October 18, 2024

Federal and State Updates

Federal Update

Internal Revenue Service (IRS)

As we near the end of the year, we wanted to remind employers who offer work-life referral benefits of the following:

Employers can claim a credit of up to 25% of qualifying child care expenses, to a maximum of $150,000.
Federal paid leave laws allow employers to claim a 12.5% tax credit if they offer paid leave at 50% wage replacement, and a 25% credit if the worker receives their full wage during leave.
Employers offering work-life referral benefits can exclude them from both gross income and employment taxes as a de minimis fringe benefit (see IRS Fact Sheet on the topic for more information). The IRS defines work-life referral services as “informational and referral consultations that assist employees with identifying, contacting, and negotiating with life-management resources for solutions to a personal, work, or family challenge.”

Larkin’s Family Care Concierge, available to employees facing childcare or eldercare challenges, allows employers to support their workforce without incurring additional tax liabilities. Ask your Larkin Client Success Manager for more information on adding the Family Care Concierge.

Social Security Administration (SSA)

In a recent press release, the SSA has announced some updates for 2025. The cost-of-living adjustment (COLA) has been released for 2025, and will be 2.5% for benefits payable to Social Security beneficiaries starting in January. The taxable wage base is also increasing from $168,600 to $176,100. Many state benefit programs cap the contribution amount of their programs at the maximum Social Security wage base, so don’t forget to double check that your contributions are in line with the updates by the new year for those relevant programs.

State Updates

California

Last month, Governor Newsom signed a few bills of interest. First, regarding Assembly Bill 2123 (AB 2123) – before this bill, employees in the Golden State could have been required by their employer to use up to 2 weeks of their accrued vacation before receiving benefits through paid family leave. Coming into effect on January 1, 2025 as a result of AB 2123, employers will no longer have the ability to require their employees to use up to 2 weeks of accrued vacation before utilizing the state’s paid family leave program (or voluntary plan benefits, if the employer has an approved plan through the state).

Governor Newsom also signed Senate Bill 1090 (SB 1090) which will provide some future changes to the State Disability Insurance (SDI) program. Currently, the California Unemployment Insurance Code (CUIC) requires the Employment Development Department (EDD) to issue the initial payment for a disability or Paid Family Leave (PFL) claim within 14 days of receipt of a properly completed claim. SB 1090 will instead require initial payment within 14 days of receipt of a properly completed claim or as soon as eligibility begins, whichever is later.

The EDD instructs individuals to wait nine days after their disability starts to file their claim. Under SB 1090, individuals may initiate the claims process up to 30 days in advance of the anticipated first compensable day of their claim. Both changes under SB 1090 will become operative when they are incorporated in the EDD’s integrated claims management system as part of the EDDNext project. You can learn more about the project here.

Lastly, AB 2499 makes changes to the California Labor Code which provides various protections for an employee who is a victim of a crime or abuse and also requires reasonable accommodations for the safety of a victim of domestic violence, sexual assault, or stalking. Of note:

The bill revises and recasts the jury, court, and victim time off provisions for employees as unlawful employment practices with the California Fair Employment and Housing Act (FEHA), which means enforcement will reside with the Civil Rights Department (CRD) as of January 1, 2025.
Instead of crime or abuse, the bill will refer to a “qualifying act of violence,” which is defined as domestic violence, sexual assault, stalking, or any act, conduct, or pattern that includes bodily injury or death; drawing, brandishing, or using a firearm, or other dangerous weapon; or, using or making a reasonably perceived or actual threat to use force against another individual.
Prohibits an employer with 25 or more employees from discharging or discriminating or retaliating against an employee who is a victim or who has a family member who is a victim for taking time off work for a purpose related to a qualifying act of violence.
Employers will be able to limit the total leave taken by an employee to 12 weeks. In cases where the employee’s family member is the victim, employers may limit time taken to assist in relocation purposes to 5 days and total leave taken to 10 days. Employers may not limit the total leave time to fewer than 12 weeks if a family member, who is the victim, is deceased as a result of a qualifying act of violence.
The bill expands the eligibility for reasonable accommodations to include an employee who is a victim or whose family member is a victim of a qualifying act of violence.
Employees may use leave under the Healthy Workplaces Healthy Families Act (HWHFA) if the employee or the employee’s family member is a victim. The HWHFA will also include new qualifying circumstances (related to a qualifying act of violence) such as:
- Enrolling children in a new school or childcare.
- Providing care to a family member who is recovering from injuries.
- Seeking, obtaining, or assisting a family member with legal services.
- Preparing for, participating in, or attending any civil, administrative, or criminal legal proceeding.
- Seeking, obtaining, or providing childcare or care to a care-dependent adult if necessary to ensure the safety of the child or dependent adult.

