Author: Angel Chang

Unlimited PTO: The benefits and challenges of launching an unlimited PTO program

Posted on by Angel Chang

Although it is generally not required, most employers offer their employees some form of vacation or Paid Time Off (PTO). This is typically a form of wages for services performed based on tenure or hours worked. However, a recent trend has seen some employers offering a different type of time off that is not accrued and not considered wages in most circumstances. Instead, it allows employees to take as much time off as needed – unlimited PTO, flexible time off, discretionary time off, unlimited vacation, or a variety of other names to align with a specific company’s culture.

Young family on vacation have a lot of fun

Unlimited PTO is a flexible time off policy that does not utilize accruals or balances but allows employees to take as much time off as they need for personal, vacation, or any other reason. It aims to promote work-life balance while also reducing the administrative burden of tracking accrued PTO or vacation policies.

More and more companies are shifting from traditional vacation or PTO plans to unlimited PTO in an effort to offer more flexible time off benefits to their employees. The 2025 Marsh McLennan Agency Leave of Absence and Time Away Survey indicates that nearly 34% of employers now provide some form of unlimited PTO, an increase of 7% from the prior survey results. While this type of policy appeals to employees who want to find more work-life balance, transitioning from traditional PTO or vacation to unlimited PTO involves several compliance considerations for employers.

Business women image of hands close and open a laptop computer on table after finished using it

Benefits of unlimited PTO for the employee

Unlimited PTO offers significant flexibility for employees, allowing them to take time off as needed without the constraints of accrued vacation or PTO hours. This flexibility supports a healthier work-life balance and empowers employees to manage their time according to personal and professional needs. Employers often observe that employees feel trusted to complete their work to align with deadlines and manage their work-life balance via appropriate use of their time off. As a result, employees tend to be more engaged and productive. This increased satisfaction can lead to a more positive workplace culture.

There can be challenges for employees who struggle with the flexibility and utilize less time off than they would under a traditional PTO or vacation plan. Still, employers can take steps to help employees feel comfortable with unlimited PTO. This typically involves setting a minimum usage requirement, encouraging employees not taking time off to do so, and ensuring that leadership and managers set an example by utilizing their own time off.

 

Benefits of unlimited PTO for the employer

From the employer’s perspective, implementing unlimited PTO can substantially save administrative time and resources. Employers can focus on more strategic initiatives by eliminating the need to track accruals, usage, and balances rather than managing complex PTO and vacation systems and processes. In addition, reducing liabilities associated with accrued PTO and vacation balances can result in significant cost savings. In particular, when employees separate from the company because there is no payout with an unlimited PTO program, which many states require for unused accrued PTO/vacation.

Portrait of a human resource manager a t a job interview

Compliance considerations

After an employer decides to offer unlimited PTO, they will have a few compliance considerations when it comes to transitioning from a more traditional PTO or vacation plan: developing a policy that outlines the parameters of their new program and creating a robust change-management plan to communicate the new program to all impacted employees effectively.

 

Developing a policy that outlines the parameters of their new program

From a compliance perspective, two of the most critical aspects of the transition to unlimited PTO are managing each employee’s existing PTO or vacation balance and complying with any applicable state or local accrued sick leave requirements. A few states treat accrued but unused PTO and vacation as wages, meaning that employers are prohibited from utilizing any process or policy in which an employee is forced to forfeit their earned but unused PTO or vacation. The employer cannot simply zero out or eliminate those existing balances in those locations. Although this might be technically compliant where forfeiture of PTO and vacation is allowed, it would almost certainly be poorly received by employees and potentially harm the employer-employee relationship. Therefore, treating all employees’ PTO and vacation balances the same, regardless of employee work location, is recommended.

Employers have a few options, each with their pros and cons that must be weighed as part of the decision:

  1. Payout existing PTO balances: The employer could payout all existing PTO balances as of the effective date of the unlimited PTO program. This brings a significant one-time expense for the employer but also has its positives. It is easy to understand for employees, removes any administration of prior PTO/balances, and eliminates any ongoing liability.
  2. Freeze and maintain existing PTO balances: The employer could freeze and maintain existing PTO balances as of the effective date of the unlimited PTO program. In some cases, the employer may allow the use of the frozen PTO and vacation balances with very limited use, such as when unlimited PTO is unavailable or only as required at termination. This method avoids the immediate payout costs but requires the employer to carry the liability forward, potentially indefinitely. It also requires employees to maintain balances and usage in their tracking system(s). Plus, some of the PTO hours will be paid out at a higher rate to any employees who receive a salary or wage increase before the PTO is paid out.
  3. Incorporate a transition period for utilization: The employer could define a transition period that allows or requires employees to utilize existing PTO and vacation before accessing unlimited PTO. This is typically done in one of two ways:
    1. First, create a defined term for the transition, in which all absences will draw from the existing PTO and vacation balances until they are depleted, then pay out any remainder upon the official transition. This requires unlimited PTO to be launched at some date in the future, allowing more PTO and vacation to be used. However, it does require administration during that time and ongoing for any employee who slowly draws down their PTO and vacation balance due to low utilization.
    2. Second, the use of PTO and vacation is required on an ongoing basis, even after the launch of unlimited PTO, with all existing PTO and vacation used before unlimited PTO or existing PTO and vacation being used at the start of any absence. For example, each absence’s first three days (or 24 hours) are considered PTO and vacation, and the remainder is unlimited PTO. This method reduces or eliminates many positives of unlimited PTO because it requires continued administration, avoids a one-time cost, and reduces liabilities over time.

