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Grandfathering paid leave programs due by year end

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Companies operating in Delaware and wanting to maintain their existing paid leave programs must file with the state by the end of 2023.

The Delaware Paid Leave Program for businesses with 10 employees or more will not take effect until January 2025. | PHOTO COURTESY OF FREESTOCK/UNSPLASH

Companies operating in Delaware and wanting to maintain or “grandfather” their existing paid leave programs must file with the state by the end of 2023, even though Delaware’s official Paid Leave Program for businesses with 10 employees or more will not take effect until January 2025.

“These are what we call ‘employee handbook programs,’” said Chris Counihan, director of the new Division of Paid Leave in the Department of Labor, explaining that these programs are ones guaranteed as part of a company’s benefits package but not necessarily specially funded. Being grandfathered will allow these programs to operate independently for five years. After that, the company must join the official paid leave program by December 2029.

“It’s our little thank you to these companies for already having this paid leave program for their employees to begin with,” Counihan said. “We’ve only received seven or eight requests so far.”

The application portal opened Oct. 1 at https://labor.delaware.gov/delaware-paid-leave-is-coming and will continue through the end of 2023.

The Paid Leave Program, which was enacted into law May 11, 2022, and officially went into effect July 11, provides 12 weeks of paid parental leave and six weeks of medical and caregiving leave through a new state social insurance program. Under the bill, eligible Delaware workers will receive up to 80% of their average weekly wages or up to $900 through the state-run insurance program. Companies with 10 or more employees, but fewer than 25, will be responsible only for the parental leave but not the medical and caregiving leave.

Employers’ contributions will begin Jan. 1, 2025, and employees will be eligible to begin taking paid leaves after Jan. 1, 2026. Employers who wish to opt out to use a private plan and small groups who want to opt into the state program have until Dec. 1, 2024 to do so. The Senate bill authorizing the program, known as the Healthy Delaware Families Act, was sponsored by State Sen. Sarah McBride (D-Wilmington) and signed into law by Gov. John Carney.

“We also know that running a business is really hard – to make sure that you can pay the bills and your employee,” Gov. Carney said at the signing. “But I, like all the legislators behind me and so many in our business community, believe strongly that the interests of business owners and their employees are not mutually exclusive. In fact, they’re inextricably related.”

At the time of the signing, Delaware was the 11th state to agree to provide the insurance. Now, according to Counihan, 13 states and the District of Columbia offer paid leave or have committed to offering it. The final Delaware legislation, which took two legislative sessions to pass, attracted the votes of three Republican state senators to add to those of the majority Democratic caucus.

“We spent hours with the sponsor of the bill to provide feedback, recognizing that it provides challenges especially to small businesses,” said Tyler Micik, director of public policy and government relations for the Delaware State Chamber of Commerce, which was joined by some local chambers. “Most small companies don’t have a team of HR experts needed to comply.” But, he said, “The sponsors were willing to listen to us.”

According to Counihan, one result of those negotiations is that Delaware is the only state with paid leave legislation that provides the grandfathering provisions. 

“Every other state said, ‘You have to join now,’” Counihan said.

The state’s Paid Leave program will be funded by a 0.8% tax of an employee’s weekly pay, split evenly between the employee and employer. According to the official analysis, 0.4% of the tax will be for medical leave benefits, 0.08% for family caregiving, which includes military leave, and 0.32% for parental leave. The 0.8% tax will equal $4 for every $1,000 spent. The Delaware Department of Labor will reassess the rates in early 2027.

As part of the program of educating both employers and employees about the new program and its deadlines, the Division of Paid Leave conducted four public forums across the state during September and October. 

“Communication is the toughest part,” Counihan said. “We’ve been going through the various chambers of commerce and professional organizations to get out the message, but the problem is getting it to the right person.” 

To be certain that happens, he said before the end of the year an insert will be placed in the monthly unemployment insurance packages sent to companies. 

“The same people will be administering both programs,” he noted.

Additional information on Paid Leave is available online at https://labor.delaware.gov/delaware-paid-leave-is-coming.


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