Maine Paid Family Medical Leave

Governor Janet Mills signed a $10.3 billion state budget into law July 11, 2023, which contained start-up money to enact LD 1964, making Maine the 13^th state to require employers to offer paid family and medical leave benefits.

The Act creates a Paid Family and Medical Leave Benefits Program with contributions beginning in January 2025, and paid leaves commencing in May 2026.

Who is a Covered Employer?

The law applies to any employer with employees in the state of Maine, including public employers (state, city, county, municipal agencies), but excludes the Federal Government. Self-employed individuals may opt into the program.

Which Employees are Eligible for Leave?

Employees who have earned at least six times the state average weekly wage (approximately $6,200 based on current average weekly wage) in wages subject to premium during the individual’s base period.

What is Considered Qualifying Leave and What is the Duration?

Employers are required to provide up to 12 weeks of paid leave, either family or medical, in an application year (defined as a rolling 12-month period beginning on the first day in which an application is made for leave). Employees may not take more than 16 weeks for pregnancy and family leave combined. Leave may be taken for:

• Bonding with a child during the first 12 months after the birth, adoption or placement for adoption or foster care,

• Caring for a family member, defined as child, domestic partner’s child or grandchild, parent, foster parent, domestic partner, sibling or spouse, or any individual with whom the covered employee has a significant bond with a serious health condition,

• Attending to a qualifying exigency,

• Caring for a family member who is a covered service member,

• Safe leave,

• The serious health condition of the employee (after a seven-day waiting period).

Intermittent leave will be allowed. The law applies to part-time employees as well.

What Protections are Available to the Employee?

Employees who are taking leave will have the right to accrue vacation time, sick time, bonuses, advancement, seniority, length of service credit or other employment benefits, plans and programs. Employers must continue benefits as if the employee is active and must restore the employee to the same or similar job on return from leave if the employee has been employed for at least 120 days.

How Will the Leave be Funded?

Employers with 15 or more employees will contribute 50% of the required 1% payroll tax and payroll deduct the remaining 50% from employees. Employers with fewer than 15 employees are exempt and will only payroll deduct and remit 50% of the required 1% payroll tax from employees.

What Paid Leave Compensation is Available?

Effective January 1, 2026, employees who take leave will generally receive a benefit based on the employee’s average weekly wage and its relation to the state average weekly wage. The benefit will be:

• 90% of the individual’s average weekly wages that do not exceed 50% of the state’s average weekly wage; plus

• 66% of wages that exceed 50% but are less than 100% of the state’s average weekly wage.

The maximum weekly benefit amount is 120% of the state average weekly wage.

Can Employers Waive Participation in the State Plan?

Employers who wish to waive participation in the State plan will need to have the plan approved and furnish a bond if the plan is self-insured. In order to be approved, a private plan must be the same or better than the state plan. If employers use a third party that provides insurance, the policy issued by the insurer must be approved by the state.

What are the Notification Requirements?

Employee Notifications:

Employees must give reasonable notice to their supervisor of their intent to use leave, absent an emergency, illness, or other sudden necessity for taking leave.

Employer Notifications:

Employers will need to provide written notice to each employee of their rights and duties under the bill at the time of hire, and when the employee requests covered leave. Employers must also maintain a poster in a conspicuous place at the employer’s place of business in English, Spanish and any language that is the first language spoken by at least 3 or more employees, if the alternate language poster has been provided by the Department.

What are the Penalties for Failure to Comply?

Employers who fail to comply with the notice requirements will be subject to a civil penalty of $50 per employee for the first violation and $150 per employee for each subsequent violation. Employers are prohibited from retaliating against employees who take leave, including any negative change in seniority, benefits, pay. The program administrator will take enforcement action against an employer who violates these rules.

What Should Employers Do Now?

There is no immediate action necessary. As with any new law, the state will release more information and administrative guidance as they move towards the effective date.

Minnesota Paid Family Medical Leave

Signed by Governor Tom Walz in May, 2023 the Minnesota Paid Family Medical Leave bill (HF2) creates a family and medical leave insurance program that is unique in that both payroll tax deductions and leave benefits will be effective January 1, 2026.

Who is a Covered Employer?

The law applies to any employer with at least one employee in the state of Minnesota, including public employers (state, city, county, municipal agencies). A self-employed individual can opt in and be approved.

Which Employees are Eligible for Leave?

Both part-time and full-time employees will be eligible for benefits if they have qualifying leave reasons, and they earned more than 5.3% of the state average annual wage (approximately $3,500 based on current average annual wage) over a designated period prior to the start of the leave. Employees will need to either work in Minnesota 50% of the time or live in Minnesota 50% of the time.

