Compliance Update – November 2019
Every month, Lincoln puts together the latest compliance news related to family and medical leave laws and regulations – helping you keep track of the important deadlines, compliance considerations and links to additional information.
Family and medical leave
Other paid leave
Other unpaid leave
Federal Family and Medical Leave Act (FMLA)
December 20, 2019
This is the deadline to file for a private plan exemption for fourth quarter contributions. If the exemption request is denied, the impacted business will be responsible for remitting the full contribution amount from October 1, 2019 forward.
If employers apply for an exemption on or before December 20, 2019, and are approved, the exemption effective date will be October 1, 2019. This retroactive approval is only applicable to the first quarter of PFML. Any employer who submits an exemption application after December 20, 2019 will be required to remit PFML contributions for the October 1 to December 31 quarter by January 31, 2020. Additionally, these employers will need to continue submitting quarterly contributions to the commonwealth until the beginning of the quarter following their exemption approval.
Employers applying for an exemption will receive an email notification within one to two business days indicating that a determination has been made. The Department of Family and Medical Leave (DFML) will continue to accept applications on a rolling basis but applications must be approved in the quarter prior to the quarter in which they go into effect.
More information on the private plan exemption application process can be found on the DFML website.
Surety bond requirements & form update
All self-insured employers approved for an exemption are required to furnish to the DFML a surety bond running to the Commonwealth of Massachusetts. The Commonwealth recently revised the bond calculation, significantly reducing required face amounts. As an example, under the previous calculation an employer with 250 employees working in Massachusetts establishing a self-funded plan for Family Leave & Medical Leave would’ve been required to secure a bond of $70,000 per 25 employees for a total of $700,000. Under the revised calculation, this employer would be required to secure a bond of $134,882.48 (an example of the new bond form, the calculation, new bond calculation rate and instructions are available on the DFML website. ) The surety bond effective date should be the same as the effective date of your exemption. If an employer applied on or before December 20, 2019, the effective date of the exemption is October 1, 2019 and the bond term shall expire on September 30, 2020.
January 31, 2020
Employers covered under the Commonwealth’s plan will need to complete their quarterly report and submit contributions for the calendar quarter (October - December) through MassTaxConnect by January 31, 2020.
Contributions bond formula
For family leave plans:
- 2018 Average Workforce Count x 2018-2019 SAWW x the 2019 PFML Family Leave Contribution Rate x 52 weeks
- 2018 Average Workforce Count x $1,383.41 x 0.0013 x 52
For medical leave plans:
- 2018 Average Workforce Count x 2018-2019 SAWW x the 2019 PFML Medical Leave Contribution Rate x 52 weeks
- 2018 Average Workforce Count x $1,383.41 x 0.0062 x 52
For family and medical leave plans:
- 2018 Average Workforce Count x 2018-2019 SAWW x the 2019 PFML Family and Medical Leave Contribution Rate x 52 weeks
- 2018 Average Workforce Count x $1,383.41 x 0.0075 x 52
The tax treatment of PFML contributions for both state and federal purposes is governed by federal tax law. The Commonwealth has requested guidance from the Internal Revenue Service (IRS) on this question and others related to the tax implications of PFML contributions and benefits. Until IRS guidance is issued, individuals and businesses are urged to consult with their own tax advisors on these questions.
Based on its own review of federal rules and following consultation with the Massachusetts Department of Revenue, the DFML anticipates that the IRS will conclude that employee contributions should be withheld from after-tax wages. A definitive rule for proper tax treatment of contributions will be available once IRS guidance is issued.
November 1, 2019
The Family Medical Leave Insurance (FAMLI) Task Force has submitted an initial recommendation on a family and medical leave program for employees in the state. Employers may recall that the Colorado state legislature passed a bill in April 2019 to study the implementation of a paid family and medical leave program. The Task Force recommendation will ask the actuarial study to evaluate two paid family and medical leave program models with variable plan designs. The actuarial study will be submitted by December 1, 2019. The Task Force will provide a final recommendation on a paid family and medical leave program for all employees in the state no later than January 8, 2020.
November 13, 2019
Hawaii delayed its deadline for a proposal for paid family leave legislation to be submitted to the legislature. It is now due on November 13, 2019, after being originally due on September 1, 2019. In 2018, Hawaii passed a law which would require the legislative reference bureau to conduct a sunrise analysis of the impacts of and best framework for the establishment of paid family leave. The analysis will evaluate program design, cost breakdowns and projected impacts to employers by size, and options for compliance and enforcement of a paid family leave program.
January 1, 2020
The California Employment Development Department (EDD) will be requiring all employers and third-party administrators to transition to a new voluntary plan text template as of January 1, 2020. Lincoln is awaiting additional information from the EDD with the specific instruction and a final template draft document. A cross-functional Lincoln team will work to assist our customers with the transition.