Employers will be required to inform each employee of their rights under the bill upon hire, annually, at any time upon request, and any time an employee informs an employer that the employee or the employee’s family member is a victim. The CRD is required to develop a sample notice by July 1, 2025. Once the notice is published, employers will need to notify their employees of their rights under the law.

Connecticut

Once again, the Connecticut Paid Leave Board of Directors has voted for the CTPL contribution rate to remain 0.5% for 2025. Employers should continue to remit contributions at the same rate in accordance with this update.

Additionally, Governor Lamont has announced that the state’s minimum wage will be increasing to $16.35 as of January 1, 2025. This means that the Paid Leave program’s benefit rate will also increase, as the calculation is based on the current minimum wage. For 2025, the weekly benefit amount for CT Paid Leave will be $981, an increase from 2024’s $941.40.

Delaware

Hear ye, hear ye! The First State’s Department of Labor has posted the Notice of Employee Rights which must be provided to current employees at least 30 days before contributions to the new Delaware Paid Leave program begin on January 1, 2025. The notice must also be provided to a new employee upon hire, when an employee requests leave, or when an employer acquires knowledge an employee’s leave may be a qualifying event under the program. You may provide the notice to employees electronically at either the employee’s work or personal email address.

District of Columbia

The Department of Employment Services (DOES) has finally released the new maximum weekly benefit for the District’s Paid Family Leave program. The weekly benefit amount is increasing from $1,118 to $1,153 for all claims with an approved leave period that begins on or after September 29, 2024. The DOES website does not have an updated poster at this time, however, it is not uncommon for it to be unavailable until late October or early November. We will be sure to let you know once the updated poster is available.

Maine

With the effective date of Maine’s Paid Family and Medical Leave (ME PFML) program looming closer, further information on the program has been provided on their website. ME PFML has recently provided a one-page document on what employers need to know related to program contributions, as they’re beginning in January of 2025. Later this winter, the online system that employers can use to file wage reports and remit contributions will become available, so we’ll give you a heads up once it’s available.

On another note, the required workplace poster has also been published. As a reminder, this will need to be placed within your workplace where workers will be able to easily view, as well as provided to new employees within 30 days of their hire date.

Maryland

The Maryland Department of Labor has published the proposed regulations for their Paid Family and Medical Leave Insurance program – as a reminder, contributions begin July 2025 and benefits will be available for employees in July 2026. You can email comments to famli.policy@maryland.gov by November 18, 2024.

Massachusetts

The Bay State has confirmed changes to its Paid Family and Medical Leave (MA PFML) program for 2025. Effective January 1, 2025, the maximum weekly benefit will increase from $1,149.90 to $1,170.64. The contribution rate will remain 0.88%, and is the total shared cost between employer and employees.

MA PFML requires that employers provide notice of the program to employees annually. This notice is typically released in October, but at the time of this newsletter, the new version was not available. When it is, we will be sure to update you via our newsletter. Once the new version of the notice is released, it must be provided to employees this year by December 2, 2024. Further, the required workplace poster has yet to be updated for 2025 – we will share once it’s available.

Minnesota

We’ve already covered it in a previous newsletter, and wanted to give you a quick reminder that the first wage detail reports for this state’s Paid Leave program will be due on October 31, 2024. Minnesota employers whose employees are all already covered by Unemployment Insurance (UI) will not need to create an account, as Paid Leave will be using the same online reporting system as UI. However, if some or all employees are not covered, then an employer may need to create an account to submit these wage detail reports through the UI online system. There now is an employer resource toolkit available which covers FAQs, program information, and a How-To on Wage Detail Reporting that can help you get started.