In this episode, we're joined by Colleen Rynne and Vanessa Alexander from the UKG Regulatory and Tax Research Team to cover:
For more information on compliance and legislative changes, be sure to follow the Compliance Connection group in the UKG Community.
In this episode, we're joined by Colleen Rynne and Vanessa Alexander from the UKG Regulatory and Tax Research Team to cover:
For more information on compliance and legislative changes, be sure to follow the Compliance Connection group in the UKG Community.
0:00:00 Paid Family and Medical Leave programs can often put a ripple into your HR and payroll processes, but if you know the different types and what to expect, you can minimize that ripple turning into a wave. Let’s learn a bit more.
[Musical intro]
0:00:23 ASHLEY: Hi, everyone. Welcome back to the Working Smarter Café Podcast. I’m your host, Ashley Gordon, and today I’m joined by Colleen Rynne and Vanessa Alexander from our regulatory and tax research team. Hi, ladies. Welcome.
COLLEEN: Thank you so much, Ashley, for having us here today.
ASHLEY: Of course. Thanks so much for being here. So, Colleen, if you’ll start by just introducing yourself and providing our listeners a little bit about what you do here at UKG.
0:00:49 COLLEEN: Sure. Hi, everyone. I’m Colleen Rynne. I’m director of the regulatory and tax research team here at UKG. This team is responsible for product compliance at UKG, which means that the team and myself, we monitor, analyze, and partner with product development teams on regulatory updates that are happening throughout the United States, Canada, and on a global basis. And then we work with the product development teams to ensure that our products, whether it’s the ready product pro dimension central or any of our other products, can assist our customers with their compliance needs.
0:01:25 We have a wide range of responsibilities, including, of course, Paid Family and Medical Leave, what we’re talking about here today, but also any regulatory impact, whether it concerns payroll taxes, Form I-9, Affordable Care Act, data privacy, wage and hour updates, and anything else that the government can think of.
0:01:44 ASHLEY: You’re not very busy basically, right?
[Chuckling]
COLLEEN: Not at all.
ASHLEY: And, Vanessa, if you’ll take the chance to introduce yourself as well.
0:01:54 VANESSA: Yes, of course. So my name is Vanessa Alexander, and I am a senior product business analyst here at UKG. I’ve been doing payroll for about 15 years. My expertise is in payroll tax filing and compliance. Here my main focus on the team is to create partnerships with state agencies and we’re constantly on the hunt for like pending bills that are out there that are related to payroll, and then specifically those that have been signed and are ready to be implemented.
0:02:26 ASHLEY: Fantastic. So like Colleen mentioned, we are here today to talk about paid Family and Medical Leave. It always ends up being a very hot topic, so if you two can start by explaining a little bit about why Paid Family and Medical Leave legislation makes HR and payroll professionals so unbelievably nervous.
0:02:49 VANESSA: So one of the reasons I think it makes HR professionals and employers in general nervous about this, it’s just that there’s just so many things to consider, and every state has a different payroll impact. I’ll say the most common and probably the first question that I get asked when a new Paid Family and Medical Leave state comes out is what are the payroll impacts, what are the contribution amounts, what are the max subject wages, taxable wages, is this employee paid or is an employer paid. So it just gets very, these agencies have decided to make the implementation different. Every agency is different.
0:03:27 So, for example, D.C. as an employer has contributions on all wages, where Oregon has an employee and employer 60/40 split on wages up to a certain taxable wage amount, and then we have Massachusetts. They get a little crazy. They split their contribution amount between medical and family leave, and then they further split that down to percentages between employer and employee. So I can understand why it would make an employer nervous. There’s just too much to know and too much to remember with all of the different jurisdictions.
0:04:00 COLLEEN: And when each state is able to pass their own Paid Family and Medical Leave, they’re able to construct it however they want, I mean, within reason. So even though states are looking at the same thing, who are the employees eligible to take leave and what is the amount of time that they’ll be on leave for, what are they going to be paid. Each state can answer those questions very differently, which is why we’re seeing that variability that Vanessa just mentioned.
0:04:29 And in addition to that, companies may want to offer their own Paid Family and Medical Leave to their employees whether or not a state requires it. But with the rise of states passing their own laws, employers need to ensure that their policies comply with the state statutes if a private plan is allowed or go through the obstacles that these statutes present for private plans.
0:04:58 ASHLEY: You just hinted at the fact that a lot of these states have been on a trend of passing Paid Family and Medical Leave. Why is that?
0:05:06 COLLEEN: In one respect, the discussion of Paid Family and Medical Leave is not new. FMLA, the federal law, was passed in 1993, although that is, as everyone knows, unpaid leave. And the United States is only one of the few countries that does not provide paid maternity leave. In fact, we’re only one of six countries not to provide that. So, for those of us who particularly work with employers on a global scale and, you know, when someone else goes on leave and they’re on leave for weeks or months at a time, there is this known gap here at the United States.
