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October 08, 2021
New Hampshire Adopts First-in-the-Nation Voluntary Paid Leave

By Brian J. Bouchard

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The COVID-19 pandemic foisted paid leave into the public conversation. Federal programs such as the Families First Coronavirus Response Act (FFCRA) mandated periods of paid leave (short and long) for qualifying employees and offset the employer’s expense with a payroll tax credit. Ever since the FFCRA expired in December 2020, many states have debated enacting permanent, obligatory paid leave programs. In an attempt to balance the benefits of paid leave programs with New Hampshire’s more laissez-faire policy instincts, the state has adopted a first-in-the-nation voluntary paid leave program for companies and individuals alike.

How State’s New Program Works

The program relies on a combination of insurance, known as family medical leave insurance (FMLI), and tax credits. Using state employees as a risk pool (of which there are about 10,000), the New Jersey Insurance Department will solicit bids for FMLI and select an insurance partner to provide paid leave benefits under the plan. Employers and/or individuals will then pay premiums on the FMLI in the event family or medical leave is needed while a person is insured.

Employers participating in the plan (again, voluntarily) may offset the insurance premiums’ costs through business tax credits. The funding feature is intended to encourage employer participation, which itself will diversify the risk pool and ideally result in lower premiums.

The FMLI program provides six weeks of wage replacement at 60 percent of an employee’s average weekly wage. What qualifies as an “average weekly wage” will be spelled out in forthcoming regulations, but it will likely involve looking at an employee’s earnings for a specified period before leave is taken.

Eligibility

All Granite State businesses, regardless of size, are eligible to participate in the new voluntary paid leave program. The coverage is a departure from the Family and Medical Leave Act (FMLA), which applies only to businesses with 50 or more employees.

Individuals also can participate regardless of whether their company is involved in the voluntary program. The individual option also appears to apply to independent contractors and sole proprietors, but regulations will need to confirm who qualifies as an individual and whether the paid leave benefit is limited to companies’ employees.

One caveat to the individual option (or companies participating with fewer than 50 employees): An employee’s leave—while paid—may not be protected. In other words, an employee returning from leave may not be guaranteed reinstatement into their former or an equivalent position. Job-protected leave applies only if the FMLA elements are satisfied, including working for a company with 50 or more employees.

Cost to Employers, Individuals

To participate in New Hampshire’s voluntary program, employers with more than 50 employees will contract directly with the selected insurance provider. Everyone else (including smaller companies and individuals) will pay insurance premiums to the state. Premiums for individual coverage won’t exceed $5 per subscriber per week. Programs for individuals will have a mandatory seven-month waiting period and a 60-day annual open enrollment period.

Interestingly, unlike for other paid leave programs, employers aren’t required to pay 100 percent of the premiums. You and your employees may split the cost at any ratio. The feature will be an attractive feature for smaller companies wishing to provide paid leave but unable to afford the full premium cost.

What’s Next

New Hampshire’s FMLI program isn’t ready for prime time yet. Responses to the state’s requests for proposals are due March 31, 2022. The expectation is FMLI coverage will be available by January 1, 2023.

Until then, you should look at your financial records and identify where, from a budget perspective, you may be able to participate in the FMLI program. The benefit may be attractive to current and prospective employees.

Brian Bouchard is an attorney with Sheehan Phinney Bass & Green PA in Portsmouth, New Hampshire, and a member of the firm's labor and employment law practice group. Bouchard counsels and represents companies through all manner of complexities, from claims involving discrimination, retaliation, and wage and hour violations to questions involving employee management, executive contracts, employee mobility, and legal compliance. You can reach him at 603-627-8118 or bbouchard@sheehan.com.

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