OLR Bill Analysis
AN ACT CONCERNING EARNED FAMILY AND MEDICAL LEAVE.
This bill creates the Family and Medical Leave Compensation (FMLC) program to provide wage replacement benefits to certain employees taking leave under the state's Family and Medical Leave Act (FMLA) or the family violence leave law, as amended by the bill. It provides them with up to 12 weeks of FMLC benefits over a 12-month period in an amount equal to the employee's average weekly net earnings during their highest earning quarter within the five most recently completed calendar quarters, up to a maximum of $1,000 per week (or an inflation adjusted equivalent). The program is funded by employee contributions. It does not cover the state or state employees and any references to “employers” or “employees” below do not include them.
Under the bill, employees eligible for benefits (“covered employees”) are:
1. people who earned at least $2,325 (or an inflation adjusted equivalent) from one or more employers during their highest earning quarter within the five most recently completed calendar quarters and are (a) employed by an employer with at least two employees or (b) unemployed and
2. sole practitioners and self-employed people who enroll in the program.
The bill requires the Department of Labor (DOL) to administer the FMLC program and, among other things, determine the amount that employees must contribute to the program to ensure (1) its solvency and (2) that total employee contributions are at least $4 million per month. By July 1, 2019, DOL must begin collecting contributions from employees who work for employers with at least two employees and the self-employed and sole proprietors who enroll in the program. The program must begin paying FMLC benefits by July 1, 2020.
The bill establishes the FMLC Trust Fund to hold employee contributions and pay for FMLC benefits and administrative costs. Any funds expended from the General Fund to administer the program or provide benefits must be reimbursed to the General Fund by October 1, 2019.
The bill also changes various provisions of the state's FMLA and family violence leave law, which generally require certain employers to provide unpaid leave to employees for various reasons related to their health or their family members' health. Among other things it:
1. expands the FMLA's coverage from private-sector employers with at least 75 employees to all employers with at least two employees, including municipalities and other currently exempted employers (such as private schools), but not the state;
2. makes employees eligible for FMLA leave if they meet the FMLC's minimum earnings requirement (current law requires (a) private-sector employees to have been employed by their employer for at least 12 months and 1,000 work-hours and (b) most municipal employees to have been employed by their employer for at least 12 months and 1,250 work-hours);
3. changes the maximum FMLA leave allowed for currently covered private sector employees from 16 weeks over a 24-month period to 12 weeks over a 12-month period, which reduces the amount of leave certain employees can potentially take over two years;
4. eliminates an employer's ability to require an employee taking FMLA leave to use his or her employer-provided paid sick time or other employer-provided paid leave; and
5. adds to the family members for whom an employee can take FMLA leave to include the employee's siblings, grandparents, and grandchildren (including those related by marriage).
The bill requires the labor commissioner to adopt regulations by July 1, 2019, to implement the FMLC program and the bill's changes to the FMLA. It also makes numerous minor and conforming changes.
EFFECTIVE DATE: Upon passage, except the provisions that (1) extend requirements for funds administered by the treasurer to the FMLC Trust Fund are effective July 1, 2017; (2) require the treasurer to conduct a public education campaign are effective January 1, 2019; (3) require the labor commissioner to adopt regulations are effective July 1, 2019; (4) establish employer notice requirements are effective January 1, 2020; and (5) affect the terms of the current family medical leave laws are effective July 1, 2020.
FAMILY AND MEDICAL LEAVE COMPENSATION PROGRAM
§§ 2, 6, 8 & 19 — The FMLC Program
Administration. The bill establishes the FMLC program and requires DOL to administer it. It authorizes DOL to:
1. determine if a person is eligible for FMLC;
2. require a covered employee to provide certification from a health care provider to support the employee's FMLC claim;
3. request and examine any books, records, documents, contracts, or other papers relevant to a covered employee's eligibility;
4. summon and examine under oath any witnesses that can provide information relevant to a covered employee's FMLC claim;
5. establish procedures and forms for filing FMLC claims; and
6. ensure the confidentiality of records and documents related to medical certification, recertifications, or medical histories of covered employees and their family members, as required under the FMLA.
