EMPLOYMENT LAW NEWS

What Employers Need to Know About Paid Leave Laws

By Kris Janisch
Published Sept. 24, 2020

What employers need to know about paid leave

We take a deep dive into paid sick leave, paid family and medical leave and paid leave for any reason, examining current laws and projecting future trends.

Paid leave, in its many forms, has become a flashpoint for employment law across the U.S.

In this extensive resource, we will cover the evolution of such laws, how the current zeitgeist has given rise to employee-friendly legislation, as well as the state of existing paid leave laws and what the future may hold. And the influence of the COVID-19 pandemic cannot be overstated as paid leave laws continue to evolve.

Employers must increasingly grapple with the laws that apply to their workers, which vary widely by jurisdiction and complicate recordkeeping, benefits, payroll and more. We will examine the three types of laws we see most commonly today:

  • Paid leave for any reason
  • Paid sick leave
  • Paid family and medical leave

FMLA’s Influence on Paid Leave

Before we can examine the impact of paid leave laws on employers today, we must first look back at the history of the federal Family Medical Leave Act (FMLA), whose passage set the stage for broader paid leave legislation we see today.

Signed by then-President Bill Clinton in 1993, the FMLA marked the first measure to give workers protection for taking time off. No nationwide law requires employers to provide paid leave to workers, though the federal government gives paid parental leave to its more than 2 million employees, starting in October 2020.

But the fight for its passage goes back to 1984, when a group called the Women’s Legal Defense Fund crafted the initial language that would later become the FMLA. Legislation stalled out for years before its passage.

The FMLA requires employers to provide 12 weeks of job-protected unpaid leave to workers under certain circumstances. There are exceptions, however, especially when compared with the paid leave laws currently on the books across the country. The FMLA applies to:

  • Employers with 50 or more workers in a 75-mile radius
  • Employees who have worked 12 months and 1,250 hours
  • Qualifying family and medical reasons
  • Narrowly defined family members

The contrast is stark when comparing the FMLA to the paid leave laws cities, counties and states have enacted in the years since 1993. Still, the passage of the FMLA set the stage for the broader paid legislation we see today.

The Rise of Paid Leave Laws in the Public Square

Despite the passage of the FMLA, it was more than a decade until the first paid leave law was created. As lawmakers heard from constituents about the strain of choosing between their job and their health, more legislation regarding paid leave began to take shape.

Paid Leave Management. Simplified.

In 2004, California — known as one of the most employee-friendly states in the U.S. — passed a paid family leave program. Other states and cities followed in the succeeding years:

  • 2007 – San Francisco paid sick leave
  • 2008 – Washington, D.C., safe and sick leave law
  • 2009 – New Jersey Paid Family Leave
  • 2014 – Rhode Island temporary caregiver leave

These laws laid the foundation for the expansion of paid leave laws and reflect a growing sentiment among the public that workers should be entitled to paid time off and job protection. In June 2019, Connecticut passed what is considered one of the nation’s most expansive paid family and medical leave bills.

“Adopting this program means that workers who need to take time off for a new baby or recover from illness are not punished financially, and businesses do not risk losing good workers during those emergencies,” Gov. Ned Lamont said. “Regardless of whether a public or private entity administers this program, there will be no profit motive to deny any applicant. We know working families are the backbone of our state. If they are not financially stable, Connecticut will never be.”

That sentiment is echoed by thinktanks and in political commentaries in newspapers and blogs across the nation. Many argue for the need for paid leave to care for extended family, deal with a personal crisis or even organ donation. The COVID-19 pandemic has intensified calls for more paid leave legislation.

On the flip side, however, are arguments against paid leave laws, which can lead to challenges in the courts. In Texas, for example, three cities — Austin, Dallas and San Antonio — passed paid sick leave ordinances. All three faced lawsuits that delayed their implementation.

Nevertheless, those legal challenges haven’t stopped policymakers from proposing paid leave laws. And the coronavirus has prompted dozens of jurisdictions to expand existing paid leave laws, or create new ones, to cover public health emergencies.

With that background established, we can take a closer look at the various types of paid leave laws, how they differ and the challenges they present for employers.

