My Company Operates in Several States: How Can We Stay Compliant With Leave Laws?
Seven states and Washington D.C. have passed paid family leave laws and nearly all the rest are mulling some sort of proposed legislation, which poses many challenges for large companies, especially those that have employees in different states.
In a recent webinar hosted by the Disability Management Employer Coalition (DMEC), and presented by MetLife, family leave experts outlined their approaches and recommendations for how to navigate the many difficulties of meeting the requirements of states’ different paid family leave laws.
To illustrate the need for companies to stay abreast of these new laws, Dan Iskra, director of disability and absence product development and management for MetLife, noted that just two days before the June 27 webinar, Connecticut passed a law providing 12 weeks of paid family and medical leave for workers.
“This is an ever-changing landscape,” Iskra said.
While Connecticut passed its first paid family leave law, other states, like New Jersey, Rhode Island, Massachusetts, New York, California, and Washington, which already had laws on the books, may be tweaking them.
In 2019, New Jersey will reduce the threshold for companies that must comply with its family leave laws from those with 50 or more employees to those with 30 or more. The law provides employees working in New Jersey with 12 months of job-protected family leave during each 24-month period.
“States aren’t just borrowing another state’s policy,” said Sara Borgardt, lead manager for Total Rewards for AXA Equitable Life, a financial services company. “They are putting in a couple of [their own] different things for each state.”
Borgardt cited an example of the complexities of complying with these new laws. She noted that about 55% of her company’s 3,800 employees are female. If one of her company’s female employees in New Jersey is planning a maternity leave, she has various plans available to her including the federal Family and Medical Leave Act, the New Jersey statutory plan, her company’s short term disability and paid parental leave plans.
“That’s a lot of coordination to handle,” Borgardt said.
Blaine Clotfelter, first vice president for American Benefits Consulting, said one step employers need to take is an inventory of their own internal policies and procedures including sick time, paid time off, disability, parental leave and family leave, to determine if there is any overlap between the states’ plans and their own plans. Generally the states require that companies’ internal plans meet or exceed their provisions.
Companies also should do a demographic analysis of their employees.
“It can give you a feeling, a high-level picture of the impact a new statutory program might have on your organization,” Clotfelter said.
One decision a company may need to make will be whether to take on the administrative aspects of handling statutory plans on their own or to hire a third party administrator, or TPA.
For companies feeling administrative pressures, “these leave laws might be the straw that breaks the camel’s back and you may want to consider [hiring a TPA] as an option,” he said.
To understand the implications of these laws, both Clotfelter and Borgardt recommended that companies engage the various departments with expertise in related areas including human resources, legal, payroll, compliance, information technology and, if applicable, their TPA.
“You want to get these stakeholders on board as soon as you can and have them work through the details with you,” Clotfelter said.
“The mix is so that everyone has a different viewpoint or a different expertise when reading the policy,” Borgardt added.
Having input from a variety of sources helped Borgardt’s company avoid a mistake. She said her company was not able to put payroll deductions in place in the state of Washington by January 1, 2019 when it was required. The company considered doubling the deductions in February, but its employment law team noticed that retroactive deductions were not allowed under the law. The company ended up covering the deductions itself.
“We were able to resolve an issue before it became an issue,” she said.
Understanding the timing of the laws and their provisions is also important. Cornfeldt said before the laws go into effect they frequently have a 12 to 18-month lead time for payroll deductions to take place.
“You have to be aware of what the payroll deductions are and when they start,” he said.
Another item to consider is how the laws apply to 1099 contract workers. Borgardt noted that 1099 workers are eligible in Massachusetts if 50% or more of a company’s work force are 1099 contract workers.
As challenging as these new laws are, the experts said it’s important to keep in mind the benefits they can offer families that are celebrating the birth of a child, helping an elderly parent recover from an illness or coping with another challenge.
“These benefits are truly valued by all these employees in the various states that are receiving these benefits,” Iskra said. &