Hello. I'm Sarah Hipp and welcome to our mini session on Paid Family and Medical Leave. This is one in our series of state overviews and today we will be focusing on Delaware. 

If you are familiar with the state mandated paid leave landscape, then you know that this is a rapidly growing space. Paid Family and Medical Leave programs allow employees to take time off from work to attend to certain life circumstances and is often job protected. Delaware is one of a rising number of states that has passed paid leave legislation. As with most states, Delaware will be collecting contributions a year in advance of program benefits in order to build up funds. These contributions will begin on January 1st, 2025, and then workers will be able to begin receiving benefits on January 1st, 2026. 

The Delaware PFML program has a unique structure when it comes to employer size and how the benefits apply. First, employers with under 10 employees in Delaware are exempt from the program completely and therefore are not required to offer any of the paid leave benefits. The same goes for the federal government and any seasonal businesses that shut down for 30 consecutive days or more. Employers who have between 10 and 24 eligible employees are only required to offer the parental leave line of coverage. Finally, employers with 25 or more employees will be subject to the full program and all lines of coverages which we will discuss momentarily. 

When it comes to employee eligibility Delaware closely follows the same requirements as the federal FMLA. This means that employees will need at least a year of tenure with their employer before becoming eligible. In addition, the employees will need to have worked at least 1,250 hours over the past year. 

Another unique aspect of the Delaware PFML program is the concept of reclassification and declassification. Reclassification applies to out-of-state telecommuters or employees who are working on an out-of-state assignment that would otherwise be treated as Delaware employees. This allows the employer to provide PFML coverage to these workers by reclassifying them as Delaware employees. On the flip side, employers can put employees on waivers to declassify them, so they are not eligible for coverage. This would be applicable, for say, temporary workers or part-time employees who would never be expected to work that 1,250 hour requirement. 

I mentioned lines of coverage previously, so let's take a look at what those are. Delaware has separated the benefits into three lines of coverage: parental leave, medical leave, and family caregiving. Parental leave is applicable to all employers with 10 or more employees and availability of leave would be 12 weeks in an application year. Parental leave applies to both birth and non-birth parents, as well as parents who are welcoming a new child through adoption or foster care placement. With bonding leave all 12 weeks must be taken within the first 12 months following birth or placement. 

The other lines of coverage, medical and family caregiving are limited to 6 weeks in a 24-month period. Medical leave applies to an employee experiencing their own serious health condition. Family caregiving actually involves two types of leave. First is to care for a family member with a serious health condition. Very similar to the medical leave it has the same requirements but in this case it's for the employees covered family member rather than the employee themselves. 

The second is qualifying military exigency and Delaware defines these circumstances the same as FMLA. The final item to point out is that while there are separate durations and look back periods. For the parental line of coverage and the other two lines, employees would be limited to a total combined 12 weeks of leave in an application year. In the case where multiple types of leave come into play in regard to the family care I mentioned, Delaware sticks to the FMLA definitions of a covered family member. We see different variations of covered relationships in several PFML states but with Delaware, the relationships would only include the employee’s child, spouse, or parent. 

Now we will get into the financials of Delaware PFML. Delaware has set the initial contribution rate at 0.8%. This rate is then broken down for each line of coverage. And so, this is applicable in those cases where employers may only be subject to the parental leave due to being under 25 lives. The rate is split 50/50 between employers and employees however employers can choose to cover the employee portion of contributions. Premiums will also be capped at the Social Security wage limit so once an employee has paid into the program on earnings up to that amount there are no longer contributions due for that calendar year and this would apply to both the employee and employer portion. 

The contributions can be confusing so here on the slide we have a few examples of what that might look like for an employer. For easy math, let's say the employer has $1 million in payroll. If the employer has 25 or more employees that total 0.8% contribution rate would come into play and the total amount due would be $8,000. The employer can then split that cost evenly with employees, so each portion comes to $4,000. In the other case where the employer is under 25 lives, only that parental line of coverage would apply. Using the same annual payroll of $1 million the contributions would be $3,200 based on that parental leave rate. Again, employers can split that cost equally with the employee. Delaware has set the wage replacement rate at 80% of an employes average weekly earnings. There is a maximum benefit of $900 for when the program goes live in 2026. So higher income wage earners may reach this cap and not receive a full 80% replacement. Delaware also includes a minimum benefit of $100 and in the case that the employee earns less than $100 a week on average their benefit amount would be equal to 100% of their weekly earnings. 

While the Delaware benefit calculation is fairly straight forward, we would like to take a moment to look at an employee example. Here we have William with an annual salary of $85,000. 80% of William's average weekly wage would come to $1,376 since this amount is slightly higher than the state maximum benefit. William would receive $900 a week during his leave when new state PFML programs are implemented. 

There are several considerations for employers to keep in mind. In Delaware employers can opt out of participating in the state program in lieu of a private plan. This can either be self-administered or they could purchase a fully insured insurance policy through an approved carrier. The opt out period for choosing a private plan in Delaware will be on an annual basis with policies effective January 1st of the following year. Many employers already offer benefit packages that could be used in coordination with the PFML benefits in Delaware. Examples might be an existing short-term disability or an internal paid parental leave policy. It's important to understand how these benefits will be impacted and then integrate with the new Paid Family Leave benefits. 

Finally, employers who have workers in multiple states may find that the changing PFML laws and staying compliant can be a lot to manage. Employers who have more than 10 Delaware workers need to start planning communication strategies to keep their workers informed of the Delaware PFML benefits and potential impacts. When identifying impacted Delaware workers, employers also need to consider that reclassification for any teleworkers or employees on temporary assignment out of state. And on the flip side, they want to review when an employee waiver may apply as well. We also recommend that employers stay on top of all the rule making and private plan opt out deadlines as the program rolls out. I personally sign up for the state newsletters and regularly visit the Delaware PFML website, as these are great resources for information and updates. 

Thank you all for taking the time to join me today to discuss Delaware Paid Family and Medical Leave. We hope this session was helpful and Mutual of Omaha will continue to monitor the Delaware program as additional information is released.