States Requiring Immediate Action

Action Summary Listed by Upcoming Compliance Deadline

PFML Legislation to Watch

Pennsylvania lawmakers continue to discuss legislation that could create a statewide Paid Family and Medical Leave program. In March, House Bill 200 (The Family Care Act) passed the Pennsylvania House of Representatives and advanced to the Senate for consideration. Its companion legislation, Senate Bill 906, its companion bill, has already cleared the Senate Labor & Industry Committee by a 9-2 vote and is expected to be a key initiative for a vote by the full Senate when they reconvene in September.

While no new PFML mandate has been enacted as of the publication date of this newsletter, employers with Pennsylvania employees should monitor legislative developments closely. If passed, Pennsylvania would become one of the largest states to implement a mandatory PFML program.

IRS Clarifies Tax Treatment of PFML Benefits

Employers in states with Paid Family and Medical Leave (PFML) programs should prepare for new federal tax reporting requirements beginning in 2027.

What is Changing?

Under new IRS guidance, the portion of Paid Medical Leave (PML) benefits attributable to employer-funded contributions will be treated as third-party sick pay and wages. As a result, these benefits will be subject to:

• Federal income tax withholding

• Social Security tax

• Medicare tax

• Federal Unemployment Tax (FUTA)

Why It Matters

To accurately tax benefits, claim administrators will need to know the percentage of PFML premiums funded by employers versus employees.

Employers that pay all or part of the employee contribution are generally required to treat those amounts as imputed income, increasing the employee’s taxable wages.

Different Rules for Medical Leave and Family Leave

Paid Medical Leave (PML)

• Employer-funded portions of PML benefits are treated as wages (like 3rd party sick pay).

• State claim administrators will withhold applicable taxes and remit them to the IRS.

• Employers may receive PML Benefit (wage) information from the state and will need to include the taxable wage portion on the employee’s Form W-2 and remit the employer share of applicable payroll taxes.

Paid Family Leave (PFL)

• Benefits are not wages and are not subject to Social Security, Medicare, or FUTA taxes.

• Benefits are taxable income and generally reported on Form 1099-G (or 1099-misc).

While the IRS Revenue Ruling specifically addresses state-administered PFML programs, many private plan insurers and tax professionals are expected to follow this guidance when determining the taxation and reporting of PFML benefits.

Bottom line: Employers should begin reviewing contribution structures, payroll processes, and W-2 administration well in advance of the 2027 implementation date.

US Treasury and IRS guidance for PFML Tax Credit

What is Changing?

IRS Code Section 45 S has been expanded to include more opportunities for employers to qualify for PFML Tax Credits.

• Now a permanent tax credit (former Fischer PFML Tax credit expired 12/31/2025)

• Eligible employees now include part-time workers (20+ hours/week) and starts at 6 months of service (instead of 1 year).

• Credits can be calculated using insurance premiums in addition to self-funded plans using a percentage of wage paid.

• Allows tax credits in PFML Mandated states for the employer paid benefit paid above the state mandates

Why it matters

The United States does not have a federal program for PFML benefits. These tax credits are a uniform way to encourage businesses to provide the benefit while making it affordable.

Employers should consult their tax advisors to determine whether they may benefit from the expanded PFML Tax credit opportunities in IRS Notice 2026-28.

Steps Employers Should Begin Taking Now to support Federal Guidance

• Document employer vs. employee contribution percentages.

• Coordinate contributions with payroll providers.

• Review W-2 reporting responsibilities.

• Discuss reporting processes with private plan carriers.

• Consult tax advisors before changing contribution structures.

• Identify PFML Tax Credit opportunities

California – San Francisco Paid Parental Leave Ordinance

What is Changing?

San Francisco’s Paid Parental Leave Ordinance (PPLO) is expanding eligibility for covered employees. Beginning on the applicable effective date, employees will only need 90 days of employment with a covered employer to qualify for PPLO benefits, reduced from the current 180-day employment requirement.

Effective Dates by Employer Size:

• January 1, 2027: Employers with 100 or more employees nationwide

• January 1, 2028: Employers with 20-99 employees nationwide

Employers can review the signed ordinance here: 260451 – Leg Final

Why It Matters

The reduced service requirement will allow more employees to qualify for the PPLO benefit, resulting in additional employees becoming eligible for 100% wage replacement while bonding with a new child through the combination of California Paid Family Leave (PFL) bonding benefits and the San Francisco PPLO.

To qualify for the PPLO, an employee must:

• Work at least 8 hours per week in San Francisco;

• Perform at least 40% of their total weekly work hours in San Francisco; and

• Meet the applicable employment duration requirement with the covered employer.

