Interaction of Paid FML Benefits and Existing Unpaid Leave Laws

DMEC Staff@Work

The Interaction of Paid FML Benefits and Existing Unpaid Leave Laws

By Patricia Lauren D. Zuñiga, JD, LLM

Compliance Consultant
Lincoln Financial Group

New state paid leave programs may have multiple compliance mandates. A job-protection component has been present in all state laws, including unpaid leave laws that generally require certain private-sector employers to provide job-protected unpaid leave to employees. New wage replacement laws may mandate partial wage replacement benefits through either a state plan or a voluntary/private plan.

More often than not, the design of unpaid and paid leave programs have multiple points of divergence. As a result, coordinating unpaid and paid leave programs presents a complex challenge for employers and their leave vendors.

To help in understanding how to comply with these laws, this article will review the new paid family and medical leave programs, and examine how they interact with existing unpaid family and parental leave laws.

State-Mandated Unpaid and Paid Leave Laws

As more states pass and implement paid family and medical leave (PFML) laws, these new programs often mandate that benefits must be taken concurrently with the state unpaid leave law, where applicable.

States have taken differing approaches to providing wage replacement benefits along with leave. Trend-setting PFML laws have been passed recently in Washington state, Massachusetts, Connecticut, Oregon, and the District of Columbia.

These jurisdictions present a new set of challenges for employers and third-party administrators because their laws are not built on an existing statutory disability or paid family leave program. These jurisdictions are building totally new program infrastructure, sometimes without the benefit of staff expertise or partnerships with industry associations. The new state paid leave programs will also have to coordinate with existing unpaid leave laws to varying degrees.

Washington sunsetted its unpaid family leave law,1 giving employees a fresh bank of leave entitlement under the PFML program when they applied for the new benefits beginning Jan. 1, 2020.

Connecticut’s new law will provide wage replacement benefits to eligible employees taking leave for reasons allowed under the state’s FMLA. The new law, as written, amended the existing unpaid FMLA law to align with the expanded coverage of the state’s PFML program. The amendments to the existing state FMLA law take effect on Jan. 1, 2022, when the state’s PFML program begins paying benefits to employees.

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