Connecticut employers—especially small businesses—face a host of new administrative challenges when the state’s paid family medical leave mandate begins Jan. 1, 2021.
Although workers won’t be able to receive benefits until Jan. 1, 2022, employers must begin withholding 0.5% from employee paychecks for the state’s paid FMLA fund beginning Jan. 1, 2021.
Employers must remit those funds to the state at the end of each quarter starting March 31, 2021.
The mandate, which lawmakers approved in 2019, applies to businesses with as few as one employee.
It allows up to 12 weeks of paid leave for employees to care for themselves or an extended family member.
“I don’t want to minimize the impact on small employers who’ve never done this before, but it’s not going to feel like it’s just a switch for them,” Andrea Barton Reeves, the executive director of the state's Paid Family and Medical Leave Insurance Authority, told CBIA’s Nov. 13 Employment Law Conference.
“For smaller employers, this is an entirely new world.”
CBIA HR Counsel Mark Soycher called the new mandate “an earth-shattering change” for some employers.
“Smaller employers who never had to worry about FMLA now will,” he said.
Barton Reeves said the authority will be there to guide employers through the new mandate and answer their questions.
Every private sector worker in Connecticut faces the tax, even if they won’t use paid FMLA or their employer already offers it.
Most public sector employees are exempt.
Businesses with one or more employees working in Connecticut are required to register with the authority beginning Nov. 23, although registration is already open, Barton Reeves said.
From 350 to 375 employers have registered so far, she said.
“Registration is really a way for you to let us know that you’re participating and will be remitting contributions to the fund on behalf of your employees,” Barton Reeves said.
Companies that use a third-party payroll service should also register, she said, in case any mistakes are made.
Sole proprietors and the self-employed may contribute to the fund.
“If you choose to participate, though, you must remain in for three years," she said.
Employees can begin requesting FMLA in the fall and winter of 2021.
To qualify, an employee must have worked and earned at least $2,325 in the highest earning quarter of four of the last five quarters.
“An employee can earn that from multiple employers,” Barton Reeves said. “You either have to be currently employed and working in Connecticut or have worked in at least the last 12 weeks.”
The new state mandate supersedes federal law, which applies to companies with 50 or more workers.
Under federal law, an employee must have worked 1,250 hours over the past 12 months to qualify for FMLA.
The new state law only requires three months of employment.
“That’s significantly different,” Barton Reeves said. “It won’t parallel federal law so that’s a complication that larger employers will have to reconcile.”
Employers will be responsible for determining if an employee qualifies for paid leave and should ask two questions.
The first is whether the employee is eligible for job-protected leave under this or other statutes.
The second is whether they qualify for income replacement while on leave.
“We urge employers to ask both of these questions,” she said.
Paid leave can be granted to create or expand a family through birth, adoption, or foster care; for a worker’s or family member’s serious health condition; and to serve as an organ or bone-marrow donor.
There’s also extended leave for incapacitation during and after pregnancy, special military leave, and family violence leave.
Employees cannot get paid leave benefits while on workers’ compensation.
Employers who require workers to use accrued time for FMLA will no longer be able to do that as of Jan. 1, 2022.
Under the new mandate, employees are entitled to keep up to two weeks of accrued time if they take paid leave.
Spouses who work for the same employer will not be required to share the 12 weeks of paid leave.
“That is another change employers ought to become accustomed to and reconcile with federal leave,” Barton Reeves said.
Companies can choose private plans over the state plan but eligible employees must first approve it with a simple majority vote.
The private plan must offer the same or better benefits than the state plan and not cost workers more than 0.5% of their pay.
The employer or a third party must administer the plan. At least eight insurers have applied with the state to offer private FMLA plans.
Employers who choose a private plan must give their workers a plain language guide on the law, available on the authority's website, notify the authority, and upload specific documents.
The authority will review private plans and approve them for three years.
The new tax applies to unions.
“There is no bargaining as to whether you’re going to participate or not,” Barton Reeves said.
Workers who are assigned to work in Connecticut but are working remotely from their homes out of state must pay the new tax.
The authority can impose penalties on companies that ignore the new law, but Barton Reeves said she wants to avoid that.
“We understand there are employers vehemently opposed to this, not just in theory but philosophically, so we really want to work with them and explain we understand [their opinion] but they need to participate,” she said.
“If after some attempts to prompt participation fail, then I think we’ll take another step but it’s not the first place that we’re going.”