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IMA Human Resources Blog

Is Trying to Comply with Different State and Local Paid Leave Laws Making You Crazy? Help from Congress May Be on the Way.

by Wayne O. Adams III

Ice Miller is an IMA member…

Employers with establishments in multiple cities and states know the challenges of complying with laws and ordinances that vary from one jurisdiction to another. Frequently, different locales enact laws on a particular subject that impose inconsistent or conflicting obligations on employers. This can make it impossible for those employers to adopt “one-size-fits-all” policies that apply everywhere they do business. On some personnel issues, this multiplicity of laws can make human resource administration a nightmare.

An example is the dilemma facing employers trying to comply with different state and local laws concerning paid leave for employees. A hypothetical company with at least six employees in Indianapolis, Chicago and Minneapolis each would not be required to give any paid sick time to its Indianapolis employees. Its Chicago employees would be entitled to earn one hour of paid sick time for every 40 hours worked, and its Minneapolis employees would be granted one hour for every 30 hours worked. However, the devil lies in the details of the Chicago and Minneapolis ordinances. For instance in Chicago, employers can cap the total sick time earned at no less than 40 hours, or five days, a year, whereas the Minneapolis ordinance allows workers to accrue up to 48 hours per year. Both ordinances require employers to permit employees to carry over unused sick time hours from one year to the next, but the Minneapolis ordinance caps the total paid sick time a worker may accrue at 80 hours.

Recognizing the compliance and administrative challenges individual state and local leave laws are presenting employers, Representative Mimi Walters (R-Calif.) recently introduced the Workflex in the 21stCentury Act (H.R. 4219) to attempt to simplify the plight of such employers. Her bill would exempt employers from state and local leave obligations if they give workers a certain amount of general paid leave that can be used for medical, family, bereavement, vacation and other reasons. Depending on the number of employees working for the company and the particular employee’s length of service, the employer would have to provide a minimum of 12 to 20 days of paid leave per year to qualify for the exemption.

In addition, the Tax Cut and Jobs Act (H.R. 1) contains a new tax credit equal to 12.5% of the amount of wages paid to qualifying employees during any period in which such employees are on FMLA leave if they are paid at least 50% of their normal wage rate during the leave. The credit would be increased by 0.25% (not to exceed 25%) for each percentage point by which the rate of payment exceeds 50%. In order to qualify for the credit, the employer must give full-time employees at least two weeks of paid family and medical leave per year and proportionately less for part-time employees. At the time this article was written, the new tax bill was only a few days from a final vote and the above credit was still in the bill. Assuming passage, this credit, unlike H.R. 4219, will not exempt employers from complying with different state and local leave laws, but it will provided a financial incentive to encourage employers to provide paid leave time for all employees in sufficient amounts to comply with the laws of the different jurisdictions where they do business.


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