PFML May Be Coming to Your State: What Employers Need to Know

Current federal proposals for a universal paid family and medical leave (PFML) program may, if enacted, present a unique set of regulatory challenges and added administrative responsibilities to already-stretched human resources (HR) and benefits staffs across the country. Both private and public employer organizations may be required to implement a PFML program for their employees at a time of seismic changes occurring in the workplace and limited resources for many employers across the nation.

Lawmakers continue efforts to pass comprehensive federal paid family and medical leave. The U.S. House of Representatives recently passed the Build Back Better Act (BBBA), which includes a four-week PFML provision. While the BBBA must still pass the Senate (where it faces an uncertain future) before it can be signed by the President, now is the time to sharpen your understanding of potential impacts on your organization.

If you’re just digging in to PFML, you may find this article helpful: PFML: What Is It and What Can We Expect?

Leave mechanics vary greatly, from the most recent federal paid leave proposal in the BBBA to the unique programs in place in the ten states and D.C. . However, there are common themes to consider.

How would a PFML program affect HR management?
How would a PFML program impact your current benefits program?
How could new federal and/or state PFML laws affect private and public employers, labor unions, and associations?

PFML and HR Management

PFML provides benefits that allow employees to take paid time off to care for a family member’s serious health condition, bonding with a new child, or recovery from personal illness or injury. Depending on the program, leave may also be available for military caregivers, victims of domestic violence, and bereavement.

Think about your employee population. How many parents do you have on your staff? Similarly, how many care for family members with medical conditions? What’s the makeup of employees who may be planning for pregnancy, childbirth, or adoption?

If employees are guaranteed four weeks of PFML under the BBBA, how will you manage potential increases in the number of employees out on leave? Will you be able to maintain an adequate workforce to backfill the positions of employees out on PFML?

According to a 2019 Mercer survey, nearly 64% of respondents say they have had to add resources to deal with new leave mandates.² What are the administrative requirements to implement and maintain a new federal or state mandated PFML program? Do you have the administrative staff to handle the additional responsibility?

Impact on Current Benefits Program

Integration of a PFML program with your current benefits may look very different depending on the specific federal or state PFML plan at issue, existing insurance coverages, available sick leave plans, and other employee benefit features. PFML benefits may be provided in a number of ways: directly from the applicable government program, through a self-funded employer plan where allowed by law, or by private carrier provided leave or temporary disability benefits. To plan well, you will need to consider potentially complex coordination requirements.

How will PFML programs integrate with your organization’s sick leave, sick leave banks, sick or catastrophic leave donations, etc.?
What impact will PFML have on your voluntary supplemental insurance plans?
Will it be necessary to offer supplemental benefits to fill potential holes in PFML coverage (waiting periods, long-term disability, etc.)?

Organizations should also begin thinking about how a federal or state paid leave program could impact recruitment and retention. One of the primary reasons employers offer robust benefits packages including short-term and long-term disability plans is to recruit and retain employees.³ Behind salary, this type of benefit is often a top deciding factor in the job selection process.

Will PFML plans diminish the value of employer-provided benefit plans as a differentiator?
What are ways you can continue to attract employees and stand out?

How does a federal or state paid leave law affect public sector employers, labor unions, and associations?

Paid leave, short-term disability plans, and long-term disability plans are traditionally negotiated between public sector employers and employee representatives. The shared goal of this bargaining process gives state and local government organizations the opportunity to mutually develop benefit plans that result in the best outcomes for public sector employees.

How would a federal or state paid leave program affect the ability for public sector employers to negotiate their employee benefit plans?
How would a federal or state paid leave program impact the ability for labor unions, employee insurance committees or association representatives to negotiate public employee benefit packages?
Could federal or state paid leave requirements impact the overall public sector employer benefit selection process and the need to collaborate on selection outcome?

American Fidelity will continue to monitor and communicate regulatory changes to help employers succeed in benefits management. Subscribe for updates at americanfidelity.com/pfml.

This blog is up to date as of November 2021 and has not been updated for changes in the law, administration or current events.