Employers will want to balance their intended goals of launching unlimited PTO with the negative aspects of each approach to determine which method makes the most sense.

Employers should also double (or triple!) check any accrued state and local sick leave requirements that may be impacted by the transition to unlimited PTO. Many employers utilize their PTO policy to comply with state and local sick leave requirements. Utilizing unlimited PTO for compliance may add another complexity regarding specific requirements. For example, when state and local sick leave regulations require that sick leave accruals, usage, and balances are displayed on each employee’s paystub, employers need to understand how to meet that requirement with unlimited PTO. Employers must research and check with their compliance or legal team to understand any potential challenges or conflicts between state/local sick leave requirements and unlimited PTO.

 

Creating a robust change-management plan to communicate effectively

After considering the compliance challenges, employers should shift their focus to documentation and communication. Drafting an unlimited PTO policy can be challenging. Employers should establish:

  • Clear requirements around which employees are eligible
  • When unlimited PTO can be used, including whether sick leave reasons are covered, excluded, and covered under a separate policy
  • How unlimited PTO will interact with other benefits, such as short-term disability or statutory paid leaves, such as paid family and medical leave
  • Plus a variety of other details, such as the notice and approval process, any minimums or restrictions on use, and more.

After the policy is drafted and a transition date set, employers should work backward from that date to communicate the changes to impacted employees. Those communications should focus on the employees’ perspective and attempt to answer any potential questions employees may have. This will likely include providing employees with a clear timeline, a summary of the new policy, who is impacted, details about what happens to existing PTO and vacation, and who employees can contact with questions.

Employer checklist: Transitioning to unlimited PTO

  • Analyze the company’s employee population to assess whether unlimited PTO aligns with company goals and culture for all or a subset of employees.
  • Draft an unlimited PTO policy.
    • Leverage your broker and consultant partners, like Marsh McLennan Agency Absence, Disability, & Life Practice, who provide transition support and resources to help draft your policy.
  • Assess potential impacts, including:
    • Employees’ existing PTO and vacation balances
    • How unlimited PTO will interact or coordinate with accrued paid sick leave, leave of absence, paid statutory benefits, short-term disability, and any other existing programs related to time away from work
    • Watch for potential compliance requirements and impacts
  • Engage with Legal to review the policy and assess potential impacts that might cause compliance risks or challenges.
  • Develop a transition timeline and plan.
    • Work backward from the proposed effective date of the new Unlimited PTO policy to establish key dates and deliverables.
  • Engage with all impacted groups to understand potential impacts from all perspectives, including payroll, timekeeping, human resources information system (HRIS), human resources, supervisors/managers, benefits, leave of absence administration (i.e., internal team or third-party administration), and any other groups that may be impacted.
    • Identify any training opportunities or resources needed from each group.
  • Develop a robust employee communication plan.
    • Explain why the transition is happening, which will help employees understand and accept the new program. Highlight that unlimited PTO is based on trust and allows employees to balance completing their work and taking time off.
    • Provide details and examples of what will happen to an employee’s existing PTO balance during the transition to unlimited PTO.
    • Emphasize that while the plan may be called ‘unlimited PTO,’ there is still a requirement for supervisor or manager approval.
    • Provide information about where and how to enter PTO requests to emphasize that time must still be entered and tracked.
  • Create supervisor and manager training materials and resources.
    • Consider developing a standard operating procedure (SOP) or guide to assist supervisors and managers with the unlimited PTO process. This should include the approval and denial criteria, focusing on business needs and employee productivity, and to avoid the Supervisor/Manager tracking individual employee usage that might be used as a factor in approval/denial decisions.

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Transitioning to an unlimited Paid Time Off (PTO) program can provide greater flexibility and enhance employee satisfaction. However, it is essential to plan carefully and communicate clearly to ensure compliance and effectiveness. If you would like assistance with the transition process, reviewing and editing policies, or launching a new unlimited PTO program, please contact Marsh McLennan Agency.

March 2025 Statutory Update

Posted on by Angel Chang

Click HERE to view and download the full Update

In this Update:

Federal Guidance

DOL: Use of Paid Time Off During FMLA and Paid Family and Medical Leave
IRS: Federal Tax Treatment of Statutory Paid Family and Medical Leave Contributions and Benefits

 

Family and Medical Leave Updates

California Family Rights Act (CFRA) and Pregnancy Disability Leave (CA PDL) – Updated Notices
Delaware Paid Leave (DE PL) – Updated Regulations
Maine Paid Family and Medical Leave (ME PFML)

Employer Registration Required
Private Plan Application
Updated Resources

Maryland Family and Medical Leave Insurance (MD FAMLI) – Potential Program Delay
Minnesota Paid Leave (MN PL)

Contribution Rate Change
Status Updates

Paid Leave Oregon (PLO) – Updated Regulations

 

Accrued Paid Leave Updates

Alaska Earned Paid Sick Time – Resources
Massachusetts Earned Sick Time – Updated Model Notice
Michigan Earned Sick Time Act (MI ESTA) – Last Minute Amendments
Missouri Earned Paid Sick Time – Reminder, Resources

The consequences of failing to accommodate your employees

Posted on by Angel Chang

In the world of workplace accommodations, an employer must track many laws and regulations to ensure that they are compliant and provide employees with applicable protections, rights, and benefits. The primary law that drives these requirements for employers is the Americans with Disabilities Act Amendments Act (ADAAA, or ADA for short).

