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The Connecticut Paid Leave Act: What You Need to Know

As these deadlines quickly approach, employers should be communicating with their employees about the payroll tax so that they are not surprised by the additional deduction that will soon hit their paychecks.

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As these deadlines quickly approach, employers should be communicating with their employees about the payroll tax so that they are not surprised by the additional deduction that will soon hit their paychecks.

Last year, Connecticut Governor Ned Lamont signed the Connecticut Paid Leave Act into law. Called by many “the most significant workplace law that Connecticut has passed in decades”, the Paid Leave law will affect nearly every Connecticut employer and employee. The roll out for this new legislation is just starting at a time that has impacted businesses and workers alike. What do you need to know about this new legislation?

What exactly is the Connecticut Paid Leave Act?

Connecticut’s Paid Family and Medical Leave law is an expansion of the current FMLA program. To be clear, the CT Paid Leave will:

  1. Create an Insurance Trust Fund that will be administered by a governing body called the Authority. This fund will be financed through contributions employers will now be withholding from employee pay.
  2. Expand the existing Connecticut FMLA in the following ways:
    • Eligibility – Employees will be eligible for benefits once they have been employed by any employer in Connecticut for at least 12 weeks and have earned at least $2,325 during the highest-earning quarter in the first four out of the five recently completed quarters.
    • Benefit – The weekly benefit amount is based on a formula and is capped at 60 times the state’s minimum wage. Therefore, when Connecticut’s minimum wage increases to $13 per hour on August 1, 2021, the maximum weekly amount will be $780.
    • Extent of Leave – Eligible employees may take 12 weeks of paid FMLA in a 12-month period for:
      • Their own serious health condition;
      • The serious health condition of a covered family member;
      • Birth, adoption or placement of a child in foster care;
      • Service as an organ or bone marrow donor; or
      • A qualifying emergency when a spouse, child or parent is on active duty; to care for a covered military family member; and due to an act of family violence.
    • Adding new relatives to the current definition of a Family Member. The current definition of a family member is expanded to add siblings, grandparents, grandchildren, and an individual related to the employee by blood or close association.
  1. The program will be funded by a tax on payroll. Beginning January 1, 2021 employees will pay into this program through payroll deductions. These payroll deductions are capped at 0.5% of the employee’s earning and there is no employer match.
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Who is covered under Connecticut Paid Leave?

  • The CT Paid Leave applies to employers with one or more employees working in CT
  • Sole proprietors and self-employed individuals with certain criteria
  • The law also applies to certain state employees who are not covered under a labor contract and public employees whose labor union negotiates inclusion into the program (and then all other non-union public employees of that public entity also are covered)

Who is excluded from Connecticut Paid Leave?

Non-public (Private) elementary and secondary schools are excluded from the law.

What does the timeline for Connecticut Paid Leave look like?

  • Sept. 4, 2020: ctpaidleave.org site is launched. This is the site all businesses must use to register as well as the site employees will use to apply for funds in the future.
  • Nov. 23, 2020 – If you did not already know, this is the date on which employers covered by this law began registering with the CT Paid Leave Insurance Authority.
  • Jan. 1, 2021 – On this date, employers must begin withholding employee contributions.
  • March 31, 2021 – Employers must remit those funds to the State at the end of each quarter starting March 31, 2021.
  • Jan 1, 2022 – Employees, sole proprietors and self-employed individuals can submit applications to begin receiving benefits for qualified events.

As these deadlines and dates quickly approach, employers should be communicating with their employees about the payroll tax so that they are not surprised by the additional deduction that will soon hit their paychecks. To learn more about the impact of Connecticut Paid Leave on your organization please contact our HR Advisory team by clicking here.

 

 

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statutes, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

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