0:05:45 And then what really pushed us to the forefront, though, is the pandemic, and with the pandemic, it exposed this gap of lack of Paid Family and Medical Leave, and with the pandemic over, or COVID more under control, state legislatures are asking what have had, would it have helped if employees had access to Paid Family Medical Leave during the pandemic, and now that the pandemic is over, should those employees still have it, is that need still there.
0:06:21 VANESSA: Yes, and also I’ll piggyback a little bit on what Colleen said. The pandemic really did present an opportunity to have a system in place where we can take time off and still have a job but also be compensated for those lost days of work. So the states saw there was an opportunity to implement what could be considered justified as paid time due to personal or family medical issues, and what we’ve seen in every state is that they define this very differently. So it could be for the normal, I would say normal, personal medical leave, like a pregnancy, but we also have family caregivers that need to take time off for a family member. It could be for mental health, it could be for adoption, it could be for foster care. Some states have even included military leave for deployment-related reasons.
0:07:14 And then we have Oregon, that has what they call a safe leave, which is an employee that is a victim of sexual assault, domestic violence, harassment, stalking. So Paid Family Medical Leave really did open the door for these states to really think what is best for the employee during these unforeseen situations.
0:07:34 ASHLEY: That’s unbelievably fascinating, and I will say it seems like the biggest challenge is the variability that we see in these laws. So what are some of the trends or the expectations that employers can expect as more of these types of laws pass?
0:07:53 COLLEEN: Sure. So with the variability of laws, each state, when they are considered a Paid Family Medical Leave program, they need to answer six questions. One, what is the reason for the paid leave. Two, how long can the employee take the leave. Three, what is the amount that the employee, or what is the amount of the benefit the employee is going to receive while on leave. Four, which employees are eligible for leave. Five, who is paying for the leave, is it the employee, the employer, or a combination of both. And then sixth, what is the contribution amount, how much is the employee and/or employer paying in to.
0:08:32 And then as we mentioned before, the responses to each of those six questions is going to differ based upon the state, and sometimes the states will agree on an answer to a particular question. For instance, the typical length of leave granted under a PFML is 12 weeks, but in other times they can vary greatly. In terms of trends, Vanessa kind of touched on this a bit, where now that states are able to define their own programs and with the expansion of thought of who is a family member and what are the reasons for leave, we are seeing states define their programs beyond the traditional married couple with children.
0:09:19 So for instance, the definition of who’s a family member is becoming much more expansive. They are including grandchildren and grandparents as people for whom an employee can take leave to care for. The most expansive one is Washington state’s definition, which includes, quote, anyone who the employee is expected to care for at home, which, you know, is very vague and I believe intentionally so and may require discussions between your employees and your HR department to determine if leave is eligible for that employee to care for a person within their home.
0:09:58 And as Vanessa also mentioned, there’s different reasons for an employee to take leave, which are, you know, based on military leave or sexual assault, stalking, harassment, which we may not have been thinking about back in ’93 when FMLA was passed. Another trend that we’re seeing is the mandated Paid Family Medical Leave plans versus the voluntary Paid Family Medical Leave plans, where the mandatory ones are the states requiring leave to be provided to employees should they meet the eligibility, whereas with the voluntary ones, employers can opt into the program if they so choose.
0:10:44 VANESSA: Yeah, and the different types of plans, again, to kind of piggyback with the private plans and government-issued plans, so there are different plans that employers have options to. So you can have a government-issue plan, or the state agencies have government-issued plans, and then you have a private insurance plan also, like Colleen said, voluntary plans. So a private plan must be approved by the state and offer paid leave benefits equal or more generous than those provided under the state paid medical leave plan.
0:11:20 And some states may also require employee voting to approve a private plan, which I find very interesting. And so if the employer choose to go private plan, they have two options. They can do a purchase, they can purchase it via licensed insurance carrier, who administers the plan, or self-insured plans, which is administered by the employer. So I will say that seven out of the 10 that we have for Paid Family and Medical Leave programs allow for private plans, so some states don’t even allow you to have a private plan, and also what’s interesting is that private plans are not nearly as popular as state plans because the process can be very difficult for an employer to apply.
0:12:09 So some employers won’t even go private because it’s just the process in itself is difficult. And then what’s even more interesting on the different types of plans, then we have some agencies that have gone completely voluntary. So we have Vermont, Virginia, New Hampshire, and Florida so far that are completely voluntary, so that’s just a benefit that’s out there for the employer to add as a benefit package if they choose. And a common trend with that, it’s usually states with no income tax that have a completely voluntary plan. So I thought that was interesting as well.