The bill also requires DOL, in consultation with the state treasurer and the Department of Revenue Services, to establish the procedures needed to implement the program. DOL must:
1. design, establish, and operate the program to ensure transparency in program management and the FMLC Trust Fund through oversight and ethics reviews of plan fiduciaries;
2. establish and maintain a secure internet website that displays public notices from DOL and other information it deems relevant and necessary to educate the public about the FMLC program; and
3. submit a report to the General Assembly by January 1, 2018 with recommendations for legislative action needed to implement the program.
The bill requires the labor commissioner, by July 1, 2019, to adopt regulations to establish the procedures and guidelines needed to implement the FMLC program and the bill's related changes to the private-sector FMLA. The regulations must at least include procedures for hearings and redress, including restoration and restitution, for an employee who believes an employer has violated any of the bill's or these laws' provisions. Unlike the current regulations for private-sector FMLA and state employee family medical leave, the commissioner does not have to make reasonable efforts to ensure the regulations are compatible with the federal FMLA and its regulations.
Employee Contributions. The bill requires (1) DOL to begin collecting contributions to the FMLC Trust Fund by July 1, 2019 and (2) every employee who works for an employer with at least two employees and the self-employed and sole proprietors who opt in to the program to contribute a percentage of his or her weekly earnings to the trust fund in a manner the commissioner prescribes. The department must determine the amount of contributions necessary to ensure (1) the program's solvency and (2) that contributions total at least $4 million per month. The bill also requires DOL to:
1. design and establish the process by which employees must contribute a portion of their salaries to the trust fund, including creating an information packet with the necessary paperwork for participating;
2. evaluate and establish a process that allows employers to credit their employee's contributions to the trust fund through payroll deposit; and
3. ensure that contributions are only used to provide FMLC benefits and pay for the program's expenses, including employee costs and the costs of implementing, maintaining, advertising, and administering the program.
FMLC Benefits. The bill requires DOL, by July 1, 2020, to begin paying FMLC benefits to covered employees who file claims. The program must provide up to 12 weeks of FMLC benefits to covered employees during a 12-month period, which can be determined as a:
1. calendar year;
2. fixed 12-month period (e.g., a fiscal year or 12-month period measured from an employee's first day of employment);
3. 12-month period measured forward from an employee's first day of leave; or
4. rolling 12-month period measured backward from an employee's first day of leave.
Under the bill, a covered employee's weekly benefit is 100% of his or her average weekly earnings during his or her highest earning quarter within the five most recently completed calendar quarters before going on leave, after state and federal tax deductions. But the benefit cannot be more than $1,000 per week, or an inflation adjusted equivalent.
If the IRS determines that FMLC benefits are subject to federal income taxes and the employee chooses to have the taxes withheld from the benefits, DOL must deduct and withhold the amount required by the U.S. Internal Revenue Code in a manner consistent with state law. (The bill does not specify how contributions to the fund or benefits paid from it will be treated under state tax laws.)
Inflation Adjustments. Starting July 1, 2020 and by July 15 each year, the bill requires the labor commissioner to annually announce an adjustment to the minimum earnings threshold and benefit cap based on the Consumer Price Index (CPI) for urban wage earners and clerical workers in the northeast urban area of New York-Northern New Jersey-Long Island, NY-NJ-CT-PA, with no seasonal adjustment, as calculated by the U.S. Bureau of Labor Statistics. The adjustment must be the CPI's percentage increase between the last complete calendar year and the previous calendar year, with the amount of the increase rounded to the nearest five cents. The adjusted earnings threshold and benefit cap take effect on the following January first.
Benefit Uses. The bill allows a covered employee to receive FMLC benefits for leave taken for any of the reasons allowed under the state's private-sector FMLA or family violence leave law, as amended by the bill. These allow leave:
1. on the birth of the employee's son or daughter;
2. on the placement of a son or daughter with the employee for adoption or foster care;
3. for a spouse's, sibling's, son's, daughter's, grandparent's, grandchild's, or parent's serious health condition;
4. for the employee's own serious health condition;
5. to serve as an organ or bone marrow donor;
6. for certain family members who are armed forces members undergoing treatment for an injury or illness incurred in the line of duty;
7. under certain circumstances when certain family members are in the armed forces and on active duty or have been notified of an impending call or order to active duty; and
8. for family violence victims, to (a) seek medical care or psychological counseling, (b) obtain services from a victim services organization, (c) relocate because of family violence, or (d) participate in any civil or criminal proceeding related to, or resulting from, the family violence.
