January 1, 2021 Connecticut Paid Leave Contribution Due Date Approaches:
What Connecticut Employers Need to Review
In June 2019, the state of Connecticut passed Public Act 19-25, AN ACT CONCERNING PAID FAMILY AND MEDICAL LEAVE (CT PFMLA), recognized as one of the nation’s most robust paid leave polices. While the current federal Family and Medical Leave Act of 1993 (FMLA) and Connecticut Family and Medical Leave Act (CT FMLA) laws offer job-protected leaves for covered employees experiencing certain qualifying events, these leaves are unpaid unless running concurrently with some form of paid leave (e.g. paid time off, disability).
Effective January 1, 2022, most Connecticut workers will also have access to wage replacement benefits when taking leave for reasons allowed under the CT FMLA. The addition of CT PFML will provide covered employees with up to 12 weeks of wage replacement benefits over a 12-month period (see Qualifying Reasons for more details).
Employers with at least one worker in Connecticut will be required to collect employee contributions and remit the funds to the CT Paid Leave Authority on a quarterly basis. This includes employers who may not be subject to the CT FMLA or Federal FMLA.
KEY DATES FOR EMPLOYERS
- November 23, 2020: Employer registration begins (information on the registration processes is forthcoming).
- January 1, 2021: Employers begin deducting contributions from employee wages.
- March 31, 2021: 1st remittance of employee contributions into the CT Paid Family and Medical Leave Insurance Authority. All subsequent remittances are due by the last day of each quarter.
- January 1, 2022: Employees may submit application and begin receiving benefits for qualifying life events.
- July 1, 2022: Employers begin providing employees with Notices at the time of hire and annually thereafter.
- Private Sector Employees – An employee working for private sector, including non-profit, employers with one or more employees is a “covered” employee under CT PFML.
- Public Sector Employees – Employees working for federal governmental entities, state unionized employees, local and regional boards of education, non-public elementary and secondary schools are not covered employees under the CT PFML.
- Other – Sole proprietors and self-employed individuals may opt into the program but are required to remain in the plan for a minimum of 3 years. Once enrolled, these individuals are automatically re-enrolled in the program annually unless they provide written notice to the CT Paid Family and Medical Leave Insurance Authority.
Employees, including seasonal and part-time workers, are eligible for coverage if they have earned $2,325 of Connecticut wages within the “base period” and are:
a. Currently employed and working for a Connecticut employer; or
b. Unemployed but had been working in Connecticut in the 12 weeks prior to the leave.
Base Period – The base period uses the highest wages earned during the first four of the five most recent quarters immediately before an application for leave. The employee does not have to work all five quarters for the same employer to be eligible.
EMPLOYEE CONTRIBUTIONS – PROGRAM FUNDING
According to the CT Paid Family and Medical Leave Insurance Authority, each employee is required to contribute 0.5% of his or her total wages to the CT Paid Leave Authority, up to the Social Security contribution base limit. "Total wages" means the employee's salary or hourly wages, vacation pay, holiday pay, tips, commissions, severance pay, etc., including the cash value of any “in-kind” payments. The CT PFML program is completely employee-funded, and employers are not required to contribute to the CT Paid Leave Authority.
In determining an employee's total wages, the employer should use the same calculations it performs in order to report to the CT Department of Labor for the purposes of Unemployment Insurance Compensation. Because this calculation for determining the CT unemployment insurance compensation is the functional equivalent of the calculations an employer uses to determine an employee's FICA obligation, employers can choose to base the Paid Family Leave contribution on an employee's FICA taxable wages.
Employers will deduct the contributions from the employees’ wages and remit them to the CT Paid Leave Authority on a quarterly basis. Payroll administrators may remit contributions on behalf of their employers. For ease, the CT Paid Leave Authority will allow employers to remit payment at the same intervals as their unemployment insurance obligations.
The Internal Revenue Service categorizes employee contributions for state paid family & medical leave programs as state income taxes for federal income tax purposes. This means the contributions are deductible on federal income tax returns as state income taxes for those taxpayers that elect to itemize their deductions (subject to the $10,000 state and local tax deduction cap). Under CT tax law, state income taxes are not deductible on personal state income tax returns.
The CT Paid Leave Authority is seeking determinations from the Federal IRS and state Department of Revenue Services regarding whether paid leave benefit payments made to employees are income for tax purposes.
QUALIFYING REASONS FOR CT PFML
CT PFML provides employees with paid leave for the following qualifying reasons:
Up to 12 weeks in a single 12-month period
- Creating or expanding the family through the birth of a child or the placement of a child with the family for adoption or foster care
- Caring for the employee’s own serious health condition
- Caring for a family member’s serious health condition
- Serving as an organ or bone marrow donor
- Military caregiver leave to care for a family member injured during active duty in the military
- Qualifying Exigency leave for when a family member is called to overseas active duty
Up to 12 days of paid leave per calendar year
- Family violence leave (CT only and is not also included in the federal FMLA)
Up to 2 additional weeks is available when CT PFML is exhausted for:
- Incapacity due to pregnancy (this includes physician-directed bed rest)
Weekly compensation shall be equal to 95% of the covered employee’s base weekly earnings up to an amount equal to 40x the minimum wage, 60% of that covered employee’s base weekly earnings above an amount equal to 40x the minimum wage.
The CT PFML program is not dollar for dollar wage replacement.
- If an employee's wages are less than or equal to the Connecticut minimum wage multiplied by 40, the weekly benefit amount under CT PFML will be 95% of the employee's average weekly wage.
- If an employee’s wages exceed the Connecticut minimum wage multiplied by 40, the weekly benefit amount will be 95% of the Connecticut minimum wage multiplied by 40 plus 60% of the amount the employee's average weekly wage exceeds the Connecticut minimum wage multiplied by 40.
