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state paid leave laws

As we’ve done several times before, today’s blog will be breaking down the latest developments from the onslaught of state laws requiring employers to provide paid sick leave or to honor state paid family leave time.

Paid family leave laws often require employers to contribute or to deduct employee contributions intended to fund these programs. Some states permit employers to provide comparable or better benefits through their own programs as an alternative to the state program, but typically require an employer to obtain state approval before doing so.

Wage replacement programs, like sick pay, are traditionally paid from an employer’s general assets and considered to be payroll practices, rather than employee benefits plans. Thus, employers cannot claim ERISA pre-empts (or prohibits the enforcement of) these state laws.

What follows are some of the recent developments in state leave laws that employers should be aware of:

  • District of Columbia. The Universal Paid Leave Act of 2016 (UPLA) requires additional paid leave benefits be provided concurrently with other district and federally required benefits. A covered employer is required to contribute 0.62 percent of a covered employee’s salary paid on or after July 1, 2019. Benefits do not begin until 2020.
  • Massachusetts. Effective July 1, 2019, Massachusetts employers will be required to deduct contributions from employee pay to fund the commonwealth’s paid family and medical leave plan. Some benefits become available Jan. 1, 2021, and the full implementation of new benefits are effective July 1, 2021. See our Alert and blog. The commonwealth recently announced that employers who already provide paid leave benefits may request an exemption from collecting, remitting and paying contributions to the commonwealth by applying for employer plan approval beginning on or after April 29.
  • Michigan. Michigan’s Paid Medical Leave Act requires employers with 50 or more employees to start accruing paid medical leave for an employee’s own medical condition or treatment and/or to care for a family member with a medical condition or who requires treatment. The act is effective March 29, meaning accruals must be calculated for any Michigan employee on the basis of hours worked on or after that date, up to a maximum accrual of 40 hours per year. The state recently issued an FAQ describing employer obligations in greater detail.
  • New Jersey. The Paid Family Leave Program has been on the books since 2009. Effective June 30, New Jersey has expanded the application of the law to New Jersey employers who employ 30 or more employees (as opposed to the current requirement of 50 or more employees) for each working day during each of 20 or more calendar work weeks in the current or preceding calendar year.
  • Washington. Washington state’s new paid leave law provides employees with family and medical leave benefits beginning in January 2020. Earlier this month, the state delayed its first quarter 2019 reporting timeline from April to July 2019. In July 2019, employers will be required to submit both the Q1 and Q2 reports and remit both quarters’ premium payments through the state’s online customer management system. Future reports and premium payments will be due in the month following each quarter.

What happens next?

Employers subject to state paid leave laws should review their leave policies, employee communications and required notices to assess whether changes are necessary. In addition, employers should be cognizant of any impending contribution and/or reporting obligations in those states. If you have questions about this blog, please contact your Lockton account team.