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The Difference Between the Family Leave Act (FMLA) and the Paid Family Leave Act (PFL) – What Does It Mean?

A family on the beach, all hand in hand, flying a kiteIn a previous article posted in February 2016 we discussed the Family and Medical Leave Act of 1993 (FMLA). In this article, we will discuss what the Paid Family Leave Act (PFL) is and how it works as an adjunct to the FMNA. The FMNA and PFL work together; they do not cancel each other out or replace the other.

As Ehow notes, the FMLA is a federal act that was passed in 1993, and it is applicable to the entire nation. The PFL, however, is a California state law enacted in 2002. The PFL provides for up to six weeks of paid leave in a 12-month period to employees who take time off to attend to family needs.

The Family Medical Leave Act (FMLA) and California's Paid Family Leave (PFL) programs provide certain leave entitlements to employees caring for sick or injured family members or bonding with a new baby. The FMLA is federal legislation available to workers on a national level whereas the PFL is state legislation only available to California workers who contribute to the State Disability Insurance (SDI) program.

In addition, the FMLA does not require any contribution from the eligible employees. The PFL, however, is totally funded by employee contributions and only participating employees are eligible.

The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Employees are also entitled to return to their same or an equivalent job at the end of their FMLA leave.

The FMLA also guarantees the employee’s leave to attend to serious medical illness of self, spouse, child, or parent, to care for the newborn, and other family exigencies. The PFL, on the other hand, does not guarantee the leave but only provides for compensation of the employee during the qualifying leave.

Compensation

Generally speaking within the State of California, the amount of compensation that a qualifying employee is entitled to receive under the PFL legislation is not a straight 1:1 ratio. At present in most jurisdictions, the compensation afforded employees is 55 percent of their wages.

Recent Developments

There has been a growing trend within jurisdictions situated both within and without California (in similar family leave programs in other states) to implement a form of the PFL that mandates compensation at the rate of 100 percent of wages.

Recently, the San Francisco Board of Supervisors voted to mandate that employers offer six weeks of paid leave for new parents at 100 percent of an employee’s salary, making the city the first place in the U.S. to enact fully paid family leave.

But California is not the only place where this is happening. As observed by Andrew Flowers for FiveThirtyEight.com: “this is the second big step forward for paid-leave advocates. New York Gov. Andrew Cuomo has also signed into law a bill funding 12 weeks of paid leave for new parents, at 50 percent of a worker’s paycheck, administered by the state and funded through a payroll tax.”

There have been signs elsewhere of a trend toward increasing paid family leave. According to the April 13, 2016 issue of Accounting Today, Ernst & Young has increased its paid parental leave policy for new parents to 16 weeks instead of 12 weeks beginning in July. The new parental leave policy is available to men and women welcoming a child through birth, adoption, surrogacy, foster care, or legal guardianship. EY said it would also provide generous benefits for fertility, surrogacy, and adoption. On average, nearly 1,200 EY employees in the US, half of which are men, take paid parental leave each year.

We suggest to our clients that they consider and even anticipate the possibility that more and more jurisdictions, including their own (California and other), might be eventually subject to legislation requiring them to compensate their employees on leave at the rate of 100 percent of wages--certainly a significant potential cost of doing business that should be taken into account.

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