Women working in office one girl in wheelchair with computer

The ADA requires a covered employer to provide a reasonable accommodation to a qualified individual with a disability, meaning they must make adjustments to the job or work environment to allow the employee to perform their essential functions effectively unless doing so would cause undue hardship for the employer.

Employers must also be aware of the much more recent Pregnant Workers Fairness Act (PWFA), which has some of the same foundations as the ADA. The PWFA’s central requirement is that “covered employers must provide reasonable accommodations to qualified employees, which is anyone with known limitations related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions unless the accommodation will cause the employer an undue hardship.” But, beware of the details – there is some significant variation between the ADA and PWFA, as outlined in a recent Connecting with Compliance post: “Comparing Accommodation Rights: PWFA and ADA.”

What steps can an employer take to ensure compliance?

The first step, which is consistently repeated in blog posts and webinars, is to ensure that all people managers can recognize and respond appropriately when an employee requests accommodation. Of course, there are other points in the accommodations process where an employer has the potential to drop the ball, so every employer should ensure they have a robust accommodations policy and process in place. Failure to recognize these requests and/or failure to follow (and document) a consistent process for providing reasonable accommodations can result in complaints, charges, and lawsuits.

 

The impact of not being compliant

The U.S. Equal Employment Opportunity Commission (EEOC) shared in October 2024 that it filed 110 lawsuits for the year ending September 30, 2024, focused on ensuring that workplaces are fair, safe, and inclusive. The EEOC views litigation (i.e., filing lawsuits against employers) as a strategic tool that can push more employers toward compliance with these requirements.

Of those 110 cases, 48 involved potential violations of the Americans with Disabilities Act (ADA), and another five were related to the Pregnant Workers Fairness Act (PWFA). It appears that the PWFA will remain a focus for the EEOC, so employers must focus on the nuanced requirements when it comes to requests for accommodation from pregnant employees. Employers must also be aware of the broad definition of “pregnancy-related” under the PWFA, as evidenced here when an employer failed to accommodate an employee who requested to recover and grieve following a stillbirth.

With nearly half of those 110 cases focused on ADA violations, employers must also remain diligent regarding all accommodation requests. Failure at any point in the process can lead to charges or litigation. Even when the request is properly recognized, and all sides agree on an accommodation, the employer must ensure that it is implemented and effective.

Employers must establish and adhere to a clear accommodations process to effectively mitigate the risk of EEOC charges related to the ADA and PWFA. By doing so, they not only reduce the likelihood of potential EEOC charges and/or litigation from employees but also foster a more inclusive work environment. This proactive approach demonstrates a commitment to supporting all employees, which is essential for maintaining a positive workplace culture.

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Understanding and implementing effective accommodation strategies is crucial for ensuring compliance and fostering an inclusive workplace. If you need assistance navigating your accommodation requirements, developing a comprehensive ADA policy, or reviewing your current processes, Marsh McLennan Agency is here to support you in creating an environment that values every employee’s needs and promotes a culture of accessibility within your organization.

Creating a Supportive Paid Emergency Leave Policy: A Guide for Employers

Posted on by Angel Chang

With the recent wildfires and other natural disasters, employers are looking for opportunities to support their impacted employees, including creating a paid emergency leave policy. This type of policy supports employees during critical times and ensures business continuity.

Businesswoman and female lawyer consult having team meeting with client, Law and Legal

Here’s a step-by-step guide to help draft an effective Paid Emergency Leave (PEL) policy.

  1. Identify qualifying events
    Clearly outline the types of emergencies covered by the PEL policy. This could include natural disasters like wildfires, floods, earthquakes, and public health emergencies, such as pandemics. Defining these events and the specific criteria that trigger the availability of PEL helps employees know how and when they can utilize the leave.
  2. Define eligibility criteria
    Clear eligibility criteria helps avoid confusion and ensure that all employees understand their options. Start by specifying which employees are eligible for PEL. This policy should apply to all employees impacted by qualifying events based on their work location or home address but should clearly indicate which employee groups are included or excluded from coverage. This may include full-time or part-time employees or other categorizations. Note that some groups may already have leave of absence (LOA) options to cover these absences, such as those employees covered under a Collective Bargaining Agreement (CBA).
  3. Establish employee notification requirements
    Detail how and when employees should provide notice about their need for PEL. This could be as simple as indicating that notice is required as soon as practicable. Note that exception language should be included, as there may be circumstances when employees are unable to provide advance notice.
  4. Outline documentation requirements
    Specify any documentation that might be required to support the leave request. This might include official evacuation orders, medical certificates, or other relevant documents. Clear documentation requirements help streamline the leave approval process. Again, an exception process is recommended here, allowing employees to provide documentation after the PEL has started or allowing flexibility on the timing of submission. Employers may also consider granting or approving PEL without requiring documentation if the employee is in a covered group.
  5. Determine the duration of PEL
    Specify the maximum duration of the PEL. For instance, the policy might provide a specified number of days or weeks of PEL per year or per emergency/public health emergency (PHE). This ensures that employees have adequate time to address emergencies without worrying about their income or job security. Employers may also consider allowing additional unpaid LOA if an employee exhausts PEL but is unable to return to work.
  6. Ensure job protection
    Some state and/or local regulations may provide LOA with job protection, assuming the leave reason is covered under those state/local LOA. They would likely run concurrently with the employer’s PEL. In situations where no statutory leave is available, job protection is not required. However, it is recommended that job protection is provided during PEL. This means that employees should be able to return to their same or equivalent position after their PEL ends. Job protection is crucial for employee peace of mind in these situations.
  7. Coordination with other leave policies
    Describe how PEL interacts with other leave policies, such as sick leave, PTO/vacation, or any statutory leave. Employees may not need to use sick leave or PTO/vacation if PEL is fully paid. PEL may run concurrently with statutory leave, depending on whether the leave reason is covered under the statutory LOA. In that scenario, the PEL policy should state that PEL is offset (reduced) by the amount of statutory benefit the employee is eligible to receive.
  8. Provide return-to-work guidelines
    Create specific guidelines for employees returning to work after their PEL. This could include any required documentation or notice requirements to help facilitate a smooth transition back to the workplace.

