through the state and will likely receive their benefit payments from multiple sources.

Because of this added step, clearly written communications outlining the process, and expected timelines, can help to avoid any frustrations or escalations during the leave process.

Overall, there are many decisions that multi-state employers must make in order to set up a successful paid leave program, and a similar number of challenges with creating and implementing an efficient process to provide a great employee experience. It is worth the time and effort to step back and assess your overall program, especially when you have employees in any of the states that have a paid statutory program, in order to ensure you have considered all possible options.

Other Time Off Considerations

Finally, employers may also want to consider their other obligations related to time off – such as accrued paid leave (e.g., sick, and safe leave) and bereavement leave.

There are currently more than 40 states and cities that require employers to provide accrued time off that can be used for various reasons, including the employee’s own condition or to care for a family member with a medical condition. These states are defining “family member” very broadly as compared to PFML definitions, sometimes including leave to care for non-familial relations such as anyone from the employee’s household or anyone the employee has an equivalent relationship with.

Additionally, many of these accrued paid time regulations allow the time to be used for any reason, rather than limiting it to specific sick or family circumstances. Employers must track all locations where their employees work, often including temporary work, to ensure their calculations and processes for accrual of paid sick leave hours meets all applicable state and local requirements.

Bereavement leaves requirements have also been expanding in all directions – more states are adding these requirements.

Currently, employers should be aware of bereavement leave requirements in the following states, either as a separate bereavement leave law or provided under other leave regulations: CA, CO, IL, MD, NY, OR, and WA.

These states are providing more time off per event, defining these events to include new categories, such as pregnancy loss, and broadly defining the relationships that are included in the coverage.

Additional complexities in administering these bereavement leave laws may also include:

• the leave can typically be used intermittently or continuously
• the duration of leave can vary based on the family relationship
• the employee may be entitled to apply paid time off (PTO) or vacation during an otherwise unpaid bereavement leave.

Summary and Best Practice Checklist

As more states provide and require greater benefits, employers must keep up. This is important for purposes of talent acquisition and retention, but critical for maintaining compliance with the ever-growing patchwork of laws and requirements that employers must align with. To do so, employers should assess the following factors:

Jim Jantz, Director of Compliance, and Jim Reardon, Client Executive, Marsh McLennan Agency / Absence Disability and Life (MMA-ADL)

For employers seeking assistance with any of these matters, the MMA ADL practice is always available to help and can be reached through Jim Reardon at [email protected].