Once an employee is approved for California Paid Family Leave bonding benefits, the San Francisco PPLO requires covered employers to provide supplemental compensation so the employee receives up to 100% of their normal gross weekly wages while on qualifying bonding leave. Access to the benefit calculator is here: San Francisco Paid Parental Leave calculator | SF.gov

Employer Consideration: Employers with San Francisco employees should review their leave policies, payroll practices, and employee communications to ensure they are prepared for the expanded eligibility requirements.        

Colorado

What is Changing?

Colorado FAMLI insurance has announced several changes that impact both benefit payments and annual dues for employers with private plans.

1. CO FAMLI Benefit Update – Effective July 1, 2026 Maximum weekly benefit is $1,448.02 New claims and those that were open prior to July 1 recalculated to reflect the state’s average weekly wage ($1,608.91)

2. Maintenance Fee Announcement – Due by December 31, 2026

The Private Plan Maintenance Fee for Fiscal Year 2025-2026. Employers that maintained a private plan for the entire fiscal year (July 1, 2025, through June 30, 2026) are assessed a maintenance fee of $134 per FEIN, due by December 31, 2026.

• Invoices can be found in your employer account on My Famli+Employer’s website.

• If your private plan was not in force for the full fiscal year, this fee does not apply.

The fee is calculated annually based on the state’s private plan operational expenses. As a positive sign of program efficiency, this year’s assessment decreased from last years:

3. New premium rate – Effective January 1, 2027 – State Premium rate will be 0.86%, which is a reduction from the 2026 rate. This also means employee payroll contributions for the state plan and private plans are also reduced.

Connecticut

Connecticut Paid Leave Reminds Employers to Review Contact Information

Connecticut Paid Leave is encouraging all employers, including those participating in the state plan and approved private plans, to verify that their contact information is current. Outdated contact information can result in missed compliance notices, renewal reminders, and other important communications.

What is changing?

Penalties may be assessed if the state receives CT PFML Contributions After Private Plan Approval. Employers with approved private plans should stop remitting Connecticut Paid Leave contributions to the state. Employers that continue to make contributions after private plan approval may be subject to penalties beginning with repeated occurrences.

If contributions are sent in error:

• Connecticut will not deduct penalties from employee contribution funds sent by mistake.

• Contributions (sent to the state in error) must be returned and redirected to the approved private plan insurer or retained by the self-funded plan to support benefit payments.

• Employers will be billed separately for any assessed penalties and may be required to provide information to facilitate the return of erroneously remitted funds.

Common Private Plan Audit Findings

Connecticut continues to conduct private plan audits and has identified several recurring compliance issues that employers can proactively address.

1. Failure to Upload the Approved Private Plan Document

• A copy of the approved private plan must be uploaded within 30 days of approval.

• The plan must also be available to employees within 90 days of the plan effective date.

• Failure to comply may result in early termination of the private plan or impact future private plan approval requests.

2. Failure to Renew After the Three-Year Approval Period

• Private plan approvals must be renewed every three years.

• Connecticut sends renewal reminders approximately six months, four months, and two months before expiration.

• Employers should verify contact information and monitor spam and junk folders to avoid missing important renewal notices.

3. Failure to submit the Private Plan Annual Report – due by May 1 annually.

• The state’s annual report template cannot be completed by the insurance carrier because it includes employment details only the employer would know. Carriers will provide claim level details to add to the employer’s detail to support the annual reporting need.

4. Failure to tell the state they no longer are a covered employer, or have employees in the state, or they have terminated their private plan. Even if they tell their private plan carrier the policy must be terminated, it is the employer’s responsibility to alert the state to their changing business actions in the state.

Why it matters?

Connecticut Paid Leave resources are being diverted to address preventable compliance issues that can often be avoided through timely employer action and accurate account maintenance. By encouraging employers to meet their compliance obligations from the outset, the state can devote more resources to addressing complex program administration and employer support needs. Financial penalties are intended to both offset the administrative costs of resolving these issues and encourage compliance before violations occur.

Action Item: Review your Connecticut Paid Leave account contact information and confirm your private plan compliance obligations are being met to avoid penalties, renewal issues, and other administrative complications.

Delaware

What is Changing?

Delaware Paid Leave is approaching the first private plan renewal cycle for the state’s new program. The state has confirmed that existing approved private plans will be automatically renewed provided that:

• The private plan remains in good standing;

• The employer continues coverage with the same insurance carrier; and

• No material changes are made to the approved plan design.