0:12:50 ASHLEY: I will say this is all incredibly fascinating and, despite the variability and the challenges that it all presents, it definitely sounds like employees are being put in a much better position when things arise unexpectedly in their lives. So before we dive into sort of how UKG helps customers with all of this, I want to continue down sort of the different situations that we’re dealing with. So what states and jurisdictions are the outliers for Paid Family and Medical Leave? I think you sort of hinted at a few there, Vanessa, but I’d like to call them out a little bit more if possible.
0:13:33 VANESSA: Yeah, so of course, you know, with everything, there’s always outliers, and right now what we consider outliers is California and Rhode Island. They were both early adopters of Paid Family Leave, where California passed in 2002 and Rhode Island passed in 2014, and what they decided to do is just attach this under their SDI programs that they already had. Currently in UKG Pro, paid family leave is rolled under SDI for these codes, which is not what we’re seeing the trend going, the direction that most of these states are going.
0:14:16 The tax rates are inclusive of both disability and paid family leave. This isn’t, like, again, this isn’t exactly how Paid Family Medical Leave as we know it today, but it’s close. It does include an employee component under disability and a family component under the Paid Family Medical Leave and the, and from there, from here, Paid Family Medical Leave like has evolved, you know. This is where it all started, and it has evolved drastically with states offering just much more generous benefits and eligibility requirements and less costs for employees by either splitting the contribution between the employee and employer or totally paid by the employer.
0:15:00 It’s always interesting just to see when an agency comes out with a new plan and how different they can be from one jurisdiction to another, but it’s just interesting to see. Like, how are they going to implement this? Like, what are they going to do differently from previous jurisdictions?
0:15:20 ASHLEY: I guess that’s where the fun lies in all of this. So for 2023, what states are you all watching right now that may be passing something soon or this year even?
0:15:34 COLLEEN: So we have, let me see, we’re looking at about five. So we have New Mexico, Michigan that we’re looking at, just keeping an eye out for. Minnesota has passed but wanted to add additional info to the criterias, so we’re waiting for that to be released. Maine, also their budget includes a paid family medical program, so we’re waiting on more details. Maryland did pass recently and made changes to the program, but the program’s now, it had been delayed and it’s expected to start October 2024, with the employee benefits started on January 1, 2026.
0:16:20 VANESSA: And Maine has an interesting story behind it, or maybe as interesting as it gets when you’re talking about Paid Family Medical Leave, where Maine was trying to pass it through the legislative process and it probably wasn’t going to proceed that far, and so there was a push by the citizens of Maine to have Paid Family Medical Leave be included on the ballot for the next state election, and the Maine legislature decided, well, we would prefer to be able to pass it through the legislative process rather than a referendum, particularly because if they want to modify it at a later time they would have to modify it through an additional referendum, not through the legislative process. So Paid Family Medical Leave was included as part of Maine’s budget for that reason and is now expected to pass in the next couple days.
0:17:27 ASHLEY: That’s fantastic and very interesting. Have we seen that occur before, where the citizens have fought to have it and essentially forced the legislature to respond?
0:17:40 COLLEEN: I don’t believe that’s happened with regard to Paid Family Medical Leave. Where I’ve seen this before is in California with their data privacy law, which I know is getting off topic, but when CCPA, California’s data privacy law was being enacted, there was a push for it to be on the referendum and California responded by having it go through that legislative process. So if there is a big enough push within the state by its citizens or by advocacy groups within the state to push for something that the legislature may feel somewhat hesitant about, it can force that issue and pass it as part of the political process.
0:18:25 ASHLEY: It’s fascinating. Thank you so much for expanding upon that a little bit, Colleen. So I want to talk about something that is a little bit different. So, can you explain how the Washington Cares legislation is different from Paid Family and Medical Leave.
0:18:41 COLLEEN: So, so it is very different, because Washington long-term care is really more so like a long-term disability plan that is paid by the employee. So the program was created to provide Washingtonians access should they need help with like their daily living activities. So the agency defines that basically with assistance that you need with even just taking your medication, if you need assistance with just eating, bathing, those kind of things, so the money is used for providing assisted living facilities, which we all know that can be, you know, we all know that they can be very expensive.
0:19:24 So what’s different about them is just they provide, it gives the employee the ease of mind, I guess you would say, of not having to have those expensive bills and it’s just, it’s long term, and it is capped out at a certain amount, but it is a benefit that the employee has. I’ve never seen any, I haven’t seen an agency do it this way, so it’s very different from Paid Family Medical Leave, and it’s, again, like I said, it’s 100% employee paid.
