This post will discuss employer and employee contributions and employer reporting requirements under the Paid Family and Medical Leave Act.
As we previously posted, the new law creates form of insurance which provides benefits (in the form of paid leave) to eligible employees.
Contributions are to be paid by employers and employees as a percentage of a total rate determined by the Director of the Employment Department. For employees, the total rate may not exceed 1% of employee wages, up to a maximum of $132,900. Employers will contribute an amount that is equal to 40% of the total rate determined by the Director and deduct the remaining 60% from employee’s wages. Employers may elect to pay the required employee contributions as an employer-offered benefit.
Employers that employ fewer than 25 employees are not required to pay the employer contributions, but if they do, they may apply to receive a grant under the law.
Employers must hold the contributions collected in trust and pay the contributions on a quarterly basis into the Paid Family and Medical Leave Insurance Fund (which will be established by the law). Employers will also be required to file combined quarterly reports of wages earned and contributions on a form to be created by the Department of Revenue.
Employers may obtain private insurance to provide family medical leave insurance benefits to employees, provided that: (i) approval of the employer-offered benefit plan is obtained from Director; and (ii) the benefits provided are equal to or greater than the weekly benefits and duration of leave provided by the law.
Employee contributions begin January 1, 2022.
Our next post will discuss enforcement and penalties for non-complying employers.