In recent years, many states have passed mandatory paid leave laws to provide employees with paid time off that may be taken for various reasons. These laws impose a variety of requirements on employers, ranging from mandatory employer and employee contributions, to state insurance funds, to quarterly annual reporting requirements. This article provides an overview of new paid leave requirements in California, Colorado, Delaware, Illinois and Maryland that employers should pay attention to as they look ahead to 2024.
Please note that this article is not intended to provide a comprehensive overview of all state and local paid leave requirements.
California Removes Wage Cap for Paid Family Leave and State Disability Insurance Deductions
In late 2022, California passed a law removing the wage cap that was previously applied to paid family leave and state disability deductions, which will be effective January 1, 2024. This change will affect employees earning over $153,164 (which was the previous 2023 wage cap) in future years. Employers with approved private paid family leave insurance plans may use the additional amount that would have been deducted to pay for any SDI/PFL premiums. Employers with private plans have the potential to reduce the impact on high earning employees by not increasing the premium cost for those that earn over the current taxable threshold.
Employer Action: California employers without a private plan should ensure that their payroll systems are set up without a wage cap on PFL and SDI wage deductions for 2024.
Note for Sequoia One Clients: Sequoia One will automatically adjust employee deductions to comply with the removal of the wage cap. Sequoia One does not offer clients the option to use private plans in lieu of state paid leave programs.
California Mandatory Paid Sick Leave Expanded From Three to Five Days in 2024
California recently passed SB 616, which requires employers to provide California employees 40 hours of paid sick leave to be accrued by the 200th day of each calendar year (or, for new employees, the 12-month period following commencement of employment) beginning January 1, 2024. Employees must be permitted to carry at least 40 hours of paid sick leave time from year to year. Under existing law, paid sick leave is available for full-time, part-time, and temporary employes as long as they have worked for the same employer in California for at least 30 days and have been employed by that employer for at least 90 days prior to taking leave. The law requires employees to provide notice for any foreseeable sick leave, and states that employees are not required to provide a doctor’s note or other documentation to verify the reason for leave.
Employer Action: Employers should review and update existing Paid Sick Leave policies, materials, and any accrual/carryover systems to accommodate this change.
Employee Benefits Under Colorado’s Paid Family and Medical Leave Insurance (FAMLI) Program Begin
Though employer and employee contributions to Colorado’s FAMLI program began in 2023, Colorado employees that have earned at least $2,500 across the last four calendar quarters prior to requesting benefits can now begin to apply for FAMLI benefits through the My FAMLI+ Portal (note the portal is not yet available), effective January 1, 2024.
Employer Action: Though no additional employer action is required when benefits commence, employers should ensure they are complying with existing Colorado FAMLI requirements, including quarterly reporting and posting the required program notice in a prominent location in the workplace. A new required notice is expected to be posted prior to 2024.
Note for Sequoia One Clients: Sequoia One will continue to complete quarterly reporting for Colorado employers. Sequoia One does not offer clients the option to use private plans in lieu of state paid leave programs.
Illinois Paid Leave Begins
In 2023, Illinois passed the Paid Leave for All Workers Act, which requires employers (other than those subject to paid leave ordinances in Chicago and Cook county) to provide employees working in Illinois 1 hour of paid leave for every 40 hours worked, effective January 1, 2024. Employees can use accrued paid leave for any reason.
For more information, review our blog on Illinois Paid Leave here.
Employer Action: Employers should develop a plan to retain records that document hours worked, paid leave accrued and taken, and paid leave balances for each employee and document a policy around how employees will accrue and request leave. Employers should also plan to post the required notice at worksites and incorporate it into written materials or any employee handbook after the notice is released by the Department.
Vermont Voluntary Paid Leave Program Opens to Private Employers
Vermont currently offers paid leave benefits through The Hartford to state employees as part of the Vermont Family and Medical Leave Insurance (FMLI) Program. Beginning July 1, 2024, private and non-state public employers with two or more Vermont employees can begin voluntarily offering benefits under the program. The benefits, offered as either a fully-insured plan or a self-insured plan administered by The Hartford, provides employees with a combined six weeks of paid family and medical leave benefits in a 12-month period. Costs vary based on the plan selected. More information on the available plans is expected to be released in the coming months.
Employer Action: Employers interested in offering a VT Voluntary FMLI Plan beginning July 1, 2024 can reach out to Sequoia for more information.
Note for Sequoia One Clients: Sequoia One does not offer clients the option to participate in voluntary paid leave programs.
Delaware Paid Leave Private Plan Opt-In/Opt-Out Portal Opens
Though contributions under Delaware’s Paid Leave Program do not begin until January 1, 2025, the Delaware Department of Labor will establish a portal to allow employers that wish to adopt a private plan to meet the Paid Leave program’s requirements, to opt in to doing so. A private plan can be purchased through a carrier, or self-insured benefits may be provided if employers post a surety bond with the state . Private plans must be approved by the Division of Paid Leave annually. The portal will also allow businesses with less than 10 total employees that would not otherwise be subject to the Program’s requirements to “opt-in” to voluntarily remit employer contributions to allow employees (that would not otherwise be eligible) to receive benefits under the program. The portal will be open from September 1, 2024, through December 1, 2024. More information on the portal and private plan requirements are expected to be released over time. Employers may review the Delaware Paid Leave website for more information.
Employer Action: Employers looking to use a private plan to meet the requirements of Delaware’s Paid Leave program should prepare to submit plan documents evidencing the benefits offered effective for January 1, 2025, when the portal opens in September 2024.
Note for Sequoia One Clients: Sequoia One does not offer clients the option to use private plans in lieu of state paid leave programs.
Maryland Paid Family and Medical Leave Contributions Begin
Required contributions to the Maryland Paid Family and Medical Leave Program begin October 1, 2024. The program applies to all employers with at least one Maryland employee. The employee contribution rate for 2024 is 0.45% of wages. Employers with 15 or more employees must contribute an additional 0.45% of wages. Contributions are limited by the Social Security wage cap. Employers may also choose to provide an approved private plan that meets or exceeds the benefits required under the program as an alternative to contributions. More information about the private plan application process is expected to be released in 2024.
Beginning in October 2024, employers are required to provide written notice of PFML benefits at the time of hire, annually, and within 5 days after an employee’s leave request. The Maryland Department of Labor is expected to develop a notice to be used for this purpose.
Employer Action: Employers should consider whether to offer a private plan and be prepared to distribute the required notices and remit contributions as of the effective date.
Note for Sequoia One Clients: Sequoia One will collect and remit employee and employer contributions to comply with Maryland Paid Family and Medical Leave requirements. Sequoia One does not offer clients the option to use private plans in lieu of state paid leave programs.