 

After drafting the PEL policy, an employer must ensure that the policy is communicated clearly to all employees, especially those potentially impacted. Using multiple channels (e.g., email, employee handbook, text, or phone notification) is recommended to ensure all employees understand their rights and responsibilities under the policy. By including the above details in the policy and clearly communicating the policy to employees, employers are taking a critical step toward supporting employees during these challenging situations. A clear and robust PEL policy is just one of the ways employers can support impacted employees. Still, it is a critical aspect of helping employees focus on their personal challenges while knowing that their job is secure.

Two professional executives discussing financial accounting papers in office.

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Effective leave strategies are essential for promoting compliance and fostering an inclusive workplace, especially during challenging times. If you need support, Marsh McLennan Agency is here to help you strengthen your emergency leave programs and create a compassionate PEL policy that supports your employees and nurtures a culture of care within your organization.

Embracing DEIB in leave of absence policies: A path to inclusive workplaces

Posted on by Angel Chang

In a recent DMEC webinar titled “The Intersection of LOA and DEIB – How DEIB Initiatives are Influencing the Leave Landscape,” we discussed how Diversity, Equity, Inclusion, and Belonging (DEIB) initiatives are impacting Leave of Absence (LOA) options at the statutory and employer levels. More importantly, we explored how and why incorporating DEIB principles into leave policies can effectively reflect these values and meet employees’ diverse needs. In this blog, we will highlight some of the key points from that session.

Multiracial smiling three colleagues talking and working with laptop in office

DEIB and the Regulatory Landscape

DEIB initiatives seem to be driving significant expansion of statutory LOA requirements. Regulatory changes continue to expand benefits and employer obligations. As these programs expand or are created, we see shifts in employee eligibility, covered leave reasons, or enhancements to benefits for those who need specific types of leave. These changes are making programs more inclusive and available to a diverse workforce.

Recent examples:

  • Accrued Paid Sick Leave: Connecticut is expanding the existing sick leave requirements to cover more Connecticut employees. Also, in the November election, Alaska, Missouri, and Nebraska voted to implement new paid sick leave requirements.
  • Special Use Leaves:
    • Beginning January 1, 2025, New York employers will be required to provide paid sick leave specifically for prenatal care, in addition to the existing sick leave requirements.
    • The federal Pregnant Workers Fairness Act (PWFA) expands how and when employers must offer accommodations related to pregnancy. This is not a simple expansion of the ADA but also creates an obligation for employers to provide unpaid leave in certain circumstances.
  • Bereavement: A few states are creating bereavement-specific LOA requirements, but others are adding bereavement as a covered leave reason under existing Paid Family and Medical Leave (PFML) or accrued paid sick leave laws.

DEIB and Employer LOA Policies

Many employers are going beyond statutory requirements to create DEIB-influenced LOA policies. These companies offer comprehensive leave options that address the diverse needs of their employees. For example, a Marsh McLennan Agency Absence Disability and Life client, who co-presented at the DMEC webinar, has focused on expanding their LOA offerings to support a wide range of employee needs better, offering flexible parental leave for all genders, family caregiver support, and a variety of other non-LOA types of support for employees facing catastrophic diagnoses or challenges with aging. These policies support employees and demonstrate a commitment to equity and belonging.

Pregnant business woman doing video call at office

Strategies and Next Steps

Implementing DEIB-driven LOA policies requires thoughtful planning and execution. Before launching new or expanded LOA programs, employers should ensure that these policies align with organizational goals and take steps to ensure success. This may include:

  • Identify areas of improvement: Assess existing LOA offerings and usage to help determine whether new or expanded LOA options will have the desired impact. Be sure to review statutory requirements that may impact any new programs.
  • Engage employees: Solicit employee feedback to understand their needs and preferences regarding LOA options.
  • Assess costs and impacts: Analyze potential costs of the new program, including how projected usage may impact productivity and staffing.
  • Develop and implement policies: Create policies that outline details for the new LOA program(s) and are essential for educating and training HR and Managers about the programs.
  • Promote awareness: Communicate the availability and benefits of inclusive leave policies to all employees and encourage them to use these new LOA programs when applicable.

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

With 25 years of specialized experience, we recognize that effective LOA strategies are vital for compliance and fostering an inclusive workplace culture. By partnering with us, you can enhance your LOA programs to meet the diverse needs of your workforce, ensuring equitable access to benefits. Reach out today, and let’s discuss how we can work together to reinforce your commitment to DEIB and transform your LOA initiatives into a strategic advantage.