Employers that wish to change insurance carriers or make modifications to their approved private plan will be required to submit a new application for state approval. Requests for a new private plan approval must be submitted no later than December 1, 2026.

Why it Matters?

Delaware’s Paid Leave regulations allow the state to require private plan renewals each year. The decision to automatically renew eligible private plans is a positive development for employers, reducing administrative burden and eliminating the need for annual resubmissions when coverage and plan provisions remain unchanged.

This approach also reflects the state’s confidence in the ongoing administration and oversight of approved private plans. Employers that are satisfied with their current private plan arrangements can expect a streamlined renewal process, while those considering a carrier change or plan modification should begin evaluating their options well in advance of the December 1 deadline.

👉 Important: Employers planning to change private plan carriers or modify their approved plan design for 2027 should begin the approval process early to ensure uninterrupted compliance and avoid potential contribution obligations under the state program.

District of Columbia

What is Changing?

DC has made several significant changes to their universal paid family and medical leave program including an increase to minimum wage, which impacts on the benefit calculation and then material changes to the benefit plan design as described below:

1. Effective July 1, 2026 – the minimum wage increased, 2026.

2. Effective October 1, 2026 – the benefit will be decreasing.

• Less money each week – The maximum weekly benefit will be $1,100 (down $90/week from the $1,190 prior to October 1)

• Less time to take leave – Paid Family caregiving leave (PFL) reduced from 12 weeks to 6 weeks, and paid medical leave (PML) is reduced from 12 to 10 weeks.

What stays the same in October 2026?

• Parental Leave will stay at 12 weeks, and Prenatal leave will stay at 2 weeks.

• DC PFL employer-funded tax remains 0.75% per dollar of covered payroll.

Employer Actions

• Hang the New Poster Employer Toolkit » DOES Office of Paid Family Leave

Reminder: The District of Columbia extended their ban on offsets for Insured Short-Term Disability benefits, meaning the employee may receive their full benefit payment from a STD insurance policy and full DC PFML benefits. Check with your insurance carrier to see if their STD coverage will change to accommodate the reduction of benefits that overlap with STD.

• The ban does not include Self-funded STD plans as an employer may offset DC PFML Benefits from an employer-funded STD plan.

How does it impact PFML Benefits?

Claims filed on or before September 30, 2026, continue under the current benefit plan design, even if some portion of the leave extends beyond October 1, 2026.

Hawaii

What is Changing?

Effective July 1, 2026, Hawaii expanded its Hawaii Family Leave Law (HFLL) to include leave for a qualifying military exigency. This new leave reason joins the law’s existing provisions for child bonding and family caregiver leave.

Under the HFLL:

• Covered employers are businesses in Hawaii with 100 or more employees.

• Covered employees include full-time, part-time, and intermittent employees who have worked for a covered employer for at least six consecutive months. There is no minimum hours-worked requirement.

For additional details on Hawaii’s unpaid Family Leave Law, visit the state’s Wage Standards Division website: Hawaii Family Leave Law (HFLL).

Why it Matters?

Hawaii remains the only state with a mandatory Temporary Disability Insurance (TDI) program that has not implemented a mandated paid family leave program. Expanding the HFLL to cover qualifying military exigencies signals continued evolution of the state’s family leave framework and may provide a foundation for future consideration of broader paid family and medical leave benefits. To learn more about the unpaid HFLL, review the state’s website: Hawaii Family Leave – Wage Standards Division

Maine

Maine benefit and private plan update – Effective July 1, 2026

What it Changing?

Maine will update their new state average weekly wage (SAWW) each July 1. For PFML, this will impact (1) the eligibility threshold that an employee needs to qualify for benefits, and (2) the benefit calculation and maximum weekly benefit available. In addition (3) improvements to the private plan application process have been implemented.

1.   Eligibility threshold 6x ME SAWW based on the earlier of the claim application date or the first day of leave.

2.   Maine PFML Weekly Benefit Amount

Maine’s Department of Labor, who oversees the PFML program. provided several examples to help demonstrate how the state public plan and private plans will look at the specific dates of each claim to determine the eligibility and/or benefit calculation.

·        Application submitted on 6/30/2026, for leave starting on 7/15/2026:              must earn 6 * $1,199 = $7,193.04

·        Application submitted on 7/4/2026, for leave starting on 7/15/2026:               must earn 6 * $1,250 = $7,494.72

3. Maine is making it easier for businesses to apply for private plans by simplifying the application dates.

• A new ‘Evidence of Coverage (EOC) form is required at time of the private plan application. It allows the state to quickly find key details to approve private plans faster. Carriers will issue the EOC along with the private plan insurance policy making it a more streamlined process.

