Here Are the Questions to Ask About Your PFML Benefits Amid Evolving State Laws

As more states pass and implement paid family and medical leave (PFML) laws, employers should consider how they design, pay for and administer their programs — and how statutory leaves affect company-sponsored leaves.

Questions about operationalizing PFML abound, from how employers determine work state to how they account for different definitions of family members, address expansions to existing laws and coordinate benefits.

With an increasing number of leave laws in the U.S. and more PFML laws expected, employers should discuss their options. A few questions to get the ball rolling:

• Will the company pay all associated payroll taxes and fees or split them with employees?
• If the company creates a plan, which components will it have to ensure meet or exceed the minimum requirements?
• How will we adjust other benefits to avoid conflicts and ensure equity?

Answers to these questions will have far-reaching implications, especially since 47% of the employers that responded to the 2022 DMEC Absence Plan Design and Practices Benchmarking Report said they do not offer paid parental and/or paid family care leave.

The report includes data from 2021 and 2022 on how employers structure policies; whether they allow intermittent access to PFML; if policies distinguish between birth and non-birth parents; and whether employees are required to file for state-mandated PFML before they are eligible for company-sponsored benefits. The data tells an interesting story about paid and unpaid leave in the U.S., and it will be fascinating to see how practices change as more states pass and implement PFML laws.

Ready or Not

There’s no question that different versions of PFML are hard to manage, as noted during the webinar “Important Questions Employers Should Ask Before Implementing PFML,” when 30% of attendees said they were not ready to administer PFML.

They are, however, considering benefit changes as a result of the PFML wave. And that’s good news since data shows that company-sponsored benefits influence retention. In fact, employees who see value in benefits (including paid time off) are more likely to stay with employers, while those who don’t will leave even with a significant wage increase.

Generous paid leave programs are highly ranked by employees, who ask about company policies before accepting job offers and reject those that don’t meet expectations. Perhaps that is because they see a correlation between paid leave and a company’s support for work-life balance (or integration).

Customizing Policies

Recognition of (and value for) employee benefits, including paid leave, is at an all-time high. As a result, employers should assess their leave policies to ensure their plans convey a message they intend to send — or, at the very least, one with which they are comfortable.

This review could also help identify and address inherent bias. Before introducing employer-sponsored benefits or changing programs, ask employees for feedback. Questions to consider:

• If we roll out this policy, what are the positive or negative aspects, and how do they affect employees?
• Does this policy meet the needs of all employees or just a portion?

As you consider options, establish a goal and method for measuring program success, since some options are more costly than others.

For example, are you considering a private PFML? And if so, what are the metrics you will use for success? A quick rule of thumb is that private plans may not make sense from a cost perspective for companies with fewer than 50 employees in statutory states.

Yet there are other benefits, such as streamlining management, and they can have a positive return on investment.

Other considerations include how PFML will affect short-term disability (STD) insurance. It may be harder to get employees to pay for STD in states that mandate PFML and employees pay a portion of it. In this scenario, employers may want to consider helping employees pay for statutory PFML plans and offering an STD plan to bridge gaps.

There are also bigger-picture questions.

For example, if paid leave differentiates an employer for recruiting and retention purposes, does investing in PFML plans become more tenable for employers of all sizes? Or is now the time for employers to consider redesigning STD plans to provide different types of coverage? And is that an “and” or an “or” question?

Wise employers will conduct an analysis of all options (that includes costs and benefits), rather than choosing the one that seems easiest to implement.

A Path Forward

Once a choice is made, communicate it clearly and frequently to employees, highlight the program’s unique benefits and value, and train managers and supervisors to address questions and refer employees to appropriate resources. We frequently hear about the need for more education and training for supervisors. PFML is no exception.

Employees will compare benefits with colleagues in different states, and that will be difficult for managers, since PFML laws vary widely. Consider developing a one-page state comparison reference that highlights company policy to reduce confusion and communicate the message you want employees to hear.

In other words, manage the risk associated with varying PFML laws by managing the message.

PFML may be difficult to manage, but these laws can offer an opportunity for employers to emphasize their commitment to an employee-centered mission, their vision and their values as they pertain to employee health and wellness.⁶ It’s one thing to say employee health and wellness is integral to company success.

It’s another thing to invest in it. &