As more states pass Paid Family and Medical Leave (PFML) legislation with opt-out provisions for private plans, administering these programs becomes more and more complex. Insurance companies and TPAs often struggle with some of the creative approaches states are taking. Leave administrators spend thousands of hours and countless dollars building out these leave policies, only to have specific nuances change late in the game.
Despite the overall extraordinary undertaking and exceptional leadership from these states, striking the right balance between operational efficiency and risk management is a challenge yet to be solved.
New York Paid Family Leave
One example comes from the state of New York. Under New York Paid Family Leave (NY PFL), an employee can’t be paid for a family leave absence that’s less than a full day. Partial-day absences can be tallied up and deducted from the total NY PFL allotment if the employee was paid for their time out of work by another means, but that adds administrative complexity.
Meanwhile, under federal FMLA an employee can’t be forced to take more time than necessary, up to a minimum increment of time that’s no larger than how other types of leave, and no larger than one hour no matter how other types of leave are tracked.
Federal FMLA and NY PFL can run concurrently, so the lack of alignment between the two programs leads to a lot of situations where federal FMLA is approved but NY PFL is not. Employees who don’t think about leave administration until they need to be out of work get understandably confused.
Consider, too, the extra complexity for a case manager administering FMLA and NY PFL on behalf of an employer. When partial-day NY PFL absences add up to a full day of leave, how is the case manager supposed to know whether the employee has been paid? The only way to know is to have the employer provide that level of detail. The vendor, then, must have the capability to take those partial days that equal one full day, and deduct a day of NYPFL from the employee’s total allotment.
Washington Paid Family Leave
Washington’s PFML program (WA PFML) is full of examples of complexity and confusion.
The amount of leave available to an employee changes depending on what reasons the employee needs leave for.
- 12 weeks of leave are available for medical leave: an employee’s own health condition, including pregnancy/childbirth (with an extra two weeks if the employee is incapacitated by pregnancy complications).
- 12 weeks of leave are available for family leave: bonding with a child, caring for a family member
- If the employee faces multiple events in a year -- some medical leave and some family leave -- they may be able to take up to 16 weeks (with an extra two weeks if the employee is incapacitated by pregnancy complications)..
Keep in mind, too, that “weeks” for the purposes of WA PFML are not “weeks” on the calendar, or “weeks” on the employee’s current work schedule. Rather, they’re multipliers of the employee’s Typical Workweek Hours: the employee’s average hours worked over the course of their base period.
If the employee worked an average of 30 hours per week during their base period, then they’re entitled to 30 x 12 weeks (or 360 hours) of paid family leave, even if they’re now working a 40-hour schedule each week, or a 20-hour schedule each week.
Measuring the scope of time when the employee can use their entitlement -- the leave year, or the calendar type -- is different under WA PFML too. There is no choice provided to employers like there is under federal FMLA. Time must be measured during the 52 consecutive weeks starting the Sunday before the employee’s application date (unless the leave is for bonding, in which case the 52 consecutive weeks start on the Sunday before the date of birth or placement). It’s basically a new calendar type: Rolling Forward, starting on a Sunday, with a nuance for one leave reason!
To make it even more complicated a "waiting period" is the first seven consecutive calendar days beginning with the Sunday of the first week an eligible employee starts taking paid family or medical leave. Using “the Sunday of the first week” means that a person who starts leave on a Monday will have the entire week as their waiting period to receive benefits. A person who starts their leave on a Friday will only have that day to wait, and their benefits would begin the following missed workday. I’m not sure if that was the intent, but it was indeed the outcome. Note that the waiting period does not apply to family leave taken for bonding after the child's birth or placement.
WA PFML also has a "minimum claim duration" concept where, in any given week, the employee must be out for eight consecutive hours before benefits are payable. Once the employee has been out for eight consecutive hours in a week, additional time in one-hour increments can be approved, and that additional time does not need to be consecutive. This means that a 4-hour absence would not be eligible for WA PFML benefits, unless the employee missed 4 hours at the end of one day and 4 hours at the beginning of the following day, equaling 8 hours missed consecutively.
Massachusetts Paid Family & Medical Leave
Beginning January 1, 2021, Massachusetts employees will be entitled to their own Paid Family & Medical Leave (MA PFML). Final regulations were released at the end of July. The entitlement amounts are more straightforward than WA PFML: with 12 weeks for family leave, and 20 weeks medical leave, 26 weeks to care for a servicemember, and an aggregate cap of 26 weeks across all leave reasons.
MA PFML uses the same calendar type approach that WA PFML uses, Rolling Forward starting on a Sunday. It’s not in alignment with federal FMLA, but at least any administrator who’s also offering WA PFML won’t have to reinvent the wheel!
Massachusetts took a creative approach to phasing in their benefit. Benefits for leave taken for most leave reasons will start to be payable on January 1, 2021, but benefits for leave taken to care for a family member won’t be payable until July 1, 2021.
An open question about MA PFML has to do with increments of time that would be payable. It seems that Massachusetts may allow employees to take time in 15-minute increments. That in itself isn’t an issue: employees at many companies can already take federal FMLA in increments of 15 minutes or less, if other leave types are measured that way. What about the payments, though? No leave administrator offering private paid leave plans wants to be in the business of cutting checks for 15 minutes of missed work! We are hoping that the state will allow a minimum duration for check cutting. Perhaps, rolling up the time until it equals 4 hours or one day? However, this comes with other issues, as it may be ripe for abuse.
The complexities mentioned here don’t even get into the various complex methods of benefit calculations for each state; that’s for another day!
All this said, I can’t stress enough, that despite the complexities, Paid Family Leave is a tremendous offering that all of our workforce needs access to, and I’m so grateful to each and every state that has undergone the challenge of leading our nation in supporting our people!
Connecticut… we have our fingers are crossed that you will roll out a simple, and successful program for your residents. We are rooting for you!
Paid Family Leave is just one leave type among the complex leave landscape. Download this guide that provides a comprehensive overview of the various leave types that need to be carefully monitored and managed to ensure compliance with applicable federal and state legislation.