• All new private plans have a start date aligned to the beginning of a new quarter and that should be the effective date of the insured private plan.

• The PFML Contribution exemption may have a different effective date since the program still allows the exemption to be retroactive to the beginning of the current quarter if received more than 30 days from the start of the new quarter.

Maine’s Private Plan Application Date Examples:

Maryland

Maryland’s Family & Medical Leave Insurance (FAMLI) program has opened their Employer Registration portal and Declaration of Intent (DOI) window if the employer chooses to use a private plan.

What is changing?

Action Required: Register for Maryland FAMLI – portal is open

Employers with at least one Maryland employee must register for Maryland FAMLI. Registration is completed by EIN. Employers with multiple EINs must register each EIN separately. Registered employer profiles may then be linked for streamlined administration and compliance. To access the Registration portal: Login.gov

Declaration of Intent to use a private plan (DOI) One-time only – limited offer

• Employers who choose a private plan can apply for a Declaration of Intent (DOI) to go private and receive a contribution exemption for 2027 contributions. The DOI is a limited time offer September 1-November 15, 2026.

Employers need to prepare for the MD FAMLI contribution beginning with the first payroll run in January 2027. The state rate is 0.90% applied to every dollar as earned up to the Social Security Wage annual cap (which will be published in October).

👉 Important: Registration and DOI applications began September 1 – November 15, 2026, and 2027 FAMLI contribution assessments planning should begin now.

Massachusetts

What is Changing?

Beginning January 1, 2027, the makeup of Employer and Employee funding of MA PFML will change. The actual contribution rate will be published in October, but the changes specific to the funding of PFL and PML benefits are a direct result from the US IRS taxation published RR-25-04.

For 2027 calendar year:

• Up to 100% of the medical leave contribution can be withheld from a covered individual’s wages

• Up to 40% of the family leave contribution can be withheld from a covered individual’s wages and the employer with 25+ covered individuals will be responsible for contributing the remaining 60%

• Employers with less than 25 covered individuals are only responsible for providing the covered individual contributions to the state program. (i.e., the employer portion is waived for businesses with less than 25 covered individuals.) They may take the funds via payroll deduction or may choose to fund on behalf of their covered individuals.

Why it Matters?

• Private plans – an employee cannot be charged more then they would have paid into the public plan. Private plan MA PFML benefit taxation rely on employers providing the percentage of premiums paid by employees. Please tell your carrier if this state change impacts the way you will collect funds in 2027.

• Employers with Union workers should confirm Collective Bargaining Agreements are updated with these new rules.

• Consulting your tax professional and/or employment councel is always recommended before making significant changes to your program funding.

Minnesota

Minnesota State Average weekly wage will impact both claimant eligibility and the benefit amount effective the end of October. Plus, the state confirmed their 2027 contribution rate.

What is Changing?

1. Effective October 25, 2026 New claim maximum weekly benefit $1,164.48.

Minnesota’s new state average weekly wage (SAWW) will impact claims that start on or after October 25, the last Sunday in October. For PFML, this will impact (1) the eligibility threshold that an employee needs to qualify for benefits, and (2) the benefit calculation and maximum weekly benefit available. In addition (3) improvements to the private plan application process have been implemented.

• Eligibility earnings threshold: An employee must earn at least $4,000 combined from all MN employers in the 12 months (base period) prior to taking the leave. This is 5.3% of the state’s average annual wage rounded down to the lower $100.

• Benefit Calculation: Claims that start on or after October 25 will use the new SAWW in the 3-tiered benefit calculation capping at $1,164.48.

2. The MN PFML Contribution Rate for 2027 calendar year will remain 0.88% of covered payroll. We may see an update to the 2027 Covered Payroll as it is based on the Social Security Annual Wage cap rounded to the nearest one-thousandth. The Social Security Administration will announce the 2027 annual wage mid-October allowing the state to publish their rounded payroll cap.

New Jersey

What is Changing?

New Jersey expanded the following provisions effective July 17, 2026, impacting both NJ Temporary Disability Insurance (TDI) and Family Leave Insurance (FLI) programs Read the full list of changes here.

Job Protection:

• The Statute governing benefits are amended to include provisions that effective leave claims on or after July 17, 2026, covered individuals who receive TDI or FLI benefits shall be restored to the same or equivalent position following their leave.

Coordination between NJ Earned Sick Leave and TDI/FLI.

• Eligible employees who have available ‘accrued’ sick time under NJ Earned Sick and Safe Leave may select the order in which they use earned sick time and/or TDI/FLI benefits. Please note, Earned Sick accrued time may not be applied to ‘top-up’ benefits for TDI/FLI.

