Paid Family and Medical Leave Begins in New HampshireMar 21, 2023
Most employers are familiar with the basic requirements of the federal Family Medical Leave Act (FMLA), which covers private employers with 50 or more employees as well as most public employers. Providing employees of such employers with unpaid leave for medical conditions and caring for family members has been well-established over the past 30 years.
As the unpaid family leave concept has become fully integrated into standard business practices, there has been increasing pressure throughout the country for employers to offer paid family and sick leave (PFML). Currently, 13 states and the District of Columbia have enacted PFML laws covering most private employers.
New Hampshire, where Orr & Reno’s law practice is based, is now among them. The 2022-2023 state budget that New Hampshire Governor Sununu signed into law last year included the Granite State Paid Family Leave Plan. This plan — now called the New Hampshire Paid Family & Medical Leave Plan (NH PFML) — is the first voluntary plan in the nation.
The initial enrollment period for the plan began on January 1, 2023, and ended on March 2, 2023.
How does it work?
The NH PFML Plan uses a combination of family medical leave insurance (FMLI) and tax credits for participating businesses. MetLife is the state’s provider of FMLI, and state employees (approximately 10,000 individuals) make up the risk pool. Private employers and individuals can opt into the plan by paying a monthly premium through a payroll deduction.
For participating employers, the plan allows employees to opt in or out based on personal preference. Employers can’t mandate premium payments when employees opt out. If the employer doesn’t participate in the plan, individuals can also purchase family medical leave insurance independently.
One of the key features of the NH PFML Plan is its allowance of a tax credit against the state’s Business Enterprise Tax (BET) in an amount of up to 50 percent of an employer’s total premium payments. Employers are not obligated to purchase FMLI from MetLife. However, if FMLI is purchased from another carrier, employers must submit a BET Form DP-160 request to the NH Department of Revenue Administration to claim this credit.
Employers are not required to pay 100 percent of the premiums and may decide to split the cost with employees at any ratio they wish. This option is particularly desirable for smaller companies that can’t afford the total premium cost. It’s important to note that participating employers must maintain an employee’s health insurance coverage during a paid leave.
Types of paid leave
Qualifying events under the NH PFML Plan are similar to those under the federal FMLA and include:
- the birth or adoption of a child or caring for a newborn or newly adopted or fostered child for the first year;
- care for an employee’s spouse, child, or parent with a serious health condition;
- care for a spouse, child, or parent in the military;
- military exigency; and
- a personal serious health condition that is independent of employment if the employer does not offer short-term disability insurance.
What are the benefits to employees?
The NH PFML Plan provides a minimum of six weeks of wage replacement at 60 percent of an employee’s average weekly wage. The wage replacement and tax calculation are capped at the amount of the “Social Security Taxable Wage Maximum,” as amended.
The duration of paid leave depends on the plan sponsor. Individuals and state employees receive a maximum of six weeks of paid leave. Participating employers can choose between a six-week or twelve-week plan. In all cases, paid leave may be taken continuously or intermittently — with a minimum of four-hour increments.
What do employers need to do?
The NH PFML Plan provides employers with a new option for improving employee retention and enhancing a business’s appeal in a competitive job market.
If an employer decides to provide coverage — before determining the employer’s contribution — the employer should evaluate the costs of the NH PFML Plan alongside other benefits. This could be an excellent time for an employer to review its broader benefits package, discuss the need for paid leave with its managers, and consider how the NH PFML Plan fits into it all.
There are helpful online resources for employers, with detailed information about the NH Paid Family and Medical Leave Plan and tools to assist employers in designing and implementing the right plan for their workforce.
Nonparticipating employers with 50 or more employees must, at minimum, prepare to make payroll deductions for employees who wish to participate individually.
If you have any questions about how the NH PFML Plan fits into your business’s overall benefits package, or need help figuring out any of the details, don’t hesitate to contact Orr & Reno for assistance.
About the Authors: Steven L. Winer and Meredith Farrell Goldstein