The Delaware Department of Labor has issued guidance and regulations to help implement the state’s Paid Leave (Family and Medical Leave Insurance Program). The program will be funded through payroll contributions paid by covered employers and employees.
Employers should keep in mind the following key dates:
Oct. 1, 2023 to Jan. 1, 2024 – Portal opens to allow employers to “Grandfather” (in the words of the statute and guidance) existing paid time off benefits and/or reduce their employees’ Parental Leave duration.
Sept. 1, 2024 to Dec. 1, 2024 – Opt-In/Opt-Out opened for employers who wish to use a private plan to opt-out and for small groups to opt-in to Delaware Paid Leave.
Jan. 1, 2025 – Contributions for Delaware Paid Leave begin.
Jan. 1, 2026 – Employees can begin to submit claim applications for payment.
The details
Background
Beginning Jan. 1, 2026, eligible employees are entitled to use paid leave for the following durations and reasons:
- Parental leave: Up to 12 weeks in a year for the birth, adoption, or placement of a child through foster care, as well as caring for the child during the first year after birth or placement.
- Family caregiver leave: Up to six weeks in any 24-month period to care for a family member (spouse, child, or parent) with a serious health condition.
- Medical leave: Up to six weeks in any 24-month period for the employee’s own serious health condition.
- Military family leave: Up to six weeks in any 24-month period, if the employee has a qualifying exigency arising out of a family member’s deployment as a service member.
A covered individual is eligible for a maximum of 12 weeks of paid leave in a year.
To comply with the law, an employer can provide paid leave benefits by:
· Enrolling in the Delaware Paid Leave plan;
· Using an approved private benefit plan purchased from an insurance company or administered through a self-insured plan; or
· “Grandfathering” an existing private paid leave benefit approved by the Division of Paid Leave as “comparable” to the Delaware Paid Leave plan (but only for the first five years of the plan).
Regulations and guidance
Here’s a summary of some of the topics addressed in the law, and subsequent regulations and guidance enacted to clarify the law.
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The Law as Enacted
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Clarifications in Regulations and Guidance
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Employee Count
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Employers with 10 to 24 employees are covered by the law’s parental leave requirements only. Employers with 25 or more employees are covered by all the leave requirements. Employers with fewer than 10 employees and employers that close for 30 consecutive days or more per year aren’t covered by the law. As contributions begin on Jan. 1, 2025, the initial 12-month period to determine the employer’s employee threshold number will be the 12-month period prior to the start of contributions.
To be considered a covered individual who is eligible to use leave, the employee must:
• Have been employed with the employer for at least 12 months; and
• Have at least 1,250 hours of service with the employer during the previous 12-month period.
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Any individual who works for an employer and works primarily in Delaware is considered an “employee” for purposes of the law. An individual works “primarily” in Delaware if they spend at least 60 percent of their working hours in Delaware.
To determine whether the 10-employee and 25-employee thresholds are met, the employer should start by counting every single Delaware employee, regardless of how long they’ve worked or how many hours a week they work. Then subtract the employees on waivers (see below). From there, add in any employees the employer has reclassified (see below). The Delaware Paid Leave administrative system will help employers keep track of their employee count.
Once a new level of coverage has been achieved, employees will retain those benefits for at least the next 12 months, even if the employer’s employee count falls below the threshold number. Only after continuously staying below the employee threshold number for over 12 months will the employer be allowed to drop the now-no-longer required coverages.
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Temporary Reduction Option
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With notice to the Delaware Department of Labor’s Division of Paid Leave (DPL), an employer with 10-24 employees may elect to limit the exercise of parental leave during the first five years that benefits are payable (2026 to 2031). During that five-year period, the employer may provide no less than half of the employee’s parental leave.
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This reduced amount can be anywhere between 6 and 11 weeks.
To qualify for this option to temporarily reduce the maximum benefit duration, employers must notify the DPL of their intention to do so by Jan. 1, 2024.
If prior to January 1, 2031, employers who have availed themselves of this reduced parental leave option decide to offer the full 12-week benefit for parental leave claims, the employer may do so by notifying DPL.
• If an employer decides to increase the length of Parental Leave after Jan. 1, 2024, but before Jan. 1, 2025, they should contact the DPL by email at PFML@delaware.gov to make this change.
