Two new Paid Family and Medical Leaves made their debut on January 1st.
Written by Michael Cleveland, President, PDA
Maine and Massachusetts both passed Paid Family and Medical Leave laws that went into effect on January 1, 2021.
Maine — Earned Paid Leave
- Earned Paid Leave (EPL) may be taken by covered employees effective 1/1/2021.
- The law applies to employers with at least 10 employees who work 120 hours or more in a calendar year (excluding seasonal employees).
- Employees earn 1 hour of EPL for every 40 hours worked, up to a maximum of 40 hours of EPL.
- Hours may be used after 120 days of employment, and the 120 days is inclusive of days worked prior to 1/1/21.
- Employers may choose to “front-load” the leave at the beginning of the year or on an employee’s anniversary date. However, if the employee uses more hours of leave than accrued in a given year, and leaves the company, the employer may deduct the overpaid EPL from the employee’s final check.
- Accrued, unused leave may be carried over each year, but may not exceed the 40-hour cap.
- Employees must provide reasonable notice prior to taking leave, and should exercise “good faith” in providing notice, should emergency situations arise.
- Employers may place reasonable limits on the scheduling of EPL due to “undue hardship” which is defined as “a significant impact on the operation of the business or significant expense, considering the financial resources of the employer, the size of the workforce and the nature of the industry.”
- EPL must be taken in increments of at least one hour, unless the employer agrees to smaller increments.
- If the employer has a policy to pay out unearned vacation or sick time, that same policy should apply to unused EPL.
Massachusetts — Paid Family and Medical Leave
- W-2 employees, and certain 1099 contractors meeting certain financial eligibility requirements are eligible for both Paid Family Leave (PFL) and Paid Medical Leave (PML).
- PML is state mandated and may provide up to 20 weeks of paid leave for your own medical condition, up to 12 weeks for baby bonding, or between 12-26 weeks for care of a family member (depending on the circumstance).
- The benefit can replace up to 80% of weekly earnings, depending on the covered employee’s salary.
- The program is state-funded, and is separate from any other leave that is sponsored by the employer.
- The plan is funded by a 0.75% payroll tax with a maximum of 38 cents per $100 earned.
- The PFL plan is 100% employee funded, while the PML plan is 60% employer/40% employee funded. Employers may choose to fund all or part of the employee contributions as part of their benefits package.
- Self-employed persons are eligible for the plans; however, they must fund their own contributions for both PFL and PML. Contributions must be made for two of the last four calendar quarters before becoming benefit eligibility begins.
- The programs provide job protection, benefits protection, and protection against retaliation for taking leave under the plans.
- Employers must provide the coverage either through the state administered plan, or through a private insurance plan.
The addition of these two states brings the total to 11 states (plus the District of Columbia), that have (or will have) some sort of paid family leave law. Maine and Massachusetts have joined California, Colorado, Connecticut, New Jersey, New York, Oregon, Rhode Island, Washington, and Hawaii. The push for paid-leave has presented itself across numerous states. In fact, over the last several years, 21 additional state legislatures have taken up the debate over paid-leave.
The trend of job protection and paid-leave laws most certainly will continue and bears watching closely. Employers continue to seek alternate means to manage existing leave plans (FMLA, state, municipal, and employer sponsored plans). In fact, it’s almost become table-stakes for insurers to offer some sort of alternative to state-run plans (where acceptable).
One thing is for certain — the number and variation of state mandated plans will only increase in the coming years, and so it’s incumbent upon insurers to have a well-thought-out solution for employers as they seek to navigate the ever-changing paid-leave landscape.