Employers with Employees Performing Work in These 6 Locations Must Remember to Comply with Disability Benefits Laws
Employers with Employees Performing Work in These 6 Locations Must Remember to Comply with Disability Benefits Laws
As we enter into 2022, remote work remains a central challenge for employers to navigate. Employers who previously had employees performing work in one or a handful of states may now find that after having implemented a remote work policy, their employees are spread out across the map.
This trend creates an additional compliance task. Employers of all sizes, but particularly multi-state employers, must remain vigilant as they onboard new employees and must monitor the states where their employees perform work to comply with those state’s disability benefit laws.
Six states and jurisdictions have disability benefit laws providing wage replacement for employees who experience a disability that prevents them from performing their job duties: California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island. These laws do not apply to injuries sustained on-the-job, which are separately covered by state workers’ compensation laws. Each state that mandates disability benefits has their own definition of “disability,” but typically, employees who experience a physical or mental illness or injury, including during pregnancy and childbirth, and in some cases, employees who experience a prolonged illnesses related to COVID-19, will be eligible for benefits. In order to receive benefits, an employee will need to be under the care of a medical professional who certifies their disability.
These laws apply based on where the employee performs work – whether in person or remotely – regardless of where the employee lives or where the employer is headquartered. Employers who hire even one employee in any of these six locations will need to comply as soon as their employee(s) meets the eligibility requirements. The eligibility thresholds tend to be low – employees typically need to work only a handful of hours or have received a minimal amount of wages to be eligible – so employers should always review the applicable state’s requirements before assuming that a part time, seasonal, or other short-term hire isn’t eligible for benefits.
Depending on the state, employers have a number of options for how to provide these benefits to their employees, including purchasing a private plan, self-insuring benefits, or providing benefits through the state-administered plan. Employers who wish to self-insure disability benefits will need to apply for an exemption with the state and ensure these benefits will be at least as rich as what the state plan would provide. For the sake of administrative ease, many employers choose to go the route of purchasing a private plan, if available. Private plans must be purchased from a carrier authorized to provide plans in that state and will likely need to be approved by the applicable state authority. Purchasing a private plan exempts employers from making contributions to the state fund, if one exists in that state. However, in some jurisdictions, the state-administered plan is the only option.
An additional consideration employers must contend with is how state-mandated disability benefits may interact with their other benefit offerings, including a short- or long-term disability policy or any paid company leave. If an employee experiences a disability and is eligible for benefits or leave from multiple sources, they will run concurrently. However, most fully-insured disability policies will typically reduce their benefit amount by the amount of benefits a participant receives from other sources, including from a state disability benefit program. Similarly, self-insured or advice-to-pay plans may require or advise employers to offset their benefit payment in the same way. Employers who provide salary continuation to their employees may wish to amend their own internal policy to ensure that employees who qualify for benefits from both sources do not receive more than 100% of their pre-disability earnings. As far as company leave is concerned, some states may require that employees first exhaust their employer-paid leave before receiving disability benefit payments. Given the complexities, employers should design their leave policies with the advice of legal counsel. OneDigital’s Human Resources Consulting (HRC) team is another resource employers can leverage, as they provide a full range of customizable services, including assistance with designing employer leave policies.
California, New York, New Jersey, and Rhode Island mandate paid family leave benefits in addition to disability benefits, which can be a source of confusion for employers. Typically, the paid family leave program is administered by the same authority as the disability benefits program, so in most cases, an employee will not be eligible for benefits under both programs for the same disability or leave event. That said, employers will still need to become familiar with which law applies to their employees in a variety of scenarios. For example, a California employee who experiences a specific disability in connection with pregnancy or childbirth would be eligible for state disability benefits; otherwise, a normal, complication-free delivery would make the employee eligible for benefits under California’s paid family leave program to bond with the new baby. Employers and employees alike will need to be familiar enough with these programs to be able to determine whether a given event is covered under a paid family leave program or a statutory disability program. Required workplace posters or notices are published on each state’s website and are another tool that can assist with keeping employees informed of the benefits available to them.
As you can imagine, in the course of fulfilling their responsibilities under a state disability plan, employers will likely come across employees’ medical records. This may include leave medical certifications obtained from a provider, or information the employee offers of their own accord to support a request for accommodation. Even though the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule does not apply to health information acquired by an employer in its role as an employer (distinct from any health plan function), the Americans with Disabilities Act (ADA) requires employers to maintain the confidentiality of all information related to employees’ medical conditions. Therefore, employers should always exercise discretion as they fulfill their obligations, store health information securely and separately from general employment records, and take care not to let their knowledge of an employee’s disability impact any employment decisions. However, because health care providers are covered entities under HIPAA, an employee’s authorization is required for a provider to release protected health information directly to the employer.