To qualify for benefits under the bill, an employee must notify DOL and his or her employer, if applicable, of the need for FMLC benefits. The department must determine the notice's form and manner. If DOL requests it, the employee must also provide a health care provider's certification as required under the FMLA law.
The bill allows an employee to receive benefits for nonconsecutive hours of leave, but limits the benefits to an eight-hour minimum in any workweek. If an employee takes benefits for at least eight hours, but less than one week, the employee's hourly compensation must be determined on a pro rata basis at DOL's discretion.
The bill allows employees to receive FMLC benefits concurrently with any employer-provided employment benefits as long as their total compensation while they are on leave does not exceed their regular compensation rate. Under the bill, no employees can receive FMLC benefits concurrently with unemployment compensation benefits or workers' compensation benefits.
§§ 3-5 & 21 — The FMLC Trust Fund
The FMLC Trust Fund. The bill establishes the FMLC Trust Fund to provide FMLC benefits to covered employees taking leave under the FMLA or the family violence leave law, as amended by the bill. The trust's assets must be used for (1) FMLC benefits; (2) educating and informing people about the program; and (3) paying the trust's operational, administrative, and investment costs. It must be a non-lapsing fund held by the state treasurer separate and apart from all other moneys, funds, and accounts. Investment earnings credited to the fund must become part of it.
The bill makes the trust an instrumentality of the state and requires it to perform essential government functions under the bill. It must receive and hold all payments and deposits or contributions intended for it, plus any gifts, bequests, and endowments; federal, state, or local grants; any other funds from a public or private source; and all earnings until disbursed under the bill's provisions.
Under the bill, the amounts deposited in the trust are not state property, and the trust must not be construed as a state department, institution, or agency. Amounts in the trust cannot be comingled with state funds, and the state must not have any claim to or against, or interest in, the funds. If the fund is terminated by law, however, any unclaimed funds become assets of the state.
Any contract or obligation made by the trust is not a state debt or obligation, and the state does not have any obligation to a designated beneficiary or any other person because of the trust. All debts owed by the trust are limited to the amounts available to pay the debt deposited in the trust. The trust must exist (1) as long as it holds any deposits or has any obligations and (2) until it is terminated by law.
The law for determining when property held by a fiduciary is presumed abandoned applies to the trust's property (CGS § 3-61a). Thus, property in the trust is presumed abandoned unless, within seven years after it became payable or distributable, the owner has (1) increased or decreased the principal, (2) accepted payment of principal or income, (3) corresponded in writing with the fiduciary concerning the property, or (4) otherwise indicated an interest through a memorandum on file with the fiduciary.
State Treasurer's Duties. The bill makes the state treasurer responsible for receiving and investing money held by the trust. The trust can only receive cash deposits, and no depositor or designated beneficiary may direct the investments of any contributions or amounts in the trust other than the specific fund options the trust provides.
The bill requires the treasurer, on behalf of the FMLC Trust Fund and for its purposes, to:
1. receive and invest the trust's funds in any instruments, obligations, securities, or property required under the bill;
2. procure insurance, if she deems it necessary, to protect the trust's property, assets, activities, deposits, or contributions; and
3. apply for, accept, and expend gifts, grants, or donations from public or private sources to carry out the trust's objectives.
The bill requires the treasurer to invest the trust's fund in a manner reasonable and appropriate to the trust's objectives, using the discretion and care of a reasonable person in similar circumstances with similar objectives. The treasurer must give due consideration to (1) rate of return; (2) risk; (3) term or maturity; (4) diversification of the trust's total portfolio; (5) liquidity; (6) projected disbursements and expenditures; and (7) expected payments, deposits, contributions, and gifts to be received.
The bill prohibits the treasurer from requiring the trust to invest directly in any obligations of the state or its political subdivisions, or in any other treasurer-administered investment or fund. The trust's assets must be continuously invested and reinvested in a manner consistent with the trust's objectives until they are disbursed under DOL's order or spent on the trust's operating expenses.
The bill places the treasurer's trust investments under the same oversight and requirements the law establishes for treasurer-administered funds, including the Teachers' Pension Fund, the State Employee Retirement Fund, and the Connecticut Municipal Employees' Retirement Fund.
§ 7 — FMLC Public Education Campaign
The bill requires DOL, in consultation with the state treasurer, to conduct a public education campaign to inform the public and employers about the FMLC program. The campaign must at least include information about (1) the requirements for receiving benefits under the program and (2) how to apply for benefits and the circumstances under which benefits may be available. The bill allows DOL to use funds from the FMLC Trust Fund for the public education campaign. Information distributed or available under the campaign must be in English, Spanish, and any other language the department prescribes.