December 2024 Statutory Update

Posted on by Angel Chang

Click HERE to view and download the full Update

In this Update:

Paid Family and Medical Leave Updates

Colorado Family and Medical Leave Insurance (CO FAMLI) – Updated Regulations

Maine Paid Family and Medical Leave (ME PFML)

Reminders

Updated Resources

Final Regulations

Minnesota Paid Leave (ME PL) – Updated Resources, Proposed Regulations

 

Accrued Paid Leave Updates

Cook County, IL Paid Leave – Updated Regulations

Voters in Three States Approve Accrued Paid Leave for 2025

May 1: Missouri Earned Paid Sick Time

July 1: Alaska Paid Sick Leave

October 1: Nebraska Healthy Families and Workplaces Act

 

Other News

New York Paid Personal Prenatal Leave – Guidance

 

2025 Paid Family and Medical Leave (PFML) Rates, Benefits and Required Notices

From ballot to benefit: Understanding the new paid sick leave laws in three states

Posted on by Angel Chang

Three states included accrued paid sick leave proposals on the 2024 ballot: Alaska, Missouri, and Nebraska. Voters in each of those states approved these sick leave initiatives, meaning that employees who work in each of those states will be entitled to paid sick leave in the near future, barring any unforeseen challenges in the regulatory process. The below outlines the next steps for each of these sick leave initiatives and provides details on what that means for employers and employees in each location. And remember, these are subject to change.

Elderly patient looking out window

Alaska: Paid Sick Time

Voters in Alaska approved Ballot Measure No. 1, under which the Alaska Department of Labor and Workforce Development will draft and implement regulations to provide employers with details as they prepare for sick leave accruals, which begin July 1, 2025.

The proposal appears to cover all employers regardless of size but does differentiate between employers with 15 or more employees and those with fewer than 15 employees.

  • For those with 15 or more employees, employees shall accrue one hour of sick leave for every 30 hours worked, up to a maximum of 56 hours.
  • Those employers with fewer than 15 employees accrue at the same rate, but the maximum balance is 40 hours.

Other than a few exceptions, which appear similar to those of existing sick leave laws in different states and locations, all employees are entitled to sick leave. Similarly, the covered leave reasons appear similar to other sick leave regulations, allowing leave for the employee’s own illness, injury, or health condition to care for a family member and safe leave.

The regulations may provide more guidance, but the proposed law does not mention frontloading. The law does appear to require the carryover of unused hours. Still, it caps the overall balance, and this also caps annual usage at 56 hours (or 40 hours for employers with fewer than 15 employees).

 

Missouri: Earned Paid Sick Time

After this initial approval by Missouri voters, the Missouri Department of Labor and Industrial Relations will be responsible for drafting regulations. The proposal, titled Proposition A, lists a proposed effective date of May 1, 2025.

The proposed law broadly defines employers but excludes public employers. Similarly, a covered employee is broadly defined, with a few common exceptions included in other sick leave mandates. Those eligible employees will accrue one hour of sick leave for every 30 hours worked, and there is currently no cap or limit on accrual.

Covered leave reasons in Missouri appear similar to Alaska: employee’s own illness, injury, or health condition; to care for a family member; and safe leave. However, Missouri’s proposed law also includes the closure of an employee’s business due to a public health emergency, the closure of the employee’s child’s school or daycare for the same reason, and the need to quarantine.

The Missouri law also allows for frontloading of sick leave hours but does not include details about how frontloading will impact the obligation to allow carryover of up to 80 hours of accrued but unused sick leave. Despite the higher balances and carryover, employers can limit usage to 56 hours or 40 hours for employers with fewer than 15 employees.

 

Nebraska: Healthy Families and Workplaces Act

Nebraskans voted to pass Measure 436, which propels the Nebraska Department of Labor to draft regulations, which will likely require public hearings and other steps before finalization. Employers will need to monitor the status to prepare for sick leave accruals scheduled to begin on October 1, 2025.

All private Nebraska employers are covered under the proposed law, which also broadly defines employees as anyone who works 80 or more hours within the state per calendar year. All eligible employees will accrue one hour of sick leave for every 30 hours worked, up to the maximum of 56 hours or 40 hours for employees of a small business, defined as any business with fewer than 20 full-time, part-time, and temporary employees.

The proposed law covers leave for absences due to the employee’s own illness, injury, or health condition; to care for a family member; and the closure of an employee’s business due to a public health emergency, closure of the employee’s child’s school or daycare for the same reason, and the need to quarantine.

Like Missouri, Nebraska will allow employers to frontload sick leave hours but does not include details about how frontloading will impact the obligation to allow carryover of accrued but unused sick leave. There is no mention of a limit on carryover or a maximum balance, but employers can limit usage to align with the maximum annual accruals.

Portrait of two business colleagues, looking at something online

Next steps for employers?

  • Continue to monitor the Connecting with Compliance blog for updates on these proposed regulations, as well as all other sick leave law updates.
  • For employers with employees in Alaska, Missouri, and Nebraska, review existing sick leave policies to ensure compliance with these new law(s).
  • Train supervisors and/or managers to be familiar with these laws and update any training materials (or other process documents) to align with them.

Each of these initiatives represents a significant step toward employees having access to paid sick leave across the United States, with three more states being added to the 40+ locations that already require some form of paid sick leave. While voters have approved these initiatives, there will likely be many changes to each proposed law’s details in the next regulatory processes.

 

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Marsh McLennan Agency’s Absence, Disability, & Life Practice has developed an innovative paid sick leave tool designed to assess your workforce’s dynamics, providing you with valuable insights into its effects on your organization. We are committed to incorporating these three new states as soon as the proposed regulations are released. If you are interested in this analysis, please let us know, and your Marsh McLennan Agency partner will reach out to you.