Benefit and contribution rates
Upcoming: Updated Statutory Disability and Paid Family Leave Guide
The benefit and contribution rates of state-mandated disability and paid family programs are established annually, and are typically released in Q4, applicable the following year. Once all the program rates are released by states’ regulatory authorities, Lincoln will update our Statutory Disability and Paid Family Leave Reference Guide. We encourage you to talk to your Lincoln representative later this year to learn more.
October 28, 2019
California released their 2020 State Disability Insurance (SDI) contribution rate and other changes effective January 1, 2020. Please see below:
|DI/PFL contribution rate||1.0%|
|Yearly taxable wage ceiling per employee||$122,909|
|Yearly maximum contribution per employee (taxable wages x contribution rate)||$1,229.09|
|Maximum weekly benefit amount||$1,300|
|Maximum benefit amount (wba x 52 weeks)||$67,600|
|Assessment rate (contribution rate x 14%)||0.0014%|
|State Average Weekly Wage (SAWW)||First quarter 2020 $1,325.00|
|SAWW increase rate||3.84013%|
The Job Accommodation Network (JAN) recently revised and updated its Workplace Accommodation Toolkit, which provides guidance and resources for developing or updating accommodation policies and processes while leveraging the best proven practices available. JAN, an organization funded by the US DOL’s Office of Disability Employment Policy, is the leading source of guidance on workplace accommodations and disability employment issues. The Workplace Accommodation Toolkit is available on the JAN website.
November 18, 2019
The Governor signed into law several pieces of legislation expanding protections for victims of domestic violence, including an anti-discrimination bill protecting victims of domestic violence in employment. Employers are prohibited from refusing to hire or discharging from employment an individual because of their status as a victim of domestic violence, or discriminating against them in compensation or in terms, conditions or privileges of employment. The law also requires employers to provide a reasonable accommodation allowing employees to be absent from work for a reasonable amount of time to address situations related to domestic violence. The employer is exempt from the reasonable accommodation requirement only if they can demonstrate that the employee’s absence would constitute an undue hardship to their business. The law is effective 90 days after its enactment, or on November 18, 2019.
January 1, 2020
A new pregnancy accommodation law will require employers with six or more employees to reasonably accommodate the needs of employees due to pregnancy, childbirth, or a related medical condition. Reasonable accommodations may include, but are not limited to:
- Acquisition or modification of equipment or devices
- More frequent or longer break periods or periodic rest; Assistance with manual labor
- Modification of work schedules or job assignments
The law will also require employers to post and provide written notices to new employees, existing employees (within 180 days after the effective date of this law), and any employee who informs the employer of their own pregnancy, within 10 days after the employer receives the information. The Oregon Bureau of Labor and Industries is expected to issue guidance and educational materials on implementing this law.
New York passed a provision in its state budget requiring employers to provide paid leave for up to three hours for employees to cast their vote during elections. The employee must give the employer notice of leave not less than two working days before the day of the election. The employee shall be allowed time off for voting only at the beginning or end of his or her working shift, as the employer may designate, unless otherwise mutually agreed. Employers must post a notice setting forth the right to paid voting leave starting ten working days before every election until the close of the polls on election day. The law is effective immediately.
January 1, 2020
The new Nevada paid leave law provides employees earned paid leave at the same wage rate as the employee normally earns. This applies to private sector employers with at least 50 employees. Under the enacted law, employees will accrue 0.01923 hours of paid leave for every hour worked, up to 40 hours of paid leave per year. Employers may set a minimum increment (up to four hours) for taking paid leave. An employee may use paid leave without providing a reason to his or her employer. Similar to the new Maine law, this program functions like paid sick leave.
January 1, 2020
The Governor signed into law an amendment to the Michelle Maykin Memorial Donation Protection Act. The new law requires a private or public employer to grant an employee an unpaid leave of absence, not exceeding 30 business days in a one-year period, for the purpose of organ donation. The employee must provide written verification that the employee is an organ or bone marrow donor and that there is a medical necessity for the donation of the organ or bone marrow. Organ donation leave may not be taken concurrently with any leave taken under the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). The law will be effective on January 1, 2020.
January 1, 2020
Illinois passed the Living Donor Protection Act, which amends the Illinois Organ Donor Leave Act. These laws apply to state agencies only. The new law prohibits agencies from retaliating against an employee for requesting or obtaining a leave of absence for organ or bone marrow donation. State employees may use up to 30 days of organ donation leave in any 12-month period to serve as a bone marrow or organ donor. The law also prohibits insurance carriers from discriminating against and refusing to provide coverage based solely on the insured client’s status as an organ donor. The law will be effective on January 1, 2020.