The maximum benefit amount is 60 times the Connecticut minimum wage.
An employee’s benefit amount is calculated by:
- Determining which two quarters in the first 4 of the past 5 quarters (again, the “base period”) where the individual earned the highest total wages; and
- Dividing the total wages earned in those two quarters by 26 (rounded to the next lower dollar)
Example – Calculating Benefits:
1. Determine the base weekly earnings:
In June 2023, Employee A requests CT PFML. During the base period (the first 4 of the past 5 quarters), Employee A’s covered earnings are as follows:
1st Quarter: $12,000
2nd Quarter: $11,000
3rd Quarter: $ 9,000
4th Quarter: $13,000
The two quarters with the highest wages ($12,000 and $13,000) are added together to equal $25,000. This amount is divided by 26 to determine the base weekly earnings.
$25,000/26 = $961.00.
2. Determine the benefit amount using Employee A’s base weekly earnings of $961.00
a) Minimum wage rate limit: Calculate 95% of the weekly base earnings (to a maximum of 40 times CT’s minimum wage). Minimum wage as of June 1, 2023 is set at $15 per hour.
95% × $961 = $912.95
However, the maximum benefit amount is 40 times the minimum wage.
40 × $15 = $600.00
b) Excess limit: Since Employee A’s wages exceed CT’s minimum wage multiplied by 40, calculate 60% of the weekly base earnings above the 40 times states minimum wage* (if applicable)
$912.95 - $600.00 = $312.95
60% × $312.95 = $187.77
c) Add the minimum wage rate limit and excess limit together:
$600.00 + $187.77 = $787.77
This is the weekly applicable maximum benefit amount for Employee A.
Integration with Other Paid Leave
An employee can receive paid leave from the CT Paid Leave Authority concurrent with employer-provided income replacement, so long as the total amount does not exceed 100% of the employee’s regular wages. It is important to note that most short-term disability policies will offset benefits against income received from other sources.
An employer may require an employee to use employer provided paid time off (PTO) while taking state or federal FMLA leave. However, the employer must allow the employee to keep at least two weeks of accrued PTO or its equivalent. In other words, an employer cannot require an employee to use their last two weeks of accrued PTO in conjunction with CT PFML.
Covered employees may use intermittent leave in a number of ways. Employees may use a number of consecutive days for the same qualifying reason, work a reduced number of hours compared to their routine schedule and take 15 minute increments related to the leave (i.e. doctors appointment, therapy sessions).
Covered employees receiving Unemployment Compensation, Worker’s Compensation or any of other state or federal benefit that provides wage replacement, may not concurrently receive CT PFML benefits.
Revisions to CT FMLA and CT PFML Administration
Effective January 1, 2022, amendments to the current CT FMLA include some prominent changes in response to CT PFML. These include, but are not limited to:
- Changing the threshold of employees to one employee (currently 75).
- Reducing the maximum duration of a leave from 16 weeks over a 24-month period to 12 weeks over a 12-month period (14 weeks for pregnant mothers experiencing a serious health condition resulting in incapacitation).
- Removing the 1,000 “hours worked” requirement and provide eligibility to employees who have worked for their employer at least 3 months immediately preceding their request for leave.
- Amending the definition of family member to include a spouse, sibling, daughter or son, grandparent, grandchild or parent; or, an individual related to the employee by blood or affinity, and whose close association with the employee shows to be the equivalent of those family relationships.
Employers will review requests for leave from employees and determine if an employee is eligible for leave under either Federal FMLA or CT FMLA (or both). If the employer grants the request and the employee has enough accrued paid time off, the employee can choose to use that time to subsidize their leave. An employer can also update its leave policy to require that an employee use that accrued time for their leave. Remember that employers must allow the employee to retain at least two weeks of accrued PTO or equivalent.
If it is determined that the employee will require wage replacement during the leave, the employee can apply directly to the Paid Leave Authority for paid benefits.
Private Plan Option
The CT Paid Leave Authority will allow employers the alternative to offer coverage using a private option. Employers will need to demonstrate that they are able to administer claims and are offering their employees the same benefits (or better) than the public option at a cost of no more than 0.5% of employee wages.
1. Follow the Connecticut Paid Family and Medical Leave Insurance Authority on a number of social media applications:
2. Determine if you will apply for a private option:
The CT Paid Leave Authority is currently developing this application process. The proposed application process was published for public review and comment in the July 21, 2020 edition of the Connecticut Law Journal. Additional information may be found on the Connect Paid Leave website.
3. Register your organization on the Connecticut Paid Leave website:
While information is still forthcoming on how employers will register their organization on the Connect Paid Leave website, employers are encouraged to work with their payroll companies to determine if they will provide registration services on the employer’s behalf.
- Connecticut Paid Leave.Org
- Employer Toolkit
- Connecticut Paid Leave Employer Fact Sheet
- Connecticut Paid Family Leave Authority
- Overview of PFML Programs
- Public Act 19-25
- Public Act 19-117
- PFMLI Bylaws
- PFML Comparison Chart
- Employees work in CT if an employer pays CT unemployment insurance and CT payroll taxes.
- This is currently $137,700.
- The CT Paid Leave Authority will be providing employers with additional information to assist in making “affinity relationship” determinations.
- This is $13 on August 1, 2021, $14 on July 1, 2022 and $15 on June 1, 2023 (Public Act 19-4)
- In January 2022, 40 times the minimum wage is equal to $520/weekly. This increases to $560 on July 1, 2022, and $600 on June 1, 2023. In January 2022, 60 times the minimum wage will be equal to $780/weekly. This increases to $840 on July 1, 2022, and $900 on June 1, 2023.