Navigating Delaware’s Paid Family and Medical Leave: Key facts for employers

Posted on by Angel Chang

There are more than a dozen existing Paid Family and Medical Leave (PFML) laws, and another four are going live in the next couple of years. These laws are all broadly similar, but each has some variation that distinguishes it from the rest. Delaware Paid Leave (DE PL) seems to take that one step further, adding some interesting nuance employers need to track. In this blog, we will review some core elements of the program along with some unique aspects.

Delaware Legislative Hall in Dover,

As a reminder, DE PL will go live on January 1, 2026, and the latest set of proposed regulations was published in early October.

Covered Employers

Requirements: An employer is required to participate in DE PL based on the number of employees primarily working in Delaware.

  • Employers with fewer than 10 employees are exempt, along with federal government employees and any business that is entirely closed for 30 consecutive days or more per year.
  • Employers with 10 to 24 employees working primarily in Delaware must provide Parental Leave only.
  • Employers with 25 or more employees must provide full coverage, which includes Parental Leave, Medical Leave, Family Caregiver Leave, and Military Qualifying Exigency Leave.

Determining number of employees: To determine the number of employees, employers must count the number of employees who primarily work in Delaware and are expected to meet the “covered individual” definition defined in the Family and Medical Leave Act (FMLA). Certain employees working in Delaware may be able to opt-out if they are not expected to meet the eligibility criteria. They can do this via a defined Waiver process, which requires the signature of both employer and employee if both parties pay contributions.

DE PL Unique Aspect: Employers should also note that employees are counted per company based on each FEIN, not the total number of employees if an employer has multiple separate entities in Delaware. However, the Delaware DOL will utilize the FMLA’s definition of “integrated employer.” This means that multiple, separate FEINs may be treated as a single entity and thus count all employees together based on the following factors:

    • common management
    • interrelation between operations
    • centralized control of labor relations
    • degree of common ownership or financial control

When the number of employees changes: When the number of employees meets a threshold for additional coverage, notice to employees is required. The required leave type must be provided within 30 days and maintained for 12 months. For example, once an employer goes from nine to 10 employees, they must provide parental leave. The employee count must fall below the threshold for 12 consecutive months to eliminate coverage, which requires 30-day advance notice to employees.

When it’s voluntary coverage: Finally, employers should note that they can voluntarily provide coverage for any leave type they are not required to provide based on employee counts.

Eligible Employees

An employee is any individual who primarily reports to work at a worksite in Delaware, defined as working at least 60% of their work hours physically in Delaware each calendar quarter. In addition, an employee must meet the following criteria at the time of the application for leave of absence, similar to the eligibility criteria for FMLA:

  1. the employee must have been employed for at least 12 months by the employer with respect to whom leave is requested
  2. have worked at least 1,250 service hours with the employer during the previous 12-month period.

Contributions

Employers and employees may share the contributions for DE PL, which begin on January 1, 2025, one year ahead of the go-live date for benefits. The contribution rate for 2025 and 2026 will be 0.8% of employee wages, split as follows:

  • Parental Leave: 0.32% of wages
  • Medical Leave: 0.4% of wages
  • Family Caregiving Leave + Military Qualifying Exigency: 0.08% of wages

Employers may utilize payroll deductions from covered employees to share up to 50% of the costs with employees, or an employer can opt to pay a higher percentage of the contributions. These contributions are capped at the Social Security taxable limit, set at $176,100 for 2025, as covered in the October 2024 Statutory Update. Employers are only required to pay their share of contributions for the leave types they are required to provide based on the number of Delaware employees. Employers are prohibited from deducting more than 50% of employees’ wages, equal to 0.4% of the total 0.8% rate.

DE PL Unique Aspect: The 0.8% contribution rate applies only to wages earned while working in Delaware.

If any employer provides more than 50% of contributions or otherwise changes the contribution split in the future, notice of the change must be given by December 1 for an effective date of January 1 of the following year.

Benefit Amount

Benefits are calculated based on the employee’s wages 12 months before the application for leave of absence. Benefits are up to 80% of the employee’s average weekly wages, up to the maximum weekly benefit of $900, which is in effect for 2026 and 2027 and then subject to change annually.

DE PL Unique Aspect: benefit amounts are based on wages earned while working in Delaware.

Leave Entitlement

The maximum leave entitlement provided under DE PL is 12 weeks in a 12-month period, using any of the four leave year methods allowed for FMLA: calendar year, fixed year, forward-looking, or rolling backward.

The amount of leave available for each leave reason varies as follows:

  • Parental Leave: 12 weeks per 12-month period and must be taken within one year of a child’s birth, adoption, or placement.
  • Medical Leave, Family Caregiver Leave, or Military Qualifying Exigency Leave: 6 combined weeks per 24-month period.

Any combination of the above can be used, but an employee may not exceed 12 weeks in a 12-month period. Leave can be taken intermittently, with a minimum of one full workday increment.

couple with newborn Baby on bed.

Coordination of Benefits

Coordination with other programs: DE PL runs concurrently with FMLA and may run concurrently with any employer-provided leave of absence, disability benefit program (e.g., Short-Term Disability), and paid leave program.

Use of PTO: Any employer may require an employee to use up to 75% of their accrued but unused PTO before utilizing DE PL, and that required PTO will be counted toward the length of the DE PL leave. An employer and employee may agree to use PTO during DE PL as a top-up to the DE PL benefits, up to 100% of the employee’s average weekly wage.

DE PL Unique Aspect: an employer must have a written policy that outlines the coordination of DE PL and any employer-provided leave of absence, disability benefit program, and paid leave program. The employer must provide written notice to employees that STD, long-term disability (LTD), or any other paid leave program is secondary to PFML. This means the STD, LTD or paid benefit will be reduced or offset. Otherwise, it will be assumed primary (meaning PFML would be reduced/offset).

