Frequently Asked Questions About The Connecticut Paid Leave (CTPL) Act
The CTPL offers members of the CT workforce the opportunity to access paid time off for qualifying life events, including childbirth and seeking treatment for serious health conditions. As a new act that recently came into effect, there are a lot of questions about the scheme and how it works. We have previously discussed the Connecticut Paid Leave Act (CTPL) in detail.
However, we decided to narrow it down to the most frequently asked questions about the CTPL in this post.
How Do I Administer Sick Time, Vacation Time (PTO), and Short-Term Disability Policies With CTPL?
The guidelines for employer-provided income replacement are set by you, the employer. When taking advantage of the federal FMLA and/or CT FMLA, you may require your employees to use accrued sick and vacation leave time as well as other paid time off (PTO). However, as of January 1, 2022, you cannot demand that your staff use up all of their PTO while on CT FMLA absence. At least two weeks of paid time off must be given to the employee to use for other reasons.
If you provide your employees with Short-Term Disability (STD) and Long-Term Disability (LTD) insurance coverage, you must review the language of those policies to ascertain their specifications. In general, STD and LTD insurance policies specify that before an employee is eligible for benefits under the insurance policies, employer- and state-provided paid leave benefits must be used.
Employees are permitted to receive both benefits from the CT Paid Leave Authority and benefits from their employer at the same time, but the total of these benefits cannot exceed 100% of the employee's regular salary.
Can An Employee Receive Both Employer-Provided Benefits And CTPL Benefits?
Yes. If an employee is taking leave under Connecticut General Statutes Section 31-51kk et seq. and can retain at least two weeks of such paid time off as required by Conn. General Statutes Section 31-51ll (e), the employer may require or may permit the employee to use any sick or other accrued paid leave while on approved leave. Employees who are qualified for CT PL benefits but do not have any employer-paid time off (due to accruals, a short-term disability policy offered by the employer, or otherwise) will begin receiving those benefits on the first day of leave without any deductions.
The employee is not entitled to any CT PL benefits during a leave of absence if the company provides paid time off that is equal to the employee's usual wage for the whole period of the leave. If an employee is qualified for CT PL benefits and receives employer-provided paid time off equivalent to some of the time they are on leave, they will only be entitled to those benefits for the remaining time they are on leave (i.e. the period the employee is on leave but not receiving employer-provided paid time off).
If an employee is out on leave and receives employer-provided paid time off that is less than their regular pay, they are still eligible for CT PL benefits. However, in this case, the benefits will be reduced to make sure that when the employer-provided paid time off is added to the CT PL benefits, the combined amount does not exceed 100% of the employee's regular pay. When an employee's earned or accrued paid leave is equal to their regular pay, this disqualifies them from collecting benefits under the policy.
However, this does not affect their maximum yearly allocation on income replacement benefits. When the employee's earned or accrued paid leave is less than their normal pay and they use the paid leave to supplement the benefits they receive under the policy, the day or days of the leave will be deducted from their annual allotment on income replacement benefits.
Are STD/LTD Benefit Payments Affected By The 0.5% CT Paid Leave Contribution?
Yes, the 0.5% CT Paid Leave contribution must be subtracted from benefits to the extent that the Internal Revenue Service (IRS) considers STD and LTD benefits to be taxable wages liable for Federal Insurance Contributions Act (FICA).
According to the IRS, sick pay is any sum provided to an employee under a plan because they were temporarily unable to work due to an illness, injury, or disability, regardless of whether the employer made the payment directly or through an insurance provider. The IRS considers short-term (STD) and long-term (LTD) disability benefits to be sick pay under this criteria.
If the employer pays some or all of the premium for the insurance, STD and LTD benefits are regarded as taxable wages subject to FICA. For more information on whether and to what extent such benefits are regarded as taxable earnings subject to FICA, see 2021 Publication 15-A.
There is no federal or state legislation requiring insurers to remit the CT Paid Leave Act funds, but IRS regulations mandate that they do so when processing employees' FICA contributions from STD and LTD coverage. Similar to how the IRS transfers responsibility for paying federal, state, and local income taxes and unemployment compensation taxes to the employer instead of the insurer.
The information the employer gets from the insurer indicating the taxable amount of the benefits shall serve as the basis for the employer's responsibility to contribute. Employers can meet this contribution requirement by charging their employees for the contribution or by making the contribution advance on the employee's behalf and requesting authorization from the CT DOL to deduct further amounts from the employee's paychecks once the employee resumes work.
Would The Employer Be Responsible For Paying The Employee's Share of Health Insurance Premiums While They Are Out on CT PL?
While an employee is on a leave of absence under the CT PL, the employer is not required to keep them on the company's health insurance plan. (The federal FMLA, however, does require that the employer continue to pay for the employee's health insurance.) If an employer decides to keep a worker on the employer-provided insurance plan while the worker is on unpaid leave, the employer can either directly bill the worker for the employee's share of the health insurance plan or it can pay the employee's share and then ask the worker for reimbursement when the worker returns to work.
It may take a while for employers, employees, and all parties involved in the CTPL Act to fully grasp the rudiments of the program and the protocols surrounding it. Quantum Benefits makes the journey less daunting by providing you with the help you need to understand the CTPL. For more information about what the CTPL Act is and the conditions for eligibility, read our previous article.
Besides educating employers and employees on the requirements of the CTPL and how it affects them, Quantum Benefits can also help you set up a paid leave plan that complies with current state and federal employment and benefits requirements. Give us a call today at (203) 856-6363 or fill out our contact form to speak with a representative.
This content is powered by Mission.