💡 Tip

Employees with a TDI claim lasting less than 3 weeks will have a seven‑day unpaid waiting period. During this waiting week, employees may use Earned Sick and Safe Leave (ESSL).

• Week 1: Unpaid TDI (ESSL can be used)
• Weeks 2–3: Paid TDI (ESSL should not be used)

For claims that last longer than 3 weeks, the seven‑day waiting period is retroactively paid under the state’s required plan design.

👉 Important: If the employer allows ESSL to be used during the waiting week and the claim extends beyond 3 weeks, this can result in an overpayment once the waiting week is reimbursed (typically around week 4). Private insurance may choose to pay week one as taken (not retroactively) if they know the claim will last longer than 3 weeks. Check your NJ TDI Policy or ask your private plan carrier for details.

New York

Effective January 1, 2027, New York’s Paid Family Leave maximum benefit and funding rate will change. Plus, Employees in the construction industry under a collective bargaining agreement enhanced eligibility.

1. What is Changing?

Annual Plan Design updates – New York Paid Family Leave (NY PFL)

*NY DBL – Disability Benefits remain the same at $170 maximum weekly benefit and payroll deduction capped at $0.60/week.

2. Beginning January 1, 2027, Employees working in the construction-industry who work for multiple employers under a collective bargaining agreement can qualify for NY PFL benefits after working at least 26 of the prior 39 weeks for employers that are signatories to a collective bargaining agreement. (Assembly Bill 4727-becomes law.)

Why it matters?

Under current rules, many construction workers do not satisfy New York PFL’s eligibility requirements because individual work assignments often last fewer than 26 weeks. By allowing employees to aggregate qualifying weeks worked across multiple signatory employers under a collective bargaining agreement, this change will enable more construction workers to meet the eligibility requirements and access Paid Family Leave benefits when needed

Oregon

Oregon Benefit Update – Effective July 1, 2026

What is Changing?

Benefits Maximums and Minimums change annually on July 1. For claims with leave start dates on or after July 1, 2026, the new state average weekly wage (SAWW) benefit calculation will apply. (Claims and/or leaves that started before July 1, 2026, will use the older SAWW in the benefit calculation.)

2027 Contribution announcements will be published in November.

Rhode Island

Effective July 1, 2026, Rhode Island updated their state average weekly wage, which also increased their Temporary Disability and Temporary Caregiver Benefit maximums.

What is Changing?

The state publishes a quick reference guide that can be found here: 7.1.26 Quick Reference.xlsx

Rhode Island Temporary Disability and Temporary Caregiving benefits are only available when you apply to the state’s program. Many employers supplement these benefits with ancillary Short-Term Disability (STD) benefits.

Washington

Washington’s PFML Program has published several changes including 1) As of August 2026, Fines and Penalties will be assessed for late reporting or payment of PFML contributions and then 2) updates for their new state average weekly wage (SAWW) which will increase 2027 PFML Benefits and 3) changes to the funding of the Paid Family Leave and Paid Medical Leave buckets.

What is Changing?

1. Effective August 1, 2026

WA State Paid Leave will begin applying penalties to past due reports and interest to overdue premium balances.

• A one percent (1%) monthly interest charge will be applied to overdue premium balances

• Late Fees ranging from $75 – $250 can be applied for late submission of Quarterly Wage/Hour reports.

• For more information – Billing statements and late fees – WA PFML

2. Effective January 1, 2027

State Average Weekly Wage and Maximum PFML weekly benefit will change

3. Effective January 1, 2027,

Beginning January 1, 2027, the makeup of Employer and Employee funding of WA PFML will change. The actual contribution rate will be published in October, but the changes specific to the funding of PFL and PML benefits are found here: WA PFML Chapter 26-statute change for PFML benefit taxation and are a direct result from the US IRS taxation published RR-25-04. For 2027 calendar year:

• Up to 100% of the medical leave contribution can be withheld from a covered individual’s wages

• Up to 45% of the family leave contribution can be withheld from a covered individual’s wages and the employer with 50+ covered individuals will be responsible for contributing the remaining 55%

• Employers with less than 50 covered individuals are only responsible for providing the covered individual contributions to the state program. (i.e., the employer portion is waived for businesses with less than 50 covered individuals.) They may take the funds via payroll deduction or may choose to fund on behalf of their covered individuals.

PFML State Update Reference Chart

See the reference chart below for a summary of when the mandated states make changes. Announcements are generally published by the states 30+ days in advance of the effective date of the changes.