The lastfew years have seen a boom in state legislation that is designed toprotect employees, and much of the legislation focuses on leaves ofabsence and continuation of coverage. (Photo:Shutterstock)

The Family and Medical Leave Act (FMLA) took effect on August 5,1993 requiring covered employers to provide job-protected leave tocovered employees for their own medical reasons or to care forfamily. FMLA also requires a continuation of health plan coveragefor the maximum 12 weeks of leave; however, the Act does notrequire the leave to be paid. Due to the lack of a federal paidleave law, some states began enacting paid leave laws as early as 2004.

While few states were on the progressive side, the last fewyears have seen a boom in state legislation that is designed toprotect employees, and much of the legislation focuses on leaves of absence, continuation of coverage,and, in some cases, the requirement for such leave to be paid. Twointeresting recent examples are California and New York.

Early leaders

California's leave laws have been in place for decades, but haveundergone various changes, including revisions in 1999, 2004, 2011,2012, and most recently, 2017. California Senate Bill No. 63implemented the New Parent Leave Act (NPLA) as of January 1, 2018.Affording protected leave to employees of employers with 20 or moreemployees, this marked a significant change from the state'sprevious requirement laws that applied only to employers with 50 ormore employees. Employers subject to California law must considerthe interaction of all state and federal leave laws, including theNPLA, FMLA, California Family Rights Act (bonding leave), andPregnancy Disability Leave (PDL).

Unlike California's law, which expanded an existing law, NewYork passed a brand new leave law, and it happens to be the mostgenerous paid leave law in the United States to date. EffectiveJanuary 1, 2018, New York's Paid Family Leave Benefits Law (PFLBL)is being phased in over four years with full implementation in2021. The law requires privately owned employers to provide paidleave to employees in three situations: (1) for a father or motherto bond with a new child (birth, adoption, or foster); (2) to carefor a close relative with a serious health condition; or (3) tocare for a close relative when another close relative has beencalled to active military service.

The length of leave in 2018 has been limited to eight weeks, butwill increase over time to become 12 weeks upon full implementationin 2021. Interestingly, in addition to creating the requirements,the law requires employee handbook modifications, conspicuousposting of specific information (similar to FMLA), the need tocoordinate with paid time off and FMLA, and of course the taxtreatment of the benefits.

Legal complexities

Readers that are paying attention will note that while paidleave laws have a direct impact on employers, there may also be animpact on health plans—including self-funded plans. At a highlevel, ERISA protects a health plan from being subject to stateinsurance laws—but laws such as paid leave and continuation ofcoverage laws have been found to not actually be insurance laws,but employment laws, and therefore ERISA can't shield anyone fromcompliance with such laws.

Following state and federal laws is crucial to the viability ofa health plan and the employer's business and compliance isgenerally not an easy feat. Laws that protect employees tend tohave intricate details and nuances; California and New York havehad a lot of attention because of the number of workers impacted,but a total of six states and the District of Columbia have nowpassed (or enacted) legislation to offer or expand leave laws.Those states include Washington, New Jersey, Rhode Island, andMassachusetts. The list of potential paid leave laws is growingrapidly as an additional 19 states have started making moves todevelop such laws. Although most federal and state laws do notcurrently require a continuation of coverage, we may soon see anupheaval in the status quo.

Employers can choose whether to provide the benefit of continuedcoverage if the applicable law does not otherwise provide such arequirement. If an employer chooses to be generous, the employer'sgenerosity must be spelled out in the employee handbook as well as the plandocument—this is particularly important for self-funded planswishing to avoid stop-loss denials. Ultimately, the interaction ofapplicable state laws, FMLA, and any other type ofemployer-sponsored leave of absence will need to be assessed oncase-by-case basis to determine the rights of an individualemployee in any particular circumstance.

Like car insurance rates changing at age 25, now that FMLA hasturned 25, is that the signal for change? The currentadministration has pushed paid family leave back to the forefrontof conversations in the last few months. President Trump hadpreviously referred to paid leave in the annual budget and renewedconversations with a mention in his most recent State of the Unionaddress.

Both sides of the political spectrum have introduced legislationon paid leave law. The sticking points will likely be how broad thelaw would be in application and how a paid leave law is funded.While FMLA currently applies to new parents who have a child oradopt and extends to care for family members with medicalconditions, current proposals for a paid leave law appear to bemore limiting in only applying to new parents (by birth oradoption). As for the source of funding, ideas include establishingleave programs based on unemployment insurance, an increase intaxes, and borrowing against future Social Security payments.

While a federal paid leave law is still in the works, manystates have seen proposals to adopt state paid leave laws.Employers need to do their homework on a regular basis to ensurethey are up to speed with the rapidly changing laws. Employers willnot only need to look at their employment policies, but also totheir health plan documents to ensure leaves and applicablecontinuation of health coverage are appropriately addressed.

Paid leave law tides are changing and states are turning theheat up, but federal law has yet to boil.

Kelly E. Dempsey is an attorney withThe PhiaGroup. She is the director of Independent Consultation andEvaluation (ICE) Services. She specializes in plan documentdrafting and review, as well as a myriad of compliance matters,notably including those related to the Affordable Care Act. Kellyis admitted to the Bar of the State of Ohio and the United StatesDistrict Court, Northern District of Ohio.

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