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June 28, 2019
2019-1194

Connecticut law adopts paid family and medical insurance program

Recently enacted Connecticut SB 1 (Public Act 19-25) creates a state paid family and medical leave insurance (FMLI) program to be funded 100% by employees through payroll deduction. (Governor's press release, June 25, 2019.)

Effective January 1, 2021, employers will begin withholding up to 0.5% (to be determined by a state board) of covered wages up to the Social Security wage limit in effect for the year (for example, $132,900 if the tax were in effect in 2019). Up to 14 weeks of paid FMLI benefits are available to eligible individuals starting January 1, 2022.?

Sole proprietors and independent contractors may opt into the state FMLI program.

The law allows employers to alternatively provide the same or better benefits as the FMLI program at the same or lesser cost to employees through a private plan. Private plans must be approved by the state and meet certain requirements. Employees covered by an approved private plan are not required to contribute to the state's FMLI program.

Starting July 1, 2022, employers are required to provide written notice to new employees upon hire and annually to all employees about their entitlement to FMLI benefits.

The Act also creates a "non-charge" against an employer's state unemployment insurance (SUI) account for the payment of benefits to employees temporarily hired to replace those on FMLI leave. This provision allows employers to lay off temporary employees hired due to an FMLI event without increasing their unemployment insurance tax rate. Laid off employees are eligible for unemployment insurance benefits assuming they meet the unemployment insurance benefit requirements.

Ernst & Young LLP insights

Connecticut joins a growing list of states (California, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, and Washington) that have established paid family and medical leave insurance programs. While Connecticut's program will be funded by employees only, the other states vary in whether employees solely fund the cost (e.g., New York), employers and employees share in the cost (e.g., Washington), or employers shoulder 100% of the cost (e.g., District of Columbia).

For the current paid family and medical leave insurance rates read our special report here.?

For information concerning the tax treatment of paid family and medical insurance read our special report here.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Advisory Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)

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