Connecticut continues to add to its roster of employee-friendly laws, leaving businesses throughout the state to figure out how best to address the resulting changes. The legislative session closed on June 5, 2019, with laws pertaining to paid family leave, sexual harassment training, whistleblower protections, and non-compete agreements awaiting likely signature by Governor Ned Lamont; a bill enacting changes to the state minimum wage law has already been signed.
After some last-minute wrangling, the General Assembly passed what appears to be the most generous paid family leave bill in the country. P.A. 19-25, “An Act Concerning Paid Family and Medical Leave,” creates the Family and Medical Leave Insurance program, to be administered by the Paid Family and Medical Leave Insurance Authority (Authority), and provides benefits to employees who take leave for reasons covered under the existing Connecticut Family and Medical Leave Act (CTFMLA). Assuming Governor Lamont signs the bill as expected, Connecticut will join California, Massachusetts, New Jersey, New York, Rhode Island, Washington, and the District of Columbia in implementing a paid family leave insurance program. This approach differs from that taken by several other states that have opted to require employers to directly provide paid sick leave benefits to employees.
Eligibility and Benefits
The bill makes several substantive changes to CTFMLA, including compensating employees on leave, expanding coverage to employers with as few as 1 employee, and covering employees who have worked for their employer for as few as 12 weeks, with no minimum hours requirement. Sole proprietors/self-employed individuals may voluntarily enroll in the program.
The bill provides employees with up to 12 weeks of paid leave in a 12-month period to care for themselves, family members—including spouse, parents, in-laws, children, siblings, grandparents, and grandchildren—and anyone else whose close association, whether by blood or affinity, is the equivalent of a family member. The bill likewise expands the family members, as listed above, for whom employees may use up to two weeks of any employer-provided paid sick leave. Employees incapacitated by pregnancy are eligible for an additional two weeks of paid leave, for a maximum of 14 weeks.
Employees will fund the paid family leave program by contributing .5% of their income via a mandatory payroll tax, with contributions commencing in January 2021. Employers make no contributions toward the program. State government employees who belong to unions are exempt, a fact that did not go unnoticed by private business opponents to the bill. Wages subject to the paid leave tax will be tied to the amount of annual earnings subject to Social Security taxes, currently $132,900.
Employees will receive a compensation benefit determined on a sliding scale, with lower-paid workers receiving the maximum benefit of up to 95% of their regular weekly pay, to be capped at a sum not to exceed 60 times the minimum wage. In comparison, New York currently provides 55% wage replacement benefits, with the benefit amount set to increase to 60% in 2020 and 67% in 2021. The Connecticut legislation appears to recognize the possibility, if not outright likelihood, of the paid leave program lacking sufficient funding to sustain itself, and contains language indicating that benefits will be reduced if revenue is insufficient. Benefits will begin to be paid on January 1, 2022, although the bill provides for earlier payment of benefits for parental bonding leave if it is deemed administratively feasible.
The bill permits employers to apply to the Authority for permission to provide benefits through a private plan option, which must provide employees with at least the same level of benefits under the same conditions and costs as the state program. Employees covered by a private plan are exempt from contributing to the state program.
Notice and Documentation
The bill imposes notice and documentation requirements on both employees and employers. Employees must provide notice of the need for benefits to the Authority and, if required by the Authority the employer must certify the employee’s current compensation level and confirm the need for leave. Starting July 1, 2022, employers must notify their employees at the time of hiring and annually thereafter about their entitlement to family and medical leave and family violence leave, and their right to file a benefits claim. Employers must also notify employees that retaliation against an employee for requesting or using family medical leave is prohibited, and advise employees of their right to file a complaint with the Labor Commissioner to seek redress for any violation.
Penalties and Complaints
The Authority may seek repayment of benefits that were paid in error, due to willful misrepresentation, or prior to the rejection of a claim. The Authority may also waive repayments and/or related penalties. Individuals who willfully make a false statement or misrepresentation, or who omit a material fact in order to obtain compensation under the program are barred from receiving benefits for two years, and may be subject to a fine of 50% of the benefits paid. Anyone who assists in making such a claim, including an employer, will be liable for the same penalty.
Claim denials and penalty assessments may be appealed to the Labor Commissioner.
The legislation was temporarily derailed by disputes regarding the size and makeup of the quasi-public entity that will administer the paid family leave program. Although Governor Lamont initially threatened to veto the bill while the Senate considered it, he eventually came to terms with the legislators on a compromise that reduced the governing board from 15 to 13 members and gave the governor the authority to name seven members, including the chairperson.
While employers understandably are looking for answers regarding implementation of the new leave and its interaction with existing sick leave and other policies, there is no need to rush to make immediate changes. The bill requires the Labor Commissioner to adopt regulations by January 1, 2020, and those regulations should shed further light on the options and obligations of business owners.
The bill, originally Senate Bill 1, was designated Public Act 19-25 on June 11, 2019 and is awaiting signature by Governor Lamont. In light of the Governor’s steadfast public support of paid family leave and his negotiations with the legislature, his signature is expected shortly.