Paid Leave for Any Reason

We start our discussion of the specific types of paid leave with what, on the surface, appears to be the simplest: paid leave for any reason. Two states and one county have passed such laws:

The trio is unique in this respect. Most paid leave laws have reasons tied to them, e.g., recuperate from an illness, care for a sick child, attend a school conference, etc. These three jurisdictions do not require a so-called “covered reason” for using the time off. But the similarity ends there. Each jurisdiction has its own rules regarding which businesses the law applies to, accrual rates, waiting periods for use, and more.

We’ll examine each jurisdiction with a brief rundown of the specifics.

Maine

Maine led the way with its paid leave for any reason law. Passed in the spring of 2019, the Maine bill did away with the typical restrictions of paid leave laws.

Maine’s paid leave law goes into effect Jan. 1, 2021, and is expected to impact 85 percent of workers there.

Specifics of the law include:

  • Applies to companies with 10 or more employees (except seasonal) workers
  • Eligible employees must have worked at least 120 days in a calendar year
  • Accrual begins at the start of employment
  • Employees accrue one hour for every 40 hours worked
  • Maximum accrual of 40 hours paid leave annually
  • Employers may require 120-day waiting period before use
  • Worker must be paid same rate while on leave

These rules behind the legislation seem straightforward, especially compared to how the paid leave for any reason laws work in Nevada and Bernalillo County, N.M.

Nevada

While Nevada trailed Maine in passing paid leave legislation, the law went into effect a full year sooner, Jan. 1, 2020.

It, too, does not require employees to give a reason for taking the time off, but the details of the bill are more complicated than those of Maine, starting with the rate at which employees accrue paid leave: 0.01923 hours for each hour of work performed. Essentially, it means a typical 40-hour-a-week employee will be entitled to about 40 hours of paid leave per year. Still, that tidy bit of math belies the intricacies of paid leave in Nevada.

Companies with at least 50 workers must provide paid leave, but there are exceptions:

  • Employers who provide equivalent time off
  • Companies in their first two years of operation
  • Temporary, seasonal and on-call employees

Other provisions of Nevada’s paid leave law include:

  • Requiring new employees to work 90 days before using leave
  • Dividing total wage in 90 days before leave by hours worked in 90 days for certain employees
  • Frontloading the paid leave is allowed

The complexity of Nevada’s paid leave law led the state’s labor department to issue further guidance in October 2019, noting “multiple inquires, comments, suggestions and proposals” from employers. The advisory opinion sought to clarify frontloading, time off notification from employees, circumstances for denying paid leave and calculating accrual rates for salary or exempt employees, among other issues.

Ultimately, Nevada’s labor commissioner often suggested companies anticipate potential pitfalls and outline specifics in an employee handbook, contract or agreement.

Bernalillo County, N.M.

Lastly, under paid leave for any reason, we have Bernalillo County, N.M. Among the three jurisdictions with paid leave for any reason, its rules are the most complex.

The county’s paid leave ordinance was approved during the summer of 2019. The law went into effect July 1, 2020, and only applies to businesses in unincorporated areas of Bernalillo County, further complicating matters for large employers. (The bulk of the county’s residents live in Albuquerque, N.M., with a population of about 559,000.)

The ordinance requires companies with at least two employees to provide at least an hour of paid leave for every 32 hours worked. (There are exceptions, however. The law does not apply to interns, independent contractors, or people employed by a parent, sibling, aunt, uncle or cousin.) It applies to employees who work at least 56 hours a year, and includes part-time, seasonal and temporary workers, as well. Leave is compensated at the same rate as normal hours.

There is also a waiting period before using the paid leave; employees can’t use it until they have worked 56 hours in a year. But it’s the cap on the annual accrual that can trip up employers. It starts on the 90th day of employment or the ordinance’s effective date (whichever is later). The cap on the annual accrual limits the increase in three increments:

  • Maximum accrual cap of 24 hours – 2020
  • Maximum accrual cap of – 40 hours
  • Maximum accrual cap of – 56 hours

Finally, unused paid leave can be carried over to the following year, but workers can’t carry over more than the maximum available to accrue each year.

Paid Sick Leave

Whitepaper: What Employers Need to Know About Paid LeaveTransitioning from paid leave for any reason, we come to the most common form of these laws: paid sick leave.