• If the increase occurs after Jan. 1, 2025, the employer will be able to make this change by accessing the employer’s account on the Division of Paid Leave’s administrative system.
The DPL has created an online Grandfathering/Parental Leave Duration Application Portal to help employers through the application. The portal opened on Oct. 1, 2023.
Employers that chose to reduce maximum parental leave benefits must inform their employees, in writing, of this decision no later than Dec. 1, 2024.
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Grandfathered Plans
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Comparable employer-provided paid leave benefits in existence on May 10, 2022, may qualify under the law for a period of five years until Dec. 31, 2029.
At that time, the employer will be required to either enroll in the Delaware Paid Leave plan or have an approved private benefit plan that meets all requirements of the Delaware Paid Leave plan in place.
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Any written existing paid leave benefit that is either (1) a private insurance contract plan, including captives; (2) a self-insured plan; or (3) an “Employee Handbook” policy, can be grandfathered if the benefit design meets the requirements set forth in the law.
To be considered “comparable,” the existing paid leave benefit must offer benefits that are within 10 percent of the Delaware Paid Leave plan’s benefit percentage, maximum benefit, and benefit duration.
In addition, the employee’s share of the cost of the existing paid leave benefits cannot be more than the employee’s share of the cost of the Delaware Paid Leave plan, the existing paid leave benefits must provide for coordination of benefits, and the existing paid leave benefit must have similar eligibility rules to that of the Delaware Paid Leave plan.
An employer that wants to have their existing paid leave benefits grandfathered must apply by Jan. 1, 2024. The DPL has created an online Grandfathering/Parental Leave Duration Application Portal to help employers through the application. The portal opened on Oct. 1, 2023.
Review the ”Grandfathered Paid leave Benefits” FAQs for more information.
Note:
Employers with 10 or more employees who do not currently have a private benefit plan may opt out of the Delaware Paid Leave plan if they purchase a private plan that provides the same or better benefits as the state plan.
As opposed to “grandfathered” private plans (those in existence prior to May 10, 2022), private benefit plans must meet all requirements of the Delaware Paid Leave program, rather than just being “comparable” to the Delaware Paid Leave program.
The private plan can be either an admitted carrier’s approved insurance plan or a self-assured program (backed by a surety bond).
Employers who wish to use a private benefit plan to offer paid leave benefits to their employees must obtain the Division’s approval and opt out of the Delaware Paid Leave program on a yearly basis.
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Waivers
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An employee and employer may opt to file a waiver of the payroll contributions required when an employee’s work schedule or length of employment with the employer isn’t expected to meet the requirements for eligibility for benefits.
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Part-time employees (working less than 25 hours per week) and/or those who are not expected to work for 12 months can co-sign, with their employer, a waiver form to withdraw from the program. Employees on waivers will be exempt from contributions and will not be eligible for paid leave.
The employer may submit a waiver of coverage form through DPL’s online portal. The form will presumably be available on the portal.
If the conditions of their employment change, employees can be taken off waivers and join the program. Under the Delaware Paid Leave plan, the employer, utilizing the recommendation of the Division of Paid Leave’s administrative system, will make the initial decision as to whether an employee’s application qualifies for leave, the dollar amount of the benefit payment and how long the employee will be allowed to remain on paid leave.
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Reclassification
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With certain limitations, employers may reclassify an employee primarily reporting for work at a worksite in another state as eligible for the plan.
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Normally, any employee who works more than 40 percent of their time outside the state of Delaware wouldn’t be eligible for benefits. However, there are two possible exceptions: (1) employees who are assigned to Delaware teams but telecommute; (2) Delaware employees who are on temporary assignment out of state.
If a telecommuting or temporarily assigned employee and their employer both sign a reclassification form (a template form will , presumably be available on DPL’s portal) these employees can join the plan. If, at some later date, the employer and employee agree that the employee shouldn’t be part of the plan, they can sign a declassification form to leave the plan.
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Next Steps
- Employers seeking grandfathered plan status should do so by Jan. 1, 2024 via the portal.
- An employer with 10 to 24 employees seeking to limit the exercise of parental leave during the first five years should do so via the portal by Jan. 1, 2024 and notify employees in writing by Dec. 1, 2024.
- Review the regulations in full.
- Read the guidance provided by the DPL.
- Prepare to begin making contributions on Jan. 1, 2025.
- Begin providing leave for the covered reasons by Jan. 1, 2026.