State paid leaves: Three things employers should do in 2020 besides comply

2020 will be a big year for statutory paid family and medical leave. This January the state of Washington joined five states and Puerto Rico in paying benefits to workers, and the District of Columbia will start paying benefits in July. July is also when major benefit enhancements in New Jersey and California go into effect. Massachusetts starts paying benefits in January 2021, so employers need to get ready this year. In the meantime, employers will be on the lookout for regulations from Connecticut and Oregon, each of which passed laws in 2019 and are expected to begin implementation in 2020. And that doesn’t include states that will pass new laws in 2020. Anyone want to bet which state will be the first to pass a paid family and medical leave law and doesn’t touch an ocean? My money is on Colorado!

Job one for employers continues to be meeting the essential legal requirements to comply with the state laws. Deducting and paying required contributions to the state, issuing employee notices and putting up required posters in public areas are table stakes. Our presumption is that all employers are meeting those minimum requirements. That means they’re done, right? Not so fast. We believe employers can turn the compliance burden of state regulations into an opportunity. Here’s how:

Review and update employer leave policies - Most employers will need to make some changes to their leave policies to incorporate state requirements. How can those changes optimize the way that employer and state policies work together? Do the employer’s leave policies detail how they coordinate with state benefits? Should the employer’s benefits change to improve coordination? Are there benefits, like paid parental leave, that have been under consideration in the past that now become cost effective when the cost is reduced by state-mandated benefits?

Streamline the employee experience - Between employer benefits, state benefits and federal leave mandates, any single employee event could trigger a myriad of leave entitlements. How many different places does an employee need to go to file for all these benefits? Some states allow the employer to increase their involvement in the delivery of state-mandated benefits by filing for a private plan. But as the employer gets more involved, what’s the trade-off between streamlining the employee experience and the ultimate cost to the employer?

Reduce employer costs – Most employers provide paid leave benefits that run concurrent with state disability and family leave benefits. For example, state disability or medical leave will usually run concurrent with the employer’s short term disability plan. How an employer structures the interaction of these plans will have a direct impact on the employer’s ultimate cost. As leave benefits change – at the employer or state level – employers need to reevaluate their approach to minimize cost and risk exposure.

In the coming months, we’ll dig into these three key employer initiatives. The goal is to weave leave policies together into a holistic, integrated offering that strikes the right balance in terms of cost, administrative simplicity and plan design. Watch this space for more details.

Written by:  Rich Fuerstenberg and Simon Camaj

Rich Fuerstenberg
by Rich Fuerstenberg

Senior Partner, Health, Mercer

Rich Fuerstenberg is a Senior Partner and is a senior consultant in Mercer’s Life, Absence and Disability (LAD) national specialty practice. In addition, Rich is a member of Mercer’s Center for Health Innovation, focusing on innovation in ancillary benefits like life, disability, dental, vision and voluntary benefits. A consultant with Mercer for more than 20 years, Rich works with employers across the country on the design, evaluation, and ongoing management of their health and group benefit plans, with special expertise in understanding the intersection of health, absence and employee productivity. Rich is a Fellow in the Society of Actuaries, a Member of the American Academy of Actuaries and a Fellow in the Conference of Consulting Actuaries.

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