Twelve states and Washington, D.C., have passed paid sick leave laws, along with a number of smaller jurisdictions.

Though many are in employee-friendly states such as California and Oregon, others including Chicago and St. Paul, Minn., have enacted paid sick leave laws. About 20 cities and counties have established paid sick leave laws. It is worth noting that these measures can be met by legal challenges. In Pittsburgh, a paid sick leave ordinance initially passed in 2015 was hung up in the courts until the summer of 2019. It took a 4-3 decision from the Pennsylvania Supreme Court to finally allow the city to implement its ordinance.

Accrual rates, covered relations, employment time limits before use, etc., can vary widely, creating complications for companies that operate across the country. And in Cook County, Ill., individual cities may opt in or out of its paid sick leave law, much like the county’s minimum wage measure, adding yet another layer of complexity.

Lastly, these laws also usually contain a provision that prevents businesses from taking adverse action against an employee who uses the paid time off. As was the case with minimum wage legislation a few years ago, government agencies have begun moving from education to enforcement.

Non-compliance can result in fines, negative headlines and public relations headaches.

Details of Paid Sick Leave Laws

When it comes to paid sick leave laws at the state level, requirements for employers can vary widely.

We’ll examine a few aspects of these laws for a sense of how they work below. But employers should be aware that the nuances of paid sick leave legislation can also leave room for interpretation, forcing labor departments to iron out specific concerns for employers by issuing final rules and dense guidance documents. Such guidelines can come long after a bill was passed, as was the case in New Jersey, where a legally binding regulations came down more than a year after the law was enacted.

Accrual Rates

Some states have relatively simple formulas for accruing paid sick leave:

  • Vermont: 1 hour for every 52 hours worked
  • Connecticut, Washington: 1 hour for every 40 hours worked
  • Michigan, Rhode Island: 1 hour for every 35 hours worked
  • Arizona, California, Maryland, Massachusetts New Jersey: 1 hour for every 30 hours worked

Meanwhile, Washington, D.C., has three separate accrual rates, depending on company size, as well as for the restaurant/bar industry. For large employers, it’s one hour for every 37 hours worked.

In Oregon there are separate accrual rates for full- and part-time employees. It’s 1.33 hours for every 40 hours worked for full-timers. Just using accrual rates as an example, we see there are rarely blanket requirements across jurisdictions when it comes to paid sick leave.

Caps on accrual rates are no different. For the most part, companies cap paid sick leave accrual with the maximum amount of time employees can take per year, but there are variations that can depend on company size, yearly maximums vs. total accruable hours, temporary halts and more.

Reasons for Use

Typically, employees can use paid sick leave to care for themselves or a family member. Even within this aspect of paid sick leave laws, there are exceptions.

Other allowable uses, depending on the jurisdiction, can include:

  • Business closure, or school, due to public health emergency, weather or other unexpected closure
  • Care for employee or covered relation due to communicable disease exposure
  • Care for guide/signal/service dog of employee or covered relation
  • Donating or caring for someone who donates bone marrow or an organ
  • FMLA-eligible reasons including maternity and paternity leave
  • Meetings related to care for child’s health condition/disability
  • Birth, adoption, placement of foster child within one year of birth/placement
  • Bereavement
  • School conferences or events

Covered Relations

As stated above, employees can use paid sick leave to care for a loved one.

But what does that mean? In the era of the “modern family” the definition of family member has expanded, which has led lawmakers to broaden the types of people for whom an employee can use paid sick leave. It’s no longer simply a child or spouse. Beyond additions such as stepchild or parent-in-law, some jurisdictions have legislation with generic language such as “close association.”

That can mean someone an employee is dating, known for a long time or specifically requested permission to care for from the employer. Emeryville, Calif., goes a step further, allowing employees to care for their own service dog or that of another covered relation.

Other paid sick leave considerations for employers include:

  • Frontloading
  • Waiting periods before use
  • Carryover requirements
  • Payout requirements
  • Existing policies beyond what the law requires

Paid Family and Medical Leave

Of the three types of paid leave under discussion here, our last category is paid family and medical leave (PFML). Though similar to paid sick leave, it is distinct and is generally used for longer-term issues.

