CLIENT ALERT: New Law Poised to Create State Paid Family and Medical Leave Program In Delaware

On April 14, 2022, the Healthy Delaware Families Act (the “Act”) passed both houses of the Delaware General Assembly. The Governor is expected to sign it into law, at which point Delaware will become the 12th United States jurisdiction to enact a paid family and/or medical leave program.

Although the State’s paid family and medical leave program will not fully ramp up until mid-2026, below is an overview of what Delaware employers can expect. For a more in-depth discussion, be on the lookout for an invitation to our next client event on May 18, 2022 at the DuPont Country Club.

The New Family and Medical Leave Insurance Program

The Act establishes a Family and Medical Leave Insurance Program (the “Program”), which has three components of benefits:

1. Medical leave
2. Family caregiving leave
3. Parental leave

Paid leave will be available under the following circumstances:

• The employee is caring for a child during the first year after the child’s birth, adoption, or placement through foster care.
• The employee is caring for a family member with a serious health condition.
• The employee has a serious health condition that makes them unable to perform the functions of their position.
• The employee has a qualifying exigency.

Benefits will be paid directly by the Delaware Department of Labor (“DDOL”) to employees. Generally speaking, benefits will amount to 80% of the employee’s average weekly wages, up to a maximum of $900 per week during the first 2 years of the Program. Employers must permit employees to take leave intermittently or on a reduced schedule when medically necessary and supported by documentation.

Although paid parental leave is available up to 12 weeks in a 12-month period, the aggregate leave taken for other reasons (medical, family caregiving, and qualifying exigency) is capped at six weeks in any 24-month period. Also, leave taken for medical, family caregiving, and qualifying exigency purposes is limited to one period of leave in a 24-month period.

Covered Employers

The Act’s requirements do not apply to: (1) the federal government; (2) employers with fewer than 10 employees reporting to work in the State of Delaware; or (3) employers who are closed for at least 30 consecutive days per year.

For all other Delaware employers, those with 25 or more employees reporting to a worksite in Delaware must participate in all three leave components (medical, family caregiving, and parental). Employers with 10 to 24 employees are required to participate in parental leave only. For the first five years of the Program (beginning when benefits start), employers with fewer than 25 employees may cap parental leave at 6 to 11 weeks (rather than providing the full 12 weeks).

When counting employees for the purposes of determining whether an employer is covered by the Act, only employees who have been employed for at least 12 months and have at least 1,250 hours of service during the previous 12 months are to be counted.

In lieu of Program participation, employers can apply to the DDOL for approval to use a private plan. Employers who wish to implement a private plan in lieu of participating in the State program must notify the DDOL on or before January 1, 2024.

Smaller employers who are not required to participate in the Program can “opt in” by notifying the DDOL and employees. Once opted in, these employers cannot opt out for 3 years, and they must provide notice of opting out at least 12 months advance notice of the decision to do so.

Covered Employees

Similar to the FMLA, benefits are available to employees who have been employed for at least 12 months and have at least 1,250 hours of service during the previous 12 months. The Act expressly incorporates the FMLA’s legal standards for determining whether an employee has satisfied the service hours requirement.

Funding the Program

Beginning January 1, 2025, employers must contribute to the Program’s Family and Medical Leave Insurance Account Fund (the “Fund”). For 2025 and 2026, the rates will be as follows:

• Medical leave: 0.4% of wages for each employee
• Family caregiving leave: 0.08% of wages for each employee
• Parental leave: 0.32% of wages for each employee

Employers can require that half of the contributions for each employee be paid by the employee in the form of payroll deductions.

Employer Obligations

Similar to the FMLA, employers will be required to provide written notices upon hire, when the employer requests covered leave, and when the employer has knowledge that an employee’s leave might qualify for the Program. There also will be a poster furnished by the DDOL.

Although payments will be issued by the Program directly to employees, employers are responsible for receiving, vetting, and making determinations on eligibility for benefits. Here is how this will work:

• At least 30 days in advance of the need for leave (or as soon as practicable), the employee applies and submits any required documentation needed to review the claim.
• The employer approves or denies the application within 5 business days of receipt of the completed application and documentation.
• If a claim is approved:
  • The employer notifies the DDOL within 3 business days.
  • DDOL initiates payments to the employee within 30 days after notification by the employer.
• If a claim is denied:
  • Within 60 days of the denial, the employee may request that the DDOL review the employer’s determination.
  • Within 30 days of the DDOL’s determination, the employee (but not the employer) may appeal the DDOL’s determination to a newly created Family and Medical Leave Insurance Appeal Board (the “Board”).
  • The decision of the Board will be final and binding on the employee and employer.

Upon returning from leave, employees are entitled to restoration of the same or an equivalent position. Unlike FMLA, there does not appear to be any exception to this requirement for “key” employees. Employers also must maintain the employee’s health care benefits during leave, although employees must pay their share of the premiums. The Act prohibits retaliation against employees who exercise their leave rights under the Act.

Enforcement

The Act provides the DDOL broad authority to investigate and audit employers’ compliance. Penalties for noncompliance range from $1,000 to $5,000 per violation.

In addition, the Act provides a private cause of action that can be brought by an employee (on behalf of themselves or a class of employees) if an employer fails to comply with job restoration and benefits provisions or engages in retaliation prohibited by the Act.

Timing

The Act is effective July 1, 2022, but structured to roll out over several years:

• By January 1, 2025, the DDOL must establish the Program. We can expect significant regulations, guidance, and forms to start rolling out in 2024.
• On January 1, 2025, employers must begin making contributions to the Program.
• On July 1, 2026, the Program will begin paying benefits to qualified employees.

Conclusion

The Labor and Employment Team will continue to monitor for further developments as the Healthy Delaware Families Act proceeds to the Governor’s desk. Stay tuned for an invitation to our next client event on May 18, 2022, where we will discuss the Act in greater detail and answer your questions.

In the meantime, if you have questions about the Act and its requirements, contact the Labor and Employment Team at Potter Anderson (Jennifer Gimler Brady, Kathleen Furey McDonough, Jennifer Penberthy Buckley and Clarissa Chenoweth-Shook).

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 100 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.