§ 8 — Participation by Sole Proprietors and the Self-Employed
The bill allows someone who is self-employed or a sole proprietor to enroll in the FMLC program and includes them in its definition of “covered employees” and “employees.” Such a person must apply to DOL for enrollment in the program, in a form and manner the department prescribes. The person can enroll as long as he or she initially does so for at least three years. The person can re-enroll in the program for periods of at least one year if he or she provides written notice to DOL and the re-enrollment begins immediately after a subsequent period of participation in the program. (Presumably, this means that a sole proprietor would have to re-enroll for at least three years if he or she had any breaks in enrollment.)
Under the bill, a sole proprietor or self-employed person can withdraw from the program by submitting a written notice to DOL at least 30 days before his or her initial enrollment period expires, or at other times the department may prescribe by rule.
§§ 9 & 11 — Complaints and Enforcement
The bill allows an FMLC participant aggrieved by a denial of benefits to file a complaint with the labor commissioner. The commissioner must hold a hearing after receiving the complaint and must subsequently send each party a written copy of his decision. The commissioner may award the participant all appropriate relief, including any compensation or benefits to which the participant would have otherwise been eligible. Any party aggrieved by the commissioner's decision may appeal to the Superior Court under the Uniform Administrative Procedure Act.
Under the bill, anyone who willfully makes a false statement or misrepresentation regarding a material fact, or willfully fails to report a material fact to obtain FMLC benefits is disqualified from receiving program benefits for one year. DOL can also seek repayment of any benefits paid (1) erroneously, (2) due to willful misrepresentation, or (3) before a FMLC claim was rejected. The bill gives the labor commissioner discretion to waive any repayments, in whole or in part, when they would be against equity and good conscience.
§ 10 — Employer Notice Requirement
Starting January 1, 2020, the bill requires all employers with at least two employees to notify their employees at the time of hiring and every year thereafter:
1. of their entitlement to family and medical leave and family violence leave, as amended by the bill, and the terms under which the leave may be used;
2. that employer retaliation against an employee for requesting, applying for, or using family medical leave for which an employee is eligible is prohibited; and
3. that the employee can file a complaint with the labor commissioner for any violation of the FMLA or family violence leave law, as amended by the bill.
Employers can meet this requirement by displaying a poster with the above information in a conspicuous place in their place of business that is accessible to employees. The poster must be in English and Spanish. The labor commissioner may adopt regulations to establish additional requirements about how employers must provide notice.
(The bill requires employers with at least two employees to meet this notice requirement starting on January 1, 2020; however, the bill does not expand the current FMLA to those employers until July 1, 2020.)
§ 12 — Severability and Exceptions
The bill specifies that its FMLC provisions are severable, and if any are found to contravene state or federal law, the remainder remain in full force and effect. It also specifies that nothing in its provisions (1) prevents employers from providing more expansive benefits, (2) diminishes any rights provided under a collective bargaining agreement, or (3) preempts or overrides the terms of any collective bargaining agreement in effect before the bill is enacted.
§ 13 — Report Requirement
Beginning by July 1, 2021, the bill requires the labor commissioner to submit an annual report to the Labor and Appropriations committees on
1. the projected and actual participation in the program;
2. the balance in the trust;
3. the size of employers at which covered employees are employed;
4. the reasons why covered employees are receiving FMLC benefits;
5. the success of DOL's outreach and education efforts; and
6. demographic information on covered employees, including their gender, age, town of residence, and income level.
CHANGES TO CURRENT UNPAID LEAVE LAWS
§§ 14-18 — FMLA
Covered Employers. Current law requires private-sector employers with at least 75 employees to provide eligible employees with unpaid FMLA leave. The bill (1) reduces this employee threshold from 75 to two and (2) includes municipalities, boards of education, and private or parochial elementary or secondary schools (all of whom are currently excluded from the law), subjecting them to the FMLA's other provisions, as amended by the bill. It does not extend the FMLA's provisions to the state and state employees who receive family and medical leave under a separate law (CGS § 5-248a).