For more details on PFML, including benefits amounts, check out our whitepaper.

The laws include job protection as well as measures to prevent companies from taking adverse action against employees who use PFML. As of early 2020, eight states and Washington, D.C., had passed PFML legislation. These laws are more expansive than the federal FMLA and add pay for employees. The funding mechanism can be through a payroll tax, joint employer-employee payroll deductions or via insurance. Those funds are generally sent to the state, which administers the funds to workers.

Thus far, PFML laws have only been enacted at the state level, as well as the nation’s capital.

The states with PFML at this time include many of employment law’s pacesetters:

  • California
  • Connecticut
  • Massachusetts
  • New Jersey
  • New York
  • Oregon
  • Rhode Island
  • Washington
  • Washington, D.C.

Like other forms of paid leave, each jurisdiction has its own rules regarding use, job protection and payment, covered employers, reasons for use, covered relations, etc. We’ll examine how these laws function and their impacts on employers.

California

As with many employment laws, PFML started in California in 2004, when lawmakers expanded on the provisions of the federal FMLA. California’s PFML applies to all private employers. Limited public employees are covered and the self-employed can opt in. Those earning $300 during a base pay period are eligible.

Maximum Length of Leave

The maximum allotted time for using PFML is 52 weeks for an employee’s own non-work related serious medical condition. It’s six weeks for a family member.

Eligible Reasons

Eligible reasons for using PFML in California include bonding with a new child (birth, adoption or foster), care for a family member with a serious medical condition, or an employee’s own disability (including pregnancy).

Eligible Family Members

Family members are defined as a child, spouse, domestic partner, grandparent, grandchild, sibling and parents-in-law.

Connecticut

Next, we have Connecticut, whose bill is considered among the most expansive in the U.S.

Signed into law in June 2019, the measure doesn’t take effect until Jan. 1, 2022.

The legislation applies to companies with one or more workers, though unionized public employees are exempt. Eligible employees must earn at least $2,325 during their highest earning quarter and meet one of the following conditions:

  • Currently employed
  • Was employed within the prior 12 weeks
  • Is self-employed or a sole proprietor and a Connecticut resident enrolled in the state’s PFML

Maximum Length of Leave

The law provides for 12 weeks of paid family and medical leave in a 12-month period. However, employees can get an additional two weeks of paid family medical leave benefits available for a serious health condition resulting in incapacitation that occurs during pregnancy.

Also, intermittent leave for a serious health condition, and military caregiver leave, is when “medically necessary.” However, intermittent leave for bonding is only permissible with employer consent.

Eligible Reasons

The eligible reasons for using PFML in Connecticut are extensive. In addition to caring for a family member, the legislation allows the time to be used for:

  • Bonding with a newly born, adopted or fostered child
  • Serving as an organ or bone marrow donor
  • Qualifying military exigency of spouse, son, daughter or parent of employee in accordance with federal FMLA
  • Military caregiver leave
  • Certain “safe time” absences

Eligible Family Members

Eligible family members include close relatives, as well as someone related to the employee by blood or whose close association to the employee is the equivalent of those family relationships.

Massachusetts

In Massachusetts, PFML applies to all employers. However, companies can use their own plans with state approval. Eligible employees must have earned at least $4,700 in the previous four quarters and 30 times the unemployment insurance benefit they would otherwise be able to collect. The law goes into effect Jan. 1, 2021.

Maximum Length of Leave

The most time someone can use PFML is combined 26 weeks total paid leave per benefit year:

  • 12 weeks for family leave
  • 20 weeks for an employee’s own serious health condition
  • 26 weeks caring for a covered service member

A noteworthy aspect of the Massachusetts PFML is the law is silent regarding minimum leave. Employees can receive benefits for intermittent leave after seven consecutive calendar days. Benefits Like Connecticut, PFML in Massachusetts is tied to state wage rates.

Note, however, that the seven-day waiting period is job-protected and counts against the maximum number of weeks of paid family and medical leave. Employers with fewer than 25 employees are not required to pay into the fund.