State Plan Claims Administration

There is a single option to file a claim for DE PL, the Delaware LaborFirst Portal. When an employee submits a claim via the portal, both the employee and employer will receive an automated notification.

DE PL Unique Aspect: After the required materials have been submitted through the portal, the employer will receive a notice about whether the leave is qualified and substantiated. That same notice will advise whether the claim should be approved, the amount of the weekly benefit, and the length of the leave.

The employer must then determine whether to approve or deny the DE PL request, the amount of compensation the employee will receive, and the approved duration of the DE PL leave. If approved by the employer, benefit payments will come from DE PL within 30 days and every two weeks until the end of the approved leave.

parents taking care of baby and looking at laptop together

Private Plan Options

Like most other PFML programs, employers may opt out of the state plan and comply with the DE PL requirements via a private plan. A private plan can be utilized for all required leave types or separately for one or more required leave types: Parental, Medical, Family Caregiver, and Military Qualifying Exigency. In contrast, any remaining leave types not covered by a private plan would be covered under the state plan.

Self or fully-insured private plans: The employer can self-funded private plans or be insured through an approved carrier. In either case, the cost to employees must not exceed the cost an employee would be charged under the state plan.

DE PL Unique Aspect: If the cost of an insured private plan is less than the state plan, the employee is only responsible for 50% of the lower cost rather than still being responsible for the higher contribution that would be charged under the state plan.

Employers may not deduct the costs of a private plan, either insured or self-funded, until the start date for PFML claims.

For self-funded private plans, an employer must have a minimum of 100 covered individuals unless the employer can demonstrate the administrative capacity to manage a self-funded plan adequately. This type of plan must be accompanied by a surety bond equal to one year of state program contributions.

Private plan deadlines: The window to apply for a private plan when benefits begin on January 1, 2026, ends soon. Applications must be completed on the Delaware LaborFirst Portal by December 1, 2024.

Also note that some employers may have applied for their existing plans to be grandfathered in to comply with requirements, which remains in effect until December 31, 2029. Employers with grandfathered plans for all required types of leave are not required to register or report hours and wages until 2030 but may be required to take action for any required types of leave that are not grandfathered.

Key Dates

December 2, 2024: Employers must notify employees of upcoming payroll contributions.

December 15, 2024: The deadline to apply for a Private Plan when benefits begin is January 1, 2026.

January 1, 2025: DE PL contributions begin.

April 1, 2025: First quarterly reporting and contributions due.

October 1 – December 1, 2025: Annual renewal period to apply for a private plan.

January 1, 2026: DE PL benefits begin.

December 31, 2029: Expiration of grandfathered private plans.

Other Resources:

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Please contact us for additional information on the upcoming paid family and medical leave programs or to learn more about how MMA ADL can help you understand these programs.

Marsh McLennan Agency’s Absence, Disability, & Life Specialty Practice helps clients understand, integrate, measure, and manage leaves of absence, time away from work, disability, and life insurance programs. Specializing in absence for over 20 years allows us to help employers meet employee expectations, reduce compliance risk, and manage costs. We are here to be your trusted partner, allowing you to prioritize what truly matters – your people.

Enhancing support: The changing paradigm of paid sick leave programs

Posted on by Angel Chang

As more cities and states mandate employers to provide accrued paid sick leave to their employees, we are witnessing a trend of expanded benefits from places that already require sick leave. Today, 40+ locations require employers to provide paid sick leave, and many have enacted changes that will be live in early 2025.

These changes could be occurring for various reasons, such as increased awareness about the advantages of paid sick leave, addressing disparities in access, or the influence of the COVID-19 temporary legislation coming to an end. This is a dynamic area that employers need to stay informed about.

This blog post will focus on three existing programs, Connecticut, Michigan, and Washington, and how they are making changes for 2025.

Doctor and woman in a healthcare setting

Connecticut

Connecticut passed paid sick leave legislation in 2011, becoming the first state to require that employees earn paid sick leave from many employers. Earlier this year, Governor Lamont signed legislation expanding the sick leave law to make paid sick leave more accessible.

  1. Expands employers mandated to provide paid sick leave: The number of employers covered under Connecticut’s Paid Sick Leave (PSL) requirements will greatly expand. Currently, only employers with 50 or more employees and operate in specific industries (service workers) are covered. The changes for 2025 eliminate the industry limitations, such that all private-sector employers will be covered. This reduces the employee count to 25, which reduces further to 11 employees in 2026 and one employee in 2027.
  2. Reduces accrual rate: In 2025, employers must also provide sick leave at a faster accrual rate, which will change from one hour of accrued sick leave for every 40 hours worked to a 1:30 ratio.
  3. Expands reasons for leave: Employees will also be able to utilize sick leave for more covered reasons, including mental health of the employee or a covered relation, safe time for a covered relation (expanded from child), or closure of employee’s workplace, a covered relations school, or place of care due to a public emergency. In addition to the existing covered relations for which an employee can take sick leave, the updates will allow usage for the following expanded list of covered relations: adult children, an individual to whom the employee stood in loco parentis, the employee’s grandchild or grandparent, the employee’s sibling, and an individual related to the employee by blood or affinity equivalent to a family relationship.

These changes will be effective on January 1, 2025.

