Q. What do companies with employees in Delaware need to know about Delaware’s paid family leave law?
A. On May 10, Governor Carney signed the Healthy Delaware Families Act into law, making Delaware the eleventh state in the country to offer paid family leave when the law goes into effect in 2026. The law will provide 12 weeks of paid parental leave and six weeks of paid medical, family caregiving, and military leave to eligible Delaware employees through a state-run paid family and medical leave insurance program.
How is the paid leave funded?
Employer and employee contributions will fund the Family and Medical Leave Insurance Program, with contributions beginning on January 1, 2025. Eligible employees will be able to utilize the job-protected paid leave beginning on January 1, 2026.
Employers can choose to cover the entire contribution into the program or withhold up to 50% of the cost from employee paychecks and cover the balance. The program will be financed through a 0.8% payroll tax that includes 0.4% for medical leave, 0.32% for parental leave, and 0.08% for family caregiving leave. The Delaware Department of Labor will regulate deductions, withholdings, and payments.
What defines eligible employees?
Similar to the federal Family and Medical Leave Act’s (FMLA) employee eligibility requirements, under Delaware’s new law, any employee primarily reporting for work in Delaware who has worked for one year for his/her employer and at least 1,250 hours in the previous 12 months is eligible to utilize the benefits and leave provided by the law.
The new law defines “covered individuals” as “individuals reporting for work at a worksite in [Delaware].” It further explains: “Individuals primarily reporting for work at a worksite outside of [Delaware] are not considered employees under this [law] unless the employer elects to classify them as such. Employers may reclassify an employee as primarily reporting for work at a worksite in another state for the purposes of this [law] through the duration of that individual’s tenure at the out-of-state worksite.”
What benefits are provided to eligible employees?
The law provides benefits to replace up to 80% of an eligible employee’s average weekly wage (with a maximum weekly payout of $900 in 2026 and 2027) and job-protected leave for the following reasons:
(1) The employee is caring for a child during the child’s first year after birth, adoption, or placement through foster care;
(2) The employee is caring for a family member (parent, child, or spouse) with a serious health condition (as defined by the FMLA);
(3) A serious health condition of the employee (as defined by the FMLA) that makes him/her unable to perform the functions of his/her position; or
(4) The qualifying exigency of the employee (which, as defined by the FMLA, “arises out of the foreign deployment of the employee’s spouse, son, daughter, or parent).
The maximum weekly benefit in 2026 and 2027 is $900. In each year after 2027, the maximum weekly benefit will “increase in proportion to the annual average increase, if any, in the Consumer Price Index for All Urban Consumers, Philadelphia-Camden-Wilmington Metropolitan area that is published by the Bureau of Labor Statistics of the United States Department of Labor.”
What is the duration of benefits?
Under the law, a covered individual is eligible for a maximum of 12 weeks of benefits in an application year (the 12-month period as defined in the FMLA). The maximum number of weeks during which parental leave benefits are payable in an application year is 12 weeks.
The maximum aggregate number of weeks during which leave benefits for family caregiving, the employee’s own serious health condition, or a qualifying exigency are payable in an application year is six weeks in any 24-month period.
Except for parental leave benefits, a covered individual is eligible for benefits under this law not more than once in a 24-month period.
Covered leave that also qualifies as leave under the FMLA runs concurrently with leave taken under the FMLA and may not be taken in addition to leave under the FMLA.
Eligible employees have the right to retain their health care benefits while on leave and to be reinstated to their job when the leave period ends or “to a position with equivalent seniority, status, employment benefits, pay, and other terms and conditions of employment.” Additionally, employers may face significant penalties if they discriminate or retaliate against an employee for requesting, applying for, or using family and medical leave benefits. Therefore, employers may not discipline, terminate, or take any other adverse action against an employee for using leave benefits in accordance with the new law.
What size employers does the new law apply to?
As a Delaware employer, your obligations under the new law will depend on how many employees you have.
Employers with more than 25 employees working in Delaware during the prior 12 months must contribute to the program and will be required to provide eligible employees with paid leave for (1) parental leave, (2) family caregiving, (3) the employee’s own medical condition, and (4) qualifying exigency of the employee (i.e., military leave).
Smaller employers (between 10 and 24 employees) must contribute to the program and will be required to provide up to 12 weeks of paid parental leave only. The federal government and companies with fewer than 10 employees in Delaware are not required to participate in the paid leave program.
Additionally, the law permits businesses to opt out of the social insurance program if they have an established paid leave program that offers comparable benefits. Employers that plan to opt out of the state leave program must first apply for approval from the state. The law also includes an exemption for employers that are closed for at least 30 consecutive days during the year.
Start planning now!
Although the law’s related payroll tax does not go into effect until January 1, 2025, employers with Delaware employees should utilize this time to evaluate the applicability of the new law to their business and begin making the necessary changes.
With respect to applicability, employers should not only evaluate their status as a covered employer as of today, but also project their headcount growth over the next few years. Companies should review the benefits provided under the law to determine if their existing benefits plan meets the opt-out requirements.
The new law requires employers to provide written notice to each eligible employee regarding his/her right to leave benefits and the procedure for filing a claim for benefits. Companies should identify the employees who will be entitled to benefits under Delaware’s law and be prepared to provide them with the appropriate notices.
Employers also should consider the budgetary implications of the payroll tax and be prepared for the potential increase in the frequency and duration of employee leaves of absence. In addition, employers should familiarize themselves with the law’s requirements and train their management employees appropriately.
If you have any questions or would like further guidance regarding this new law or its implications, please contact a member of our Labor + Employment Practice Group.