What is Considered to be Qualifying Leave and What is the Duration of the Leave?

Employers are required to provide up to 12 weeks of paid leave, either family or medical, in an application year (defined as a rolling 12-month period beginning on the first day in which an application is made for leave). Except for bonding leave, a claim for benefits must be based on a single qualifying event of at least seven calendar days. Employees may take up to 20 weeks for any combined reasons within the application year. Leave may be taken for:

• Bonding with a child during the first 12 months after the birth, adoption or placement for adoption or foster care,

• The serious health condition of a family member (defined as spouse, spouse’s parent, domestic partner, child, stepchild, foster child, child’s spouse, parent or legal guardian, sibling, sibling’s spouse, grandparent (either employee’s or spouse’s), grandchild, son-in-law or daughter-in-law, or any individual selected by the incapacitated person),

• Attending a qualifying exigency,

• Caring for a family member who is a covered service member

• Safe leave

• The serious health condition of the employee including pregnancy related medical care

Intermittent leave will be allowed.

What Protections are Available to the Employee?

Employees who are taking leave may, but are not entitled to, accrue any additional benefits or seniority while on leave. Leave may not be counted as a break in service for any pension or other retirement plans. Employers must continue all group insurance benefits as if the employee is active and must restore the employee to the same or equivalent position on return from leave if the employee has had at least 90 days of service with the employer.

How Will the Leave be Funded?

The State will provide $650 million in seed funding for the PFML program, allowing benefits to begin at the same time premium collection starts. Employers and employees will each contribute 50% of the required 0.7% of taxable wages capped at 1.2% of the wages up to the Social Security taxable wage base. The required tax will be adjusted by July 31 of every year.

What Paid Leave Compensation is Available?

Effective January 1, 2026, employees who take leave will generally receive a benefit based on the employee’s average weekly wage and its relation to the state average weekly wage, using the high quarter of their base period. The benefit will be:

• 90% of wages that do not exceed 50% of the state’s average weekly wage; plus

• 66% of wages that exceed 50% but are less than 100% of the state’s average weekly wage; plus

• 55% of wages that exceed 100% of the state’s average weekly wage.

The maximum weekly benefit, yet to be determined, will be established each October. Employers will be able to pay to pay the difference between the employee’s salary and the maximum benefit.

Can Employers Waive Participation in the State Plan?

Employers who wish to waive participation in the State plan may substitute a plan that meets or exceeds the requirements of the state plan. The plan must be approved and can be obtained through insurance or through self-funding. If self-funded, the employer is required to furnish a bond. Employers choosing to implement a private plan will be required to contribute to the state revenue fund as follows:

• Employers implementing a private plan for family leave but still participating in the state medical leave program: 0.4% of covered wages, 50% of which can be charged to employees.

• Employers implementing a private plan for medical leave but participating in the state fund for family leave: 0.3% of covered wages, 50% of which can be charged to employees.

What are the Notification Requirements?

Employee Notification

If the need for leave is foreseeable, the employee must provide at least 30 days advance notice. If leave is due to an emergency, illness or other unforeseen event, employees must provide notice as soon as possible and practical.

Employer Notification

Employers must maintain a poster in a conspicuous place at the employer’s place of business in English, and in any language that is the first language spoken by at least 5 or more employees. Employers will also need to provide employees with a detailed notice describing available benefits, required deductions and other important information within 30 days of employment or premium collection. Employees will need to provide an acknowledgement of receipt to the employer, or a signed statement indicating refusal to acknowledge receipt. In addition, employers are required to include the PFML deductions on the employee’s earning statements.

What are the Penalties for Failure to Comply?

Employers who fail to comply with the notice requirements will be subject to a civil penalty of $50- $300 per employee. Penalties for retaliation and interference range from $1,000 - $10,000 per violation. Quarterly reports that are filed late will have a late fee of $10 per employee with a $250 minimum. Noncompliant private plans are subject to a penalty of $1,000 for the first violation and up to $2,000 for each subsequent violation.

What Should Employers Do Now?

There is no immediate action necessary. As with any new law, the state will release more information and administrative guidance as they move towards the effective date.

States Permitting Paid Family Leave Insurance Products

A number of states have passed laws authorizing the creation of a paid family leave insurance product. Unlike state mandated programs (such as the ones described above), these products are voluntary and can be offered by the employer, or in some instances can be purchased on a voluntary basis by employees.

Alabama

Enacted April 27, 2023, HB 141 authorizes disability insurers to offer paid family leave benefit policies through employer sponsored group policies or voluntarily purchased employee policies as of August 1, 2023.