Eligible Reasons

Reasons for leave are fairly simple — an employee’s own condition or that of a family member, and to bond with a new child — but there is also a provision for military personnel:

  • Qualifying exigency due to a family member on active duty (impending call or order to active duty)
  • Care for a family member who is a covered service member

Eligible Family Members

Family members aren’t as broadly defined under the Massachusetts PFML as elsewhere, but a “child” does not have an age limit tied to it. Eligible family members also include parents, spouses, domestic partners, grandparents, grandchildren, siblings and parents-in-law.

New Jersey

Like California, New Jersey is another state that passed PFML bill several years ago. Its legislation went into effect in 2009. The law applies to both private and public employers, though there are limited exceptions for certain government employers.

As is the case in Massachusetts, businesses can implement a state-approved plan. Eligible employees must have at least 20 calendar weeks of covered New Jersey employment (earning $172 or more each week) or paid $8,600 or more during the base period before starting leave.

Maximum Length of Leave

The maximum amount of time eligible employees can use PFML in New Jersey is 26 weeks for their own serious medical condition. To care for a family member, it’s six weeks; that number jumped to 12 weeks starting July 1, 2020.

Eligible Reasons

Eligible reasons for use include our standard justifications, i.e., an employee’s own health issues, a family member’s, or caring for a new child (birth, adoption and foster). Yet the legislation also covers time off to deal with domestic or sexual violence against employees or their family members.

Eligible Family Members

The definition of eligible family members includes the usual, but also add anyone related by blood, someone the employee has a close association with, and people considered the equivalent to family.

New York

In New York, long a trendsetter for employment law, PFML went into effect at the outset of 2018. The law applies to all employers; the self-employed can opt in. Employee eligibility is different based on the reason for using the paid time off.

For family leave, it’s:

  • Employees must be employed 26 weeks (if scheduled 20-plus average hours per week)
  • Employees scheduled less than 20 average hours per week are eligible after 175 days worked

Under disability leave:

  • Employee must be employed four or more weeks (25 days of employment for part-time employees) Job Protection Leave for family care is job-protected under New York’s PFML bill.

For an employee’s own disability leave, the regulations all under the FMLA and New York Paid Family Medical Leave Act.

Maximum Length of Leave

The maximum length of leave is capped at 26 weeks for an employee’s own health reasons. It’s 10 weeks for family leave, increasing to 12 weeks in 2021.

Eligible Reasons

Here, we find the typical reasons for use: child bonding, care for a family member or self, as well as issues that arise for military events for the employee or close family member. Eligible Family Members Surprisingly, New York’s PFML legislation is somewhat narrowly defined: child, parent, spouse, domestic partner, grandparent, grandchild and parents-in-law.

Oregon

Oregon is among the more recent states to pass a PFML bill. Signed into law in August 2019, the measure covers nearly every worker in the state.

However, the measure does not go into effect until 2023. It applies to any company with one or more employees and covers all employees. It does not apply to independent contractors, however.

Maximum Length of Leave

The maximum leave amount is 18 weeks per year:

  • 12 weeks of paid leave total for family leave, medical leave or safe leave
  • Four additional unpaid weeks, capped at 16 total paid/unpaid
  • Two additional weeks of benefits will be given for complications due to pregnancy or childbirth

Benefits Like other states, Oregon’s benefits are tied to employee earnings:

  • Employees who earn less than 65 percent of Oregon’s average weekly wage will receive 100 percent of the average weekly wage
  • Employees who earn more than 65 percent of the state average weekly wage will receive 65 percent of the state average weekly wage, plus 50 percent of the employee’s average weekly wage that exceeds the state’s average weekly wage

The maximum weekly benefit amount is capped at 120 percent of the state’s average weekly wage, which amounts to about $1,254. Eligible Reasons When it comes to eligible reasons for use, PFML in Oregon includes time to cope with domestic or sexual violence for employees or family members, along with the standard bonding and health conditions.

Eligible Family Members

In Oregon, we again see a generous definition of family member. Close relatives are included, along with any individual related by blood or affinity whose close association with the covered individual is the equivalent of a family relationship.

Rhode Island

Rhode Island’s bill, which went into effect in 2014, has some simple and complex qualities — starting with the companies and employees to which the law applies. Called Temporary Caregiver Paid Leave, the bill applies to all private and some public employers.

