Jul 03, 2024

Understanding Changes in Leave Programs

More states are adding paid family and medical leave laws assure workers that some of their wages will continue even during a serious illness — either their own or a family member's. Read through for a review and a preview of proposed changes.

Most workers have access to unpaid, job-protected leave through the federal Family and Medical Leave Act. The FMLA, which became law in 1993, was intended to offer some stability for employees who needed to take time away from work to deal with a major medical issue. Previously, there had been no federal protection for workers. The FMLA guarantees up to 12 weeks of leave, but the time is unpaid.

Companies with fewer than 50 employees are exempt from the FMLA. Many states have thus decided to require employers to provide employees with some income while they are out on leave. Most of this funding is paid through taxes collected from the employee, the employer or both; it is typically remitted to the state by the employer.

Most current paid leave is restricted to extended time off for an employee to bond with a new child or recover from a serious illness.

Trends to watch

As their workforces are increasingly mobile and diverse, employers are expanding existing programs and exploring alternative models. Among paid leave trends to watch is paid leave for any reason. In the future, paid leave might extend to organ donation, family bereavement, and miscarriage and other pregnancy loss. In Illinois, Maine and Nevada, private employers must offer five days paid time off for any reason. California increased its offer from three days to five.

It's not surprising then that the majority of U.S. employers — 84% — plan to add to their paid leave programs within the next two years. A WTW survey ("Leave, Disability and Time-off Trends") says that employers are investing in their leave programs as a way to attract and retain workers, recognizing the importance of flexible leave programs that accommodate employees' evolving work styles.

Among changes that WTW sees coming:

• Firms will enhance parental, bereavement and caregiver leave. Paid caregiver leave stands to experience some of the most substantial increases.
• More firms are planning to adopt unlimited paid-time-off programs, which are currently more prevalent among directors and executives. Unlimited PTO can be used for emergencies, illnesses, sudden necessities and planned vacations.
• More states will join the 13 states and the District of Columbia in having laws for family and medical leave programs for eligible workers.

One consideration is that it is often hard for large employers operating in multiple states to create compliant PTO programs because differences in state laws make compliance and administration particularly challenging.

Be sure to reach out to your accountant or payroll service provider to see how they can help make sure you're getting paid leave deductions right. Constant administration, monitoring, assessment, coordination, communication and proactive action are essential.

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