The policies can include leave for the following:

• Care of the serious health condition of a family member, defined as a child, parent, spouse or any other individual defined as family in the insurance policy,

• Bond with a child within the first 12 months of birth, adoption or placement for adoption, or foster care,

• Address a qualifying exigency,

• Care for a family service member injured in the line of duty

• Provide care for a family member or other family leave as outlined in the insurance policy.

Insurance carriers are able to set the details and requirements including any waiting period and the amount of benefits paid. The duration of leave can also be determined by the carrier, but it must be a minimum of two weeks within a year (either calendar year or rolling year beginning on a fixed date).

Arkansas

Arkansas passed SB111 February 17, 2023 to create a line of “family leave insurance” to be offered by accident and health or life insurance companies. The insurance is provided to an employee to pay for a percentage of the employee’s income loss due to:

• Birth or adoption of a child by the employee

• Placement of a foster child in the home of the employee

• Care of the employee’s family member who has a serious health condition or

• Circumstances arising because the employee’s family member who is a service member is on active duty or has been notified of an order to active duty

Florida

Florida HB 721 was enacted May 26, 2023, authorizing life insurers to create paid family leave insurance and define the terms. Policies created are subject to review by the Office of Insurance Regulation and will be effective as of September 1, 2023. The insurance would be issued to an employer to replace a percentage of income loss due to:

• Birth, adoption, placement for adoption or foster care,

• Care of a family member, defined as child, spouse, parent or other person defined as a family, member in the policy, with a serious health condition,

• Circumstances arising from a family member on active duty, or impending call to active duty.

The length of leave can be determined under the policy but must be a minimum of two weeks during a period of 52 consecutive weeks (either a calendar year or a rolling year beginning on a fixed date.

New Hampshire

New Hampshire’s Family Medical Leave law became effective January 1, 2023, allowing employers to purchase a policy from MetLife to provide up to 60% of wage replacement benefits up to the Social Security wage cap for the following reasons:

• Individual’s own serious health condition, when disability coverage doesn’t apply, including child birth

• Child bonding due to birth, adoption or fostering

• Serious health condition of a family member

• Qualifying need arising from military deployment or service

• Caring for a qualifying military service member

Employers can choose between offering 6 or 12 weeks of paid leave. Individuals are now able to purchase their own policies, (if not provided by the employer) for a January 1, 2024 effective date.

• For more details: Optional Granite State FMLI Enacted.

Tennessee

Tennessee enacted SB454 creating a new line of insurance, paid family leave and authorizing life insurance and disability income insurance carriers to issue policies to employers to provide employers with a percentage of income replacement for loss of income due to:

• Birth or adoption

• Placement of a child for foster care

• Care of a family member with a serious health condition

• The status of a family member of the employee who is a service member on active duty or who has been notified of an impending order to active duty.

Carriers may begin filing their non-statutory PFL insurance products on January 1, 2024

Texas

HB1996 passed 6/12/2023 and took effect 9/1/2023. This bill deems paid family leave insurance as a type of disability insurance and allows any insurer authorized to write life or health insurance, including disability insurance in the state to provide a paid family leave policy.

Insurance carriers are able to set the terms and conditions of the policies, including the percentage of wage replacement and any waiting period. The benefit period may not be less than two weeks in a calendar year or other designated 52 week period.

Policies issued must meet minimum standards and must provide leave to:

• Care for a family member with a serious health condition,

• Bond with a child within the first 12 months of birth, adoption, placement for adoption, foster care,

• Address a qualifying exigency,

• Care for a family member injured in the line of duty.

Vermont

Vermont has a new paid family medical leave program administered by The Hartford. Qualifying leaves for state government employees began July 1, 2023.

Beginning July 1, 2024, private sector employers and other non-state government public employers will be able to purchase paid family leave policies. The program will expand to individual policies July 1, 2025. Employers and individuals will have a number of plan design options to choose from to provide partial income replacement to employees who have lost income due to:

• Birth of a child and care for a newborn child during the first year after birth

• Adoption or placement for foster care within the first year of initial placement

• Caring for a family member with a serious health condition

• Care for a covered service member with a serious injury of illness

• Serious health condition of the employee

- For more details: Vermont to Launch Voluntary PFML in 2024

Virginia

On April 2, 2022, Virginia’s governor signed SB 1 allowing insurance carriers to issue voluntary full insured paid family leave benefits as a rider to a short-term disability policy, included in a short-term disability policy or as a standalone policy.

Family leave insurance may replace all or a part of an employee’s income loss due to:

• Birth or adoption of a child by the employee

• Placement of a child for foster care

• Care of a family member of the employee who has a serious health condition

• Circumstances arising out of the fact that the employee’s family member who is a service member is on active duty or has been notified of an impending call or order to active duty.