Eligible employees include:

  • Those who have been paid wages in the state and have paid into the Temporary Disability Insurance/Temporary Caregiver Insurance fund, and have earned at least $12,600 in the base pay period
  • They may also be covered if they earned at least $2,100 in a quarter of their base period, their total base period taxable wages are at least 150 percent of their highest quarter earnings and taxable wages during the base period are $4,200 or more

Maximum Length of Leave

Rhode Islanders can use a combined maximum of 30 total weeks per year for their own medical issues or to care for a family member. Note, however, that leave must be taken for at least seven consecutive days to be eligible for benefits.

Eligible Reasons

Reasons for using leave are limited in Rhode Island compared to other states: bonding with a child (foster, birth or adoption), and caring for a family member or the employee’s own health condition.

Eligible Family Members

Here, too, we see family member more narrowly defined: child (any age), parent, spouse, registered domestic partner, grandparent and parent-in-law.

Washington

Most recently, PFML in Washington State went into effect Jan. 1, 2020. It applies to all employers, though the self-employed and independent contractors may opt in.

Employees must have worked at least 820 hours in four of the five quarters prior to Jan. 1, 2020, to be eligible for PFML.

Maximum Length of Leave

Employees taking PFML in Washington can take 16 weeks total per year combined for their own serious health condition and family leave. Also, the minimum length of leave that allow for benefits to be paid is eight consecutive hours.

Eligible Reasons

Compared to the benefit payouts, the eligible reasons for using PFML in Washington are simple: bonding with a new child, caring for one’s own or a family member’s health issue, and qualifying exigency for family a member on active duty (impending call or order to active duty).

Eligible Family Members

Eligible family member is narrowly defined in Washington: child, parent, spouse, domestic partner, grandparent, grandchild, sibling and parents-in-law.

Washington, D.C.

Lastly, we have Washington, D.C., whose PFML law goes into effect July 1, 2020.

Because of the locale, many portions of the bill are tied to the government and the district itself. It applies to all private sector employers, except those exempt from Washington, D.C., taxes by federal law or treaty. The self-employed can opt in.

PFML applies to employees who:

  • Work more than half the time in Washington, D.C., in 52 calendar weeks; or
  • Spend substantial time in Washington, D.C., and don’t work more than half the time in another jurisdiction

Job Protection

Job protection follows the FMLA and D.C. FMLA, the latter of which overs people who work at companies with 20 or more employers.

Maximum Length of Leave

In the nation’s capital, the combined duration of leave can’t surpass eight total weeks per year of combined family and medical leave. It breaks down like this:

  • Family caregiver leave: six weeks
  • Medical leave: two weeks
  • Parental leave: eight weeks

The leave may also be taken in single day increments.

Eligible Reasons

As complicated as the benefit rates are, the reasons for using PFML in Washington, D.C., are more standard. It can be used to bond with a new child (adoption and foster included), but adds legal guardianship within the first year of birth or placement.

In addition to caring for oneself or a family member, it also includes qualifying military events related to an active duty family member.

Eligible Family Members

The definition of family member under PFML in Washington, D.C., is child (including biological, foster, adopted or stepchild), parent (including parents-in-law and stepparents), spouse, domestic partner, grandparent and sibling.

The Future of Paid Leave Laws: Compliance Concerns

What do all these laws mean for employers? Complex compliance concerns. As the landscape of American culture continues to shift toward more employee-friendly laws, the proliferation of paid leave will only increase.

Already in 2020, we have seen Congress take up of paid parental leave, while states, counties and cities consider their own paid leave measures.

Plus, COVID-19 has further complicated matters for employers, with separate leave for the coronavirus. Jurisdictions have also made permanent changes to existing laws to cover public health emergencies.

Webinar: Paid Leave in the Time of COVID-19

As paid leave gains a greater foothold in jurisdictions across the country, we will likely see a shift from regulatory education to criminal and civil enforcement, as was the case with minimum wage laws in recent years.

No business wants to see its name splashed across headlines because of a lawsuit or violation. Over the last five years, there have been over 400 new laws creating or amending state paid leave programs. The number of introduced state bills continues to increase.

  • 2018: 148 bills
  • 2019: 167 bills

The lack of consistency among paid leave laws, and their impending expansion, creates monumental challenges for employers.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.

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