0:19:59 Now, the employee can opt out of this, so if the employee chooses not to deduct this amount, they can opt out of it, for sure, and it has to be approved by the agency and then the agency will then submit a letter back to the employee that they were approved for this, and then the employee then has to provide that letter to the employer to say that they have been approved to be exempt from the long-term care. So it’s definitely very different.
0:20:32 ASHLEY: And that one just went into effect recently, correct?
0:20:36 COLLEEN: It did. It started 7/1.
ASHLEY: Perfect. So I’d like to get into now a little bit how UKG responds when these types of legislations go into effect. So can you explain a little how UKG supports Paid Family and Medical Leave legislation?
0:20:55 VANESSA: Sure. So when a state passes a Paid Family Medical Leave plan, we work with the product development team to provide them the requirements, and then they come up with a solution that can assist our customers. So we have a variety of products here at UKG, but overall, UKG products can help with the automation of the administration and tracking of both paid and unpaid, federal-, state-, and employer-specific leave policies, including Paid Family Medical Leave.
0:21:32 With regards to specifically Paid Family Medical Leave, the products can track the tax withholdings and contributions that may have to be made, both on the employee and the employer side. It can also help determine eligibility of leave based on earnings with the company and can determine the time that employees are entitled to for their leave requests, because we have such variability with both the contributions and the amount and length of leave that an employee is eligible for.
0:22:03 We really believe that, with these solutions, it can help reduce the administrative burden for our customers, the labor costs for our customers, and, of course, the risk of non-compliance when managing leave requests and eligibility, whether through a legislative program or a voluntary one.
0:22:24 ASHLEY: That’s great. And I know what many people are probably thinking. So once the legislation passes, what is the process for customers to be notified of how UKG will be supporting those laws?
0:22:37 VANESSA: If you’re a UKG customer, I highly recommend joining the Compliance Connection Customer Community. Whenever there is a legislative or regulatory update that could impact their customers and/or products, we post the regulatory update within that customer community, Compliance Connection, and we do this for really a couple reasons. One is to let our customers know about the regulatory update, but even if you’ve heard about it, you know, through other means, through other media, then it also allows our customers to know that UKG is working on it and can ask us questions.
0:23:18 Now when the law is first passed, we’re not going to have all the answers. A lot of times we are waiting for regulations or for an agency to provide further guidance, but we can answer those questions as they come in, or as we get the guidance in. And then we are also working with the product development teams, and when the product development teams have planned and designed and coded how they are going to respond to the regulatory change or the new PFML plan then, and it’s ready for release, our release notes will include the necessary information that our customers need to know about how they can utilize the product to their best advantage.
0:24:01 So, absolutely recommend reviewing the release notes because it’s going to give you that further detail that the first announcements in Compliance Connection won’t have, particularly with regards to how to utilize and set this up within the product.
0 0:24:16 ASHLEY: Yes. And I know the Compliance Connection, the compliance update sites and even e-mail communications used to get the word out once we’re ready to support it. We’ll also, I’ll be sure to include more information about the Compliance Connection group in the episode notes. Thank you so much for your time today, ladies. Is there any sort of parting words that you would like to provide our customers about this topic?
0:24:41 VANESSA: I would say that we are a partnership, you know, between the employer and UKG, we’re a partnership. We do track these items very thoroughly and, as I mentioned previously, we do create partnerships with agencies. We’re constantly having meetings with them, so we’re very aware of these pending laws or [inaudible] laws, and I know it can be very nerve-wracking when a new jurisdiction is fixing to come out and what are the new, what are the payroll impacts, but just to kind of ease a little bit, you know, that we’re here and we know and we’re in very close contact with the agencies. UKG does strive to make sure that our product is in complete compliance with the agencies.
0:25:29 COLLEEN: To further that along with the partnership, we discuss these types of regulatory updates not just through Compliance Connection but through the Aspire Convention in November. There is an annual compliance updates that will include Paid Family Medical Leave as well as other regulatory updates that have occurred throughout the year, and there’s a compliance check through the e-symposium as well. So, if you’re ever concerned about or feeling like you should touch upon Paid Family Medical Leave again, I really recommend looking at or attending those programs because it will touch on it for you and will also provide you the ability to ask us questions directly.
0:26:16 ASHLEY: Well, Colleen and Vanessa, you have been a wealth of knowledge. Thank you so much for your time today. You two are truly some of the best that UKG has to offer.
0:26:26 COLLEEN: Thank you for having us.
ASHLEY: And a big thanks to you, our listeners, for being here today. If you’d like to hear more about legislative topics, please feel free to like or comment on the episode directly or within the Compliance Connection group on Community. I’m Ashley, until next time. Bye.
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[End of recording – 26:56 in length]