by Marti Cardi, Esq. - Vice President, Product Compliance
& Gail Cohen, Esq. - Senior Director, Employment Law And Compliance
September 21, 2020
We have been closely following the progress – or sadly, the lack thereof – by the Connecticut Paid Family and Medical Leave Authority in the seemingly monumental task of launching the CT PFML program. Employers of eligible employees in Connecticut will be required to begin deducting the employee contributions of not more than 0.5% effective January 1, 2021, with benefits to begin as of January 1, 2022. We summarized other aspects of the Connecticut program in a prior blog post here.
While the Connecticut statute allows employers to adopt a private plan in lieu of participating in the state program, the CT PFML Authority has yet to develop the process by which employers can obtain approval of their private plan. A “proposed employer application process” was published on July 21, 2020, and public comments were accepted through August 20, 2020. According to Erin Choquette, the General Counsel of the Authority, only 5 (only 5!) entities provided public comments (Matrix was one of those entities) on its proposed process. From Ms. Choquette’s summary of the comments at a recent Board meeting, it is clear that Matrix’s (and other’s) sentiments on the proposed process raised additional questions the Board was not prepared to answer. (Side note: Ms. Choquette’s summary spreadsheet and other documents mentioned at the Board meeting have just been made available here.)
Private plan approval process . . . or not.
At the Authority Board meeting on September 10, the Board took on the issue of private plans. The Board’s lack of clarity was apparent over how to interpret the bare-bones statutory requirement that a proposed plan must be approved by a majority vote of the employer’s employees. The Board has indicated it will hold a special meeting (not yet scheduled, according to the CT PFML website) to make that decision. The Authority is considering at least 3 employee vote options: (1) a vote on just an insurance declaration with the basic elements of the anticipated plan (but what about self-funded plans?); (2) a vote only after a full plan has been developed for employee review; and (3) two employee votes, one at each of these stages. Egads! This third option was recommended in the Board’s proposed employer application process mentioned above but drew strong objection from the insurance carriers.
The Authority has yet to articulate when in the process the Authority would approve a private plan and when such approval would be effective – as of the date of the employee vote, the date the plan was filed with the Authority for approval, the date of actual Authority approval, or some other date we haven’t yet imagined. This makes a difference, as employers must pay employee contributions over to the state for each quarter starting in January 2021 until a private plan is approved, with no chance to recoup these payments to fund the employer’s program after receiving plan approval.
So while this administrative process has been like watching sausage made, we at Matrix are still watching and learning. The end product is too important.
What should employers be doing now?
Suffice it to say, we will continue to follow the Authority’s activities and report updates when available, but we would be remiss if we did not point out to our readers that an ounce of prevention is the best approach. So, at this juncture, we are recommending the following:
- Be prepared to make the appropriate payroll deductions starting January 1, 2021.The exact amount of the employee contribution has not been announced but cannot exceed 0.5% by statute – and we predict the Authority will set the contribution rate at that full 0.5% due to concerns about financial viability of the state program.
- Employers are required to provide notice of CT PFML rights to employees at the time of hire and annually thereafter, but this is not a front-burner issue at this time.The notice requirement is not effective until July 1, 2022 (that’s not a typo here although maybe it is a typo in the statute – 18 months after contributions start and 6 months after benefits start).Nonetheless, in order to keep employees informed and forestall a flood of questions, we recommend employers plan to provide notice to employees about the premium contribution and some basic PFML information before paycheck withholding starts. That’s a fairly simple task and perhaps the Authority will design such a notice for employer use before the end of the year. Keeping our fingers crossed.
- Be ready to register on the Authority’s website, www.ctpaidfamilyleave.org, which according to the Authority, should be available for this purpose sometime in November.
Matrix Can Help!
As we have done in other recent states that allow private PFML plans, Matrix is preparing a template for self-funded private plans based on the statute itself, in a format that we will be able update once regulations are drafted and finalized. This way, for those employers interested in having Matrix administer a CT private plan, we will be ready as soon as the approval process is identified. Our sister company, Reliance Standard Life Insurance, is also standing by, considering offering an insured product. If you want more information contact your Matrix or Reliance Standard account manager, or reach us at firstname.lastname@example.org.