Maximum Leave Duration. The bill changes the maximum amount of leave an employee may take from 16 weeks over a 24-month period to 12 weeks over a 12-month period. This change reduces the amount of leave that employees currently covered under the state FMLA can potentially take over two years, because under current law, an employee can choose to take all 16 weeks of state leave in the first year followed by 12 weeks of federal FMLA leave in the second year (when they are ineligible for state FMLA leave).
Employee Eligibility. Under current law, private sector employees are eligible for leave once they work for their employer for at least 12 months and 1,000 work-hours. The bill instead makes an employee eligible if he or she meets the minimum earnings threshold for FMLC benefits. (This includes unemployed people who are not receiving unemployment benefits, although it is unclear how the FMLA, which requires employers to provide their employees with leave, would apply to the unemployed.)
Current law allows employees to take leave for themselves, their children under age 18 or who are unable to care for themselves, their spouses, and their parents (including in-laws). The bill expands the family members for whom an employee can take leave to include the employee's adult children, siblings, grandparents, and grandchildren. All of these family members include those related by adoption. Siblings, grandparents, and grandchildren also include those related by marriage.
Military Caregiver Leave. The law allows employees covered by the FMLA to take a one-time benefit of up to 26 weeks of unpaid leave for certain family members who are armed forces members undergoing treatment for an injury or illness incurred in the line of duty. The bill allows these employees to receive up to 12 weeks of FMLC benefits while on this leave.
It also adds to the family members for whom the employee can take leave to include the employee's (1) siblings and grandparents (regardless of their status as next of kin); (2) grandchildren related by blood, adoption, or marriage; and (3) siblings and grandparents related by marriage.
Employer-provided Paid Leave. Current law allows an employer to require employees to use their accrued employer-provided paid vacation, personal, family, medical, or sick leave during the time they are on FMLA leave. Employers can no longer require this under the bill. By law, unchanged by the bill, employees can opt to use their employer-provided paid leave while they are on FMLA leave.
As under current law, an employee's use of employer-provided paid leave counts toward his or her FMLA leave; however, the bill allows employees to receive FMLC benefits to make up the difference between their available employer-provided paid leave and the 12 weeks of leave allowed under the bill.
Current law requires employers to allow their employees to use up to two weeks of their employer-provided paid sick leave for a spouse's or child's serious health condition or the birth or adoption of a child. The bill expands this requirement to include serious health conditions of siblings, grandparents, and grandchildren (including those related by marriage).
Confidentiality. With certain exceptions, the FMLA requires employers to keep records and documents related to their employees' medical histories and medical certifications as confidential medical records under the state's Personnel Files Act. The bill extends this requirement to include the same records related to providing FMLC benefits.
§ 20 — Family Violence Leave
Current law requires employers (including the state) with at least three employees to allow employees who are family violence victims to take paid or unpaid leave to (1) seek medical care or psychological counseling; (2) obtain service from a victim services organization; (3) relocate because of family violence; or (4) participate in any civil or criminal proceeding related to, or resulting from, the family violence. The bill lowers the employer's employee threshold from three to two employees and allows the leave to include benefits paid under the FMLC program. (Presumably, this would not include state employees, as they are not covered by the FMLC program under the bill.)
The law, unchanged by the bill, allows employers to limit unpaid family violence leave to 12 days per calendar year. It also specifies that family violence leave does not count against any other leave provided under state or federal law. It appears that this will allow family violence victims to take family violence leave in addition to the 12 weeks of leave allowed under the bill, although any FMLC benefits an employee receives while on family violence leave will be subject to the bill's 12-week benefit limit.
§ 22 — Municipal Employee Family Medical Leave
Under current law, municipal employees are generally only eligible for family medical leave under the federal FMLA. The federal law provides 12 weeks of unpaid leave over a 12-month period to employees who worked for their employer for at least 12 months and 1,250 work-hours over the 12 months immediately preceding their leave. But current state law also allows certain municipal employees to qualify for leave under a lower work-hour threshold and in certain circumstances not allowed under federal law.
The bill eliminates these laws on July 1, 2020 and brings all municipal employees under the state FMLA. Thus, to qualify for leave they will only have to meet the minimum earnings threshold for FMLC benefits and will be able to take leave for any reasons allowed under the state FMLA.
HB 6212, reported favorably by the Labor and Public Employees Committee, also creates the Family and Medical Leave Compensation (FMLC) program and changes various provisions of the state's FMLA and family violence leave law. It is identical to SB 1.
Labor and Public Employees Committee