Decoding State Leave Law Legislation — A Guide for HR Leaders and Business Owners

As new laws continue popping up across different states, leave laws are becoming an intricate and ever-evolving maze for employers. Staying up-to-date and compliant presents a formidable challenge for HR leaders and business owners, especially those with remote employees in multiple states.

Experts Samantha Munro, senior counsel at ADP, and Tim Morris, legal compliance director at ADP, teamed up in a webinar to provide critical insights for navigating paid leave laws.

Launch the webinar on demand for a deep dive into the details or keep reading to get the key takeaways.

How does state leave differ from FMLA?

State leave differs from FMLA in that FMLA provides up to 12 weeks of leave for qualifying employees, while state leave can provide paid leave for qualifying employees. As a quick refresher, FMLA refers to the Family Medical Leave Act, which was effective on August 5, 1993, and gives employees with qualifying reasons access to job-protected leave from their employment. The FMLA only requires unpaid leave. However, the law permits an employee to elect, or the employer to require the employee, to use accrued paid vacation leave or paid sick or family leave for some or all of the FMLA leave period. Since federal policies have yet to be implemented to provide paid leave in the private sector, many states are proposing and passing laws that provide employees with paid leave options. Some states have paid sick leave, paid family leave and paid family and medical leave.

While having paid leave options is great for employees, it can create a compliance challenge for employers with employees in multiple states. Since the laws vary by state, there's no uniform way for employers to implement compliance with these laws across their workforce. "What ends up happening," says Munro, "is that we are left with a patchwork of various state and local paid leave laws that employers are struggling to keep up with."

Which state leave laws apply to my remote employees?

The laws of the state where your remote employee(s) performs work dictate the rules that apply to both the employee and the employer. For example, if your organization is headquartered in Texas but you have remote employees performing work in Michigan, then the Michigan state leave laws apply to your remote employees and to you as the employer. For the employees working out of company headquarters in Texas, any applicable Texas state leave laws would apply to them.

This can be challenging for organizations with remote employees in multiple states because it means the organization is responsible for keeping up with and complying with multiple varying state leave laws. As more laws are proposed, employers are left scrambling to keep up with any new regulations that may be enacted that may apply to them. Munro suggests working with a legal expert to help ensure you are meeting all the state requirements of states where you have remote employees. "It's crucial that employers have resources like legal experts or an HCM platform able to help them keep up with their changing employer obligations as new laws are proposed and passed," said Munro.

How are state leave plans funded? (e.g., who pays the employee?)

Employer premiums, employee premiums, or both typically fund state leave plans that provide for wage replacement. These premiums are withheld from employees' pay (if applicable) and paid by the employer to the state. Then, when an employee files for qualified paid leave through the state and is approved, the state pays a percentage of their normal wages while on leave. This is one reason why it's essential to ensure remote employees are set up within the correct state so that the correct state premiums can be paid when applicable.

It's important to note that some state leave plans are optional and can be opted out of by the employee. This would exempt the employee and employer from paying the premium but disqualify the employee from taking any paid leave through the state plan.

Can I have a private paid leave plan for my employees and opt out of the state leave requirements?

Yes, in some states, employers can elect to provide their employees with a private paid leave plan, but this is usually only an option if the private plan meets or exceeds the state's requirements for paid leave. You can think of these private plans as similar to insurance, where employers (and potentially employees) make the required premium payments. Then when a paid leave is needed, the private plan provider pays a percentage of the wages the employee was receiving while actively at work. Having remote employees in multiple states can complicate private plans since you would need one for each state where you have remote employees.

What reasons would qualify my employee to take state leave?

Unlike FMLA, the reasons an employee may qualify for state leave can be more expansive than those provided by the FMLA. The qualifying circumstances differ by state but are vast, with some state laws qualifying employees caring for a relation due to a communicable disease, employees caring for someone who has donated bone marrow, bereavement, for care of a service dog or even employees needing time off for meetings related to the care of a child with a health condition or disability. Because the qualifying circumstances for state leave are vast, reviewing state-specific regulations is essential when evaluating whether your employee may qualify for leave.

Munro suggests a careful review of laws before making any conclusions. "Often, we can rush to thinking that employee circumstances don't qualify for leave because we are thinking of the FLMA requirements, which are generally limited to the medical condition of self or an immediate family member. That's not the case with these new state laws, so just slow down and do the review before deciding someone doesn't qualify.

For a detailed review of this topic, replay our complementary webinar anytime: How to Navigate the Ever-Changing Maze of Paid Leave Laws

What about state-required sick leave?

States can and are also regulating paid sick leave. Sick leave, also known generally as sick time, is often provided by employers to their employees to cover unexpected sick days, doctor appointments and other short-term illness-related absences. Not all employers choose to provide their employees with sick time, so many states have proposed and passed laws regulating sick time provided to employees. Employers still fund paid sick time, but some states now require employers to follow certain guidelines regarding how much time to provide and when to provide it (e.g., on the first day of employment) and other details related to sick time.

Some localities have also passed regulations for providing sick time to employees. Morris says that if there's ever a question about which law applies, employers need to abide by the law that is more favorable to the employee. "If there's a conflict between applicable laws, employers must abide by the law that is the most generous to the employee."

Can employers utilize a paid time off (PTO) policy for their employees to cover all paid leave law requirements that may apply to their workforce?

While employers can utilize a PTO policy to cover all paid leave laws that may apply to their workforce, there are considerations an employer may want to keep in mind before doing so.

For a PTO policy to effectively capture all applicable state leave laws, it must mirror any accrual rates, eligibility, caps and carryovers outlined in the state leave requirements. This often creates conflicts for employers who have an eligibility waiting period (e.g., eligible to take PTO after 90 days of employment), especially when many paid leave laws provide leave on day one of employment.
Requesting PTO usually requires manager approval, and it must be scheduled out for a certain number of days or weeks or not allowed on blackout days. This would run afoul of many state paid leave laws, which do not provide the employer with the discretion to deny the leave request if the employee is eligible to take it.
Depending on company policy and state law, unused PTO time may need to be paid out to employees upon the end of the year or separation. This is rarely the case for paid leave or sick leave. Therefore, if the employer does not have or is barred from having a "use it or lose it" PTO policy, the employer would now need to pay out additional time that they might not have otherwise needed to pay out.
Many paid state leave laws prohibit an employer from retaliating against an employee who exercises or attempts to exercise their rights under the applicable state leave law. Should an employer rely on a PTO policy to cover all state leave law requirements, the employer may have to add a non-retaliation component to the policy. This can be problematic for employers as it would limit their ability to take disciplinary action, among other things, regarding the use of PTO.

The wrap-up

At the end of the day, it's the employers' responsibility to keep up with state leave laws in the state where they're headquartered and all the states where they have remote employees performing work. Although this may prove to be a difficult task, especially where multiple state leave laws apply, it is essential to maintain compliance.

For a deeper look at state paid leave laws, sick leave laws, and some state-specific regulations, launch the webinar on demand: How to Navigate the Ever-Changing Maze of Paid Leave Laws.