Female child in hospital bed

Michigan

Michigan currently requires employers to provide accrued paid sick leave to employees under the Paid Medical Leave Act (PMLA), but that will change as of February 21, 2025, when the Earned Sick Time Act (ESTA) replaces the PMLA. The ESTA is more employee-friendly, providing eligibility for more employees, a faster accrual rate, and broader covered leave reasons.

ESTA)

PMLA

What is the effective date?

Replaces the existing law and becomes effective February 21, 2025.

Current law, effective through February 20, 2025.

What employers are covered?

All employers who employ one or more employees, excluding the U.S. government.

Employers who employ 50 or more individuals.

What is the accrual rate?

Accrue one hour of sick leave for every 30 hours worked.

Accrue one hour of sick leave for every 35 hours worked.

What is the maximum annual accrual?

72 hours

40 hours

Can sick time be frontloaded rather than accrued?

Yes, employers may frontload 72 hours of sick leave.

Yes, employers may frontload 40 hours of sick leave.

What is the maximum annual usage?

72 hours

40 hours

What leave reasons are covered?

Sick time (employee or covered relation), safe time, and other time, including meetings at the child’s school or daycare, closure of the workplace or child’s school, or the need to quarantine.

Sick time (employee or covered relation), safe time, and other time, including closure of workplace or child’s school or need to quarantine.

Which covered relations may an employee take leave for?

Child, grandparent, grandchild, parent, spouse (defined more broadly), and other individual related by blood or with a relationship equivalent to family.

Child, grandparent, grandchild, parent, spouse.

Washington

Since 2018, employers have been required to provide paid sick leave to their employees under Washington’s Paid Sick Leave (PSL) program. Beginning January 1, 2025, the PSL program will feature a few updated definitions that will broaden its scope and applicability to more employees in more situations.

  1. Expanded covered relationships: Employees will be able to utilize paid sick leave to care for additional covered relations, including the employee’s grandchild or grandparent. The definition of the employee’s child is being expanded to include the child’s spouse, including son-in-law or daughter-in-law. In addition, employees will also be able to take time off to care for an individual who regularly resides in the employee’s home and is cared for by the employee.
  2. Expanded leave reasons: The covered reasons are also being expanded. Currently, sick leave may be used when a child’s school or place of care is closed for health-related reasons, but this will be expanded to include closures due to a declaration of emergency by the local, state, or federal government.

 

Summary

Employers with Connecticut, Michigan, and Washington employees should review their sick leave policies to ensure alignment with the updated requirements. Employers should also ensure that their systems and processes are aligned with changes to the accrual rates. Finally, HR and managers should be trained to ensure that employee sick leave requests are handled appropriately and in alignment with the updated requirements.

Happy senior man is recovering from the coronavirus is visited by his grandchildren

How can Marsh McLennan Agency’s Absence, Disability, & Life Practice help?

Please contact us for additional information on drafting your paid sick leave policies or to learn more about how MMA ADL can assist in understanding these programs.

Marsh McLennan Agency’s Absence, Disability, & Life Specialty Practice helps clients understand, integrate, measure, and manage leaves of absence, time away from work, disability, and life insurance programs. Specializing in absence for over 20 years allows us to help employers meet employee expectations, reduce compliance risk, and manage costs. We are here to be your trusted partner, allowing you to prioritize what truly matters – your people.

October 2024 Statutory Update

Posted on by Angel Chang

Click HERE to view and download the full Update

In this Update:

Paid Family and Medical Leave Updates

California State Disability Insurance (CA SDI) and Paid Family Leave (CA PFL)

Use of Vacation Time Prior to Receipt of CA PFL Benefits
Advance Filing of CA SDI and CA PFL Claims

Delaware Paid Family Leave (DE PFL) – Revised Regulations

District of Columbia Paid Family Leave (DC PFL) – Maximum Weekly Benefit Increase

Maine Paid Family Leave (ME PFL)

Updated Resources
Paid Leave Portal – Employer Registration and Private Plan Application

Maryland Family and Medical Leave Insurance (MD PFAMLI) – Status Update

Massachusetts Paid Family and Medical Leave (MA PFML) – Benefit Accruals During Leave

 

Accrued Paid Leave Updates

California Paid Sick Leave – Amendment

Massachusetts Earned Sick Time – Amendment

Michigan Earned Sick Time – Updated Resources

 

Other News

 California – Anti-Discrimination, Accommodations and Leave for Crime Victims – Amendment

 

Important Reminders 

October – December

Colorado Family and Medical Leave Insurance (CO FAMLI) – Private Plan Requirements

Delaware Paid Leave (DE PL)

Employer Registration, Private Plan Application, and Opt-In
Model Notice Available

District of Columbia Paid Family Leave (DC PFL) – Contribution Rate Change for Q3 Remittance

Minnesota Paid Leave (MN PL) – Quarterly Wage Detail Reporting Due October 31

 

January

California State Disability Insurance (CA SDI) and Paid Family Leave (CA PFL) –  2025 Benefit Formula

Connecticut Paid Sick Leave – Applies to Most Employers Beginning January 1; Model Notice Available

Delaware Paid Leave (DE PL) – Contributions Begin January 1

Maine Paid Family and Medical Leave (ME PFML)

Contributions Begin January 1
Model Notice Available

New York Paid Prenatal Personal Leave – Becomes Effective January 1

Paid Leave Oregon (PLO) – Reasons for Leave Expand Effective January 1

Rhode Island Temporary Caregiver Insurance (RI TCI) – Maximum Duration Increases January 1

 

2025 Paid Family and Medical Leave (PFML) Rates, Benefits and Required Notices