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Risk & Compliance: Mandatory Paid Leave Is Coming

By Net Assets posted 04-27-2020 01:05 PM

paid leave

Human Resources |

New leave laws are likely to arrive in your state or city if they haven't already. The time to prepare is now.

Article by Amber Stockham, SPHR

From the May/June 2020 Net Assets magazine

Comprehensive benefits packages are nothing new to independent schools; they are often a draw to working in the sector. What is new — and causing complications — are laws passed by states and municipalities that dictate what exactly those packages need to offer.

Montgomery County, Maryland, for example, recently passed a law requiring employers to offer paid sick leave to part-time employees. The law has impacted employees like bus drivers at Sandy Springs School, according to Carolyn Miller, director of human resources. The good news is that the change has been welcomed by long-time employees and hasn’t created an administrative or financial burden for the school. She’s tracking the new leave in a spreadsheet. “The overall attitude is that everyone is getting some benefits,” she said.

While compliance is sometimes easy and sometimes not, keeping up with changing requirements is always a challenge.

The Compliance Landscape

No federal law requires private employers to provide paid leave to their personnel, but the Family Medical Leave Act of 1993 (FMLA) does require some employers to provide unpaid leave to some employees with serious medical conditions or who care for those with serious medical conditions or who care for a new child. FMLA has been popular with employees, and Congress expanded its scope in 2008 and 2010.

This popularity is driving state and local governments’ expansion of leave requirements, as progressive lawmakers tout paid leave as a human right. The laws are intended to provide better work/life balance for employees and to give employees a financial cushion during times of duress and illness. Some acknowledge the increasing complexity of family structures, and provide protection for non-custodial parents and non-relative caregivers who must take time off to care for sick children and adults.

Currently, eleven states mandate paid sick leave, five have state-provided disability leave and eight have paid family leave. In some instances, counties or municipalities like St. Paul, Chicago and Pittsburgh have passed their own ordinances. Each law is unique, and many now exist alongside other relevant regulations. Most offer between eight and 30 weeks of paid leave based upon different criteria and provide between 60% and 100% of current wages. Eligibility requirements also vary; some offer benefits to all workers, some to those who have been employed more than 30 days, and others only apply to employers with 15 or more employees.

Some states are passing regulations which remove the burden entirely from employers, with the state providing paid leave directly through new state agencies. Others are choosing to leave the administrative burden with employers. Either way, the funding burden falls on employers, as nearly all of the state agencies overseeing the administration of these benefits are funded through payroll taxes.

The Independent School Context

The lack of uniformity in the laws has proven to be a challenge for some schools as they struggle to understand what is required of them and develop appropriate administrative systems and funding for these new benefits. In some cases, simply determining if personnel are eligible for the leave and how much compensation they will receive can be complicated and lead to frustration for both the school and the employee. The statutory amount offered by the state may not equal the employee’s full wage. Faculty members who are taking parental leave over the summer in states that use a working hour formula to determine leave wages may find their pay reduced while on leave. This may result in confusion about what a school has discretion to offer and what it is mandated to offer. That confusion may ultimately lead to frustration, suspicion and increased turnover at well-intentioned schools. Said one HR professional, “They think it’s the school that’s short-changing them.”

New York City is at the heart of the change, with requirements at both the city and state level. This has proven a challenge for Convent of the Sacred Heart, where HR Compliance Manager Dan Chen explained some policies must run concurrently while others do not. “The interplay, in, say, a maternity leave situation, between paid family leave to bond with the newborn child, short-term disability coverage for the mother's own disability, and our own policy for salary continuation during an approved FMLA absence, can create a lot of confusion,” he said.

Unfortunately, some schools have also reported abuse of these generous mandates. Examples include employees with multiple salaries, such as for teaching and coaching, who fall ill only during times they are paid more money; employees with generous sick leaves returning to work in a less timely manner; and certain teachers with an abundance of leave always falling ill on grading deadlines. Schools too are worried that questioning such patterns and disciplining employees may backfire. Massachusetts’ paid family and medical leave law, for example, presumes retaliation if any employee is terminated within six months of time off under the law.

For other schools, the laws have been a welcome change, as the burden for paying for some benefits has been eased by the state’s mandate that employees contribute. “For us, it’s a positive,” said Tammy Stotik, director of human resources at Oregon Episcopal School, meaning the legislative changes align with the school’s mission (which may not be the case for every school). OES was considering adding a short-term disability policy but observed that neighboring states California and Washington had passed related laws and decided to wait and see what Oregon did. When a new law does pass, OES plans “to craft something that is in line with the law and best practice,” Stotik reported.

Other schools said that while new laws may have required small tweaks to their policies, the changes were not disruptive to either operations or staff. Sometimes schools can simply alter existing policies while other times they may need to add new benefits or remove redundant benefits. Most report finding external resources for assistance, whether through a school association, a local employer’s group or their school counsel.

Complying with new paid leave laws can require extensive planning, and those who are currently unaffected should begin thinking about their potential impact.

Planning Ahead

The momentum behind state and local leave laws over the past few years suggests they will continue to expand to more states. Complying with new paid leave laws can require extensive planning, and those who are currently unaffected should begin thinking about their potential impact. Planning steps include:

Speak with your insurance broker about what they are hearing at the state and local level. Often your broker will know before you do if a new leave law is being contemplated. Open communication can prevent costly mid-fiscal year surprises.

Review your benefits package and have a plan to respond to any laws your state or municipal government may be considering. Would you be required to add a new benefit, or do you already provide generous paid leave? If your state mandated paid family or sick leave, how would it affect the existing leave you provide, and how would you ease the transition for your existing employees who may have accrued leave under a different system?

Plan for any new administrative burdens which may be imposed by a paid leave law. With school employees often already overworked, taking on the administration of a paid medical leave law may be more than the business office can absorb. Many insurance carriers are beginning to offer leave administration services for not just FMLA but also state-mandated paid leave, according to Bianca Saul, compliance director for Borislow Insurance. These services can help schools navigate overlapping regulations.

With school employees often already overworked, taking on the administration of a paid medical leave law may be more than the business office can absorb.

Refresh your benefits package annually, taking into consideration what you are looking to accomplish by offering the benefits you provide. If it is used as a recruiting and retention tool, you will want to ensure it remains competitive. If it is used to provide a safety net for your employees, you will want to look at how effective it has been for your employees who needed it. Or if the goal is simply to comply with the law, you will want to ensure you are providing adequate funding for any legal changes which may have already occurred or are scheduled to occur in the coming fiscal year. While your school’s fiscal year may be July to June, many legal changes take effect in January.

Clarify any interaction between competing benefits in school policy. Does your parental leave run concurrently with FMLA? Are employees required to supplement any state-offered sick benefits with earned sick time from the school? Consult your school counsel if you intend to require employees to run leaves concurrently to ensure you are in compliance with all applicable laws.

Ensure you are in compliance with all state and local laws before making any substantial changes to your insurance benefits package. If a law has recently been passed, your local school or employers’ associations, insurer or school counsel may be offering free or low cost webinars and meetings to provide guidance. These options afford opportunities to learn from others nearby and develop contacts to consult after the event.

Provide clear guidance to faculty and staff as well as administrators overseeing the benefits. If your legislature has passed a new leave law, your faculty and staff likely know a little about it but do not fully understand it. Once you understand the law’s ramifications on your benefits offerings, the specifics of what will be provided under the law, and how employees can utilize the law, communicate with all parties to prevent confusion, frustration and misuse. “Know how to explain all the different options or lack of options to the employee,” advised Chen. 

Amber Stockham, SPHR, is NBOA’s director, human resources programs.

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