PFML: What It Is and What Can We Expect

This article originally appeared on the American Fidelity blog.

Nearly three decades back, in 1993, the Family and Medical Leave Act (FMLA) was passed. FMLA requires certain organizations to offer workers up to 12 weeks of unpaid leave to care for a new baby or sick family member. Today, states across the US are enacting state paid-leave laws, and laws that provide for paid family medical leave (PFML). The potential for a federal leave program is on the horizon.

Understand the Difference Between FMLA and PFML

FMLA is a federal labor law, where when we refer to PFML laws we mean state or local laws that provide for paid leave situations similar to leave required under FMLA. The most significant difference in FMLA and PFML comes from the “P.” Where FMLA provides job protection without pay to an employee who meets leave requirements, PFML provides paid leave or salary replacement.

Both programs may include benefits that allow employees to take paid time off to care for themselves or a family member, for bonding with a new child, to recover from an illness or injury, or to care for a family member with a serious medical condition.

Explore the difference between the Family and Medical Leave Act (FMLA), Paid Family and Medical Leave (PFML), and disability insurance

Current PFML Landscape

As of March 2018, approximately 17% of workers have access to private paid family leave benefits.¹ This percentage is growing as more employers ask for family leave coverage for their employees and states adopt PFML programs.

Because PFML has only been enacted on the state level to date, there is not yet a uniform definition of eligibility, duration, benefit triggers, or definition of “family member”. Further, there is no set method of how the program is funded, but largely, contributions are made from both employers and employees. Benefits are also capped at certain salary levels, providing higher wage replacements to low wage earners (in some cases over 100 percent) and lower wage replacements to middle or high wage earners (as low as 40 percent).

Mandates Vary State to State

As of February 2021, nine states plus the District of Columbia have passed PFML legislation. States included are CA, CO, CT, DC, MA, NJ, NY, OR, RI, and WA.

Even within the states who have adopted legislation, the benefits vary widely.

- - - - Medical leave ranges from 2 – 30 weeks in a one-year period
      - Family Leave ranges from 6 – 12 weeks in a one-year period.
      - Wage replacement percentage varies from 40% up to more than 100% based upon average weekly wage and maximums can range from $170 per week up to $1,356 per week or even a ratio of earnings compared to minimum wage and state average weekly earnings.
      - Plan eligibility and definition of family members differ in every state where enacted.

Does PFML work with other benefits?

Integration or coordination of PFML and other benefits, like disability insurance, is the process in which disability insurance benefits are paid to employees who are also receiving paid wages from PFML or other leave. With this process, an employee could potentially receive up to 100 percent of wages from PFML or other leave for the period of time they are receiving disability benefits. Integration or coordination can vary depending on the specific PFML statute and the terms of the insurance contract or other benefit plan.

This can result in duplication of coverage and possibly overspending for consumers. These rules can be complex and result in challenges understanding when to file claims for different benefits and how each benefit works.

What can employers expect from future legislation?

PFML is a popular topic of discussion, but there’s still a looming challenge on how to fund it, and whether it should be a uniform federal program, or state program. A “one size fits all” approach to entities that have complex benefit plans may not be the answer. With many unanswered questions, knowing the landscape of benefits in your state is key to protecting yourself and your employees.

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