Last month, the Employment Security Department (ESD) announced that for the first time since the inception of the Paid Family & Medical Leave (PFML) Program in 2019, premium rates will rise from 0.4% to 0.6%. The new rate takes effect starting January 1, 2022. The premium calculation occurs on September 30 each year and is governed by state statute.

In 2022, employer share of the premiums will be about 27%, with employees picking up the remaining 73%. This is a change from the current employer to employee contribution ratio of 37% to 63%. Employers are only required to pay for the portion of premiums that goes towards medical leave. This new premium split is due to more than half of PFML claims since September 2020 being for family leave, which drew more heavily from the employee-funded portion of the PFML fund. That makes the employee-funded (family leave) portion of the fund the one that needs the most replenishing.

According to ESD, the overall rate hike is driven by high usage of the program over the last year, coupled with reduced payrolls feeding into the program during the pandemic. ESD will post more materials regarding the premium changes to its website in early November.

Dates to remember

The new 0.6% PFML premiums go into effect on January 1, 2022, at which point employers will begin withholding the new premiums.