Upcoming Dates To Know for Delaware PFML

As we previously reported, Delaware passed the “Healthy Delaware Families Act” on May 10, 2022, establishing a paid family and medical leave insurance program for employees working in Delaware (DE PFML), set to begin paying out benefits on January 1, 2026.

The Delaware Department of Labor, Division of Paid Leave (Division) recently issued its first round of implementing rules for DE PFML.

This article summarizes the rules’ key highlights, including important upcoming dates for employers with Delaware employees to be aware of, as outlined in the table below, as well as a broad overview of the DE PFML program.

Grandfathering Of Existing Paid Time Off Leave Plans

Employers that offered private paid time off benefit plans that were in place before May 10, 2022 may be exempt (or grandfathered) from DE PFML until December 31, 2029 (five years from the start of DE PFML contributions) if their plan is deemed “comparable” to the state public plan and they were made available to all employees.

To be considered "comparable," the employees covered under the existing leave plan must not be required to contribute more to the employer's existing plan than is required under the state public plan. Additionally, the existing leave plan's three main plan components (benefit percent, maximum benefit, and benefit duration) must be within 10% of the equivalent state plan components.

See the table below for a breakdown of the “comparable” components within existing leave plans to be grandfathered under DE PFML:

Moreover, for an employer’s existing parental leave plan to be considered “comparable” for grandfathering status, it must provide coverage for a child’s birth, adoption, and foster placement, as well as offer these benefits regardless of the parent’s sex, gender, or marital status.

Employers may grandfather one line of coverage (for example, medical leave through a short-term disability policy^[5]) and use the state public plan for other lines of coverage that are not considered “comparable.”

Employers who wish to grandfather their existing paid time off benefit plans must submit an application on the DE PFML portal before January 1, 2024.

Employers with 10 - 24 Employees: Paid Parental Leave Reduction Option

Employers with 10 - 24 employees may temporarily reduce the parental leave maximum benefit duration from 12 weeks to a minimum of 6 weeks for claims submitted prior to January 1, 2031, the first five years after the start of benefits on January 1, 2026.

To temporarily reduce the maximum benefit duration, these employers must notify the Division of their intention to do so by January 1, 2024 through the same online application process on the DE PFML portal.

These employers must also notify employees, in writing, of this decision no later than December 1, 2024.

Small Employer Opt-In

For all small employers (those with under 10 employees for parental leave or those with 10 - 24 employees for the other leave lines of coverage), providing DE PFML is voluntary.

However, once a small employer decides to opt-in, compliance with the terms of the DE PFML is mandatory and applies to all covered individuals.

These employers may opt into the state public plan between September 1, 2024 and December 1, 2024.

Private Plans

Employers may satisfy their DE PFML obligations and opt-out of collecting and remitting required premium contributions by notifying the Division through the online portal of its decision to provide DE PFML benefits through a state-filed and approved private plan. The private plan must be at least as generous and provide all of the same benefits, rights, and protections to employees as the state public plans.

Employers must submit private plan applications for the 2025 calendar year by December 1, 2024.

DE PFML Overview

Delaware PFML will provide income replacement PFML to eligible employees working in Delaware during a health or family event.

Covered employers: All employers with 10 or more employees working in Delaware are required to participate in the DE PFML program.

The following employers are exempt from DE PFML:

• Employers with 9 or fewer employees working in Delaware
• Federal government employers
• Seasonal employers that completely shut down for 30 days or longer, meaning these employers do not pay their employees and do not conduct business with clients during the annual closure period.

The table below captures the employer size (of employees working in Delaware) and DE PFML requirements in more detail:

Employers will determine whether they meet either the 10-employee or 25-employee coverage threshold by counting the number of employees over the preceding 12-month period. The initial 12-month period to determine the employer’s employee size threshold number will be the 12-month period prior to the start of contributions on January 1, 2025.

If the employee headcount decreases below the required threshold to provide DE PFML for any line of coverage and an employee is on leave, that leave will continue as approved.

Eligible employees: To be eligible, an employee must work primarily (meaning 60% of their time) in Delaware, have worked for their employer for at least 12 months, and have worked at least 1,250 hours (about 25 hours a week) in the most recent 12 months. Part-time employees (those working less than 25 hours per week) and/or those who are not expected to work for 12 months (such as students working over the summer) can co-sign, with their employer, a waiver form to withdraw from the program and be exempt from contributions.

Employees primarily reporting for work at a worksite or telecommuting outside of Delaware are not considered eligible employees for DE PFML. Note that telecommuting employees or employees temporarily assigned to work out-of-state, who are not considered eligible employees, can co-sign, with their employer, a reclassification form to join the DE PFML program.

Qualifying leave purposes: Once approved, employees can receive 80% of their weekly wages (up to $900 per week) for the following purposes:

• Medical Leave: Address a personal serious health condition or injury (up to 6 weeks, every 24 months),
• Parental Leave: Care for a new child in the event of the birth, adoption or foster care placement of the child (up to 12 weeks per year),
• Family caregiving Leave: Care for a family member with a serious health condition (up to 6 weeks, every 24 months),
• Qualified Exigency Leave: Assist while loved ones are on overseas military deployment (up to 6 weeks, every 24 months)

Employees are limited to a maximum of 12 weeks of total, combined leave per year.

Contributions: The table below captures the contribution rates under DE PFML for 2025 and 2026. In 2027, the state will adjust the contribution rate based on consumer price index changes.

Employers may require employees to contribute up to 50% of the cost of the DE PFML program.

If an employer decides to contribute more than 50% of the cost, they are required to notify the Division and inform all employees by December 15 of the year prior to the January 1 effective date the following year.

Employers may have different employee/employer contribution amounts for different classes of employees as long as:

• the different amounts apply equally to all employee classes' lines of coverage; and
• the employee classes are defined without reference to protected classes.

Employee notice requirements: Employers may require employees to provide notice of their need to take DE PFML at least 30 days in advance. If 30 days' notice is not practicable due to a lack of knowledge of approximately when leave will be required to begin, a change in circumstances, or a medical emergency, notice must be given as soon as practicable, considering all the facts and circumstances.

Next Steps for Employers

Since DE PFML contributions do not start until 2025 and the benefits are not payable until 2026, employers with Delaware employees have some time to comply.

However, those employers intending to apply for a “grandfathering” of their existing paid leave policies must take action on the DE PFML portal by January 1, 2024.

Additionally, those employers with 10 - 24 employees working in Delaware who intend to temporarily reduce the parental leave maximum benefit duration from 12 weeks to anywhere between 6 and 11 weeks must take action on the DE PFML portal by January 1, 2024.

Click here for the DE Division of Paid Leave’s webpage with helpful information and DE PFML resources.

Risk Strategies is closely following developments in connection with DE PFML and will continue to publish updates when available. Contact us directly with any questions at benefits@risk-strategies.com.

[1] 10% less than the state public plan’s requirement of 80%.

[2] 10% less than the state public plan’s requirement of $900.

[3] 10% less than the state public plan’s requirement of 12 weeks of parental leave.

[4] 10% less than the state public plan’s requirement of 6 weeks of medical, family caregiving, or qualified exigency leave.

[5] Due to the number of in-force policies in Delaware, these rules note the Division will undertake an impact analysis of short-term disability plan grandfathering on the future solvency of the DE PFML program. This may lead to termination of the grandfathered status of short-term disability plans if the program solvency is threatened.