As a final consideration, while these state disability laws do not provide job-protection, job protection may be available to employees under the Family and Medical Leave Act (FMLA) or a similar state law, such as the California Family Rights Act. FMLA provides 12 weeks of unpaid, job-protected and benefits-protected leave to employees who work for a covered employer. Generally, an employer who employs 50 or more employees in a 75-mile radius is subject to the law. For more information on the federal Family and Medical Leave Act, please visit the Department of Labor’s website.
Employers who have already hired or who plan to hire employees in California, Hawaii, New Jersey, New York, Puerto Rico, or Rhode Island should familiarize themselves with each state’s disability benefits mandate. The following quick reference chart provides the major details of each state’s law and includes the link to each state’s program website. There, employers can register their business, file wage reports, remit contributions, or review the requirements for purchasing a private plan or self-insuring benefits, as applicable. If you have any questions as you review this information, reach out to your OneDigital account team.
|California||Hawaii||New Jersey||New York||Puerto Rico||Rhode Island|
|Program Name and Website||State Disability Insurance (SDI)||Temporary Disability Insurance (TDI)||Temporary Disability Insurance||Disability Benefits Law||Temporary Non-Occupational Disability Insurance Program||Temporary Disability Insurance|
|Covered Employers||All private and public employers who pay $100 or more in wages in a quarter to one or more employees||Private employers||Private employers||All private and public employers with one or more employees for 30 or more calendar days||Private employers||Private employers|
|Exempt Employers||Employers who have not paid an employee more than $100 in any calendar quarter||Federal, state and local government employers||Federal employers are exempt; state and local government employers may opt in||Corporations with no employees; organizations owned by a Native American tribe||Federal, state, and local government employers, private domestic employers, non-profits, drivers, and agricultural employers may opt in||Federal, state and local government employers|
|Covered Employees||CA workers who have earned at least $300 in wages and had deductions withheld, have lost wages due to their disability, and have not performed their usual work for 8+ consecutive days||Currently employed HI workers who have been paid for 20 or more hours each week for 14 weeks of employment, and have earned no less than $400 in the 52 weeks preceding the disability||NJ workers who have worked at least 20 weeks earning at least $240 weekly, or a combined total of $12,000 in their base year and have paid into the program||Virtually all employees performing work in NY, after their 30th day of employment||PR workers who have received wages of at least $150.00 in insured employment during their base year||RI workers who have earned at least $14,700 in base period wages; or $2,450 in 1 quarter and total base period wages of at least 1.5x the highest quarter earnings, and total earnings of at least $4,900|
|How the Program Defines a Disability||An illness or injury, either physical or mental, including elective surgery, pregnancy, childbirth, and other conditions||Nonwork-related injury or sickness, including pregnancy||Physical or mental health condition or disability unrelated to work; includes pregnancy/childbirth, COVID-19, boding with a new child, and domestic violence||Injuries or illnesses that do not arise out of the course of employment; includes disability during pregnancy||An illness or injury that is not related to employment or an automobile accident; pregnancy complications; death and dismemberment||Non-work-related illness or injury|
|How Coverage May Be Provided||State Administered Plan or Private Plan||Private Plan, Self-Insured Plan, or via Collective Bargaining Agreement with benefits as favorable as the law||State Administered Plan or Private Plan||Private Plan or Self-Insured Plan||State Administered Plan only||State Administered Plan only|
|Contribution Rates (2022)||Employee contributes 1.1% up to taxable wage limit of $145,600||Employer may pay entire cost or employee contributes no more than 0.5% up to max. weekly deduction of $6.00||Employee contributes 0.14% up to taxable wage limit of $151,900; Employer contributes between $39.80 and $298.50 on the first $39,800 of earnings||Employer may pay entire cost or employee contributes no more than 0.5% up to $0.60 per week||0.60% up to $9,000; Employer and employee split cost – employee may pay no more than 0.30%||Employee contributes 1.1% up to taxable wage limit of $81,500|
|Benefit Amount (2022)||60-70% of highest-earning quarter from base period wages||58% of average weekly wage up to a maximum of $667 per week||85% of average weekly wage up to a maximum of $993 per week||50% of average weekly wage up to a maximum of $170 per week||Minimum benefit of $12 per week; maximum benefit of $113 per week||4.62% of highest-earning quarter from base period wages up to a maximum of $978 per week|
|Waiting Period||7 days||7 days||7 days||7 days||7 days; 0 days if hospitalized||None|
|Maximum Benefit Period||52 weeks||26 weeks||26 weeks||26 weeks||26 weeks||30 weeks|
|Benefit Offset Information||SDI benefits plus wages cannot exceed regular weekly wage; SDI benefits may be affected if employer continues to pay wages during claim||Private plan or self-insured plan may include offset provisions||Benefit will be offset by SDI benefits or by a retirement pension; private plan may include offset provisions||Private plan or self-insured plan may include offset provisions||Workers receiving a retirement pension or SDI benefits may be eligible, if they have worked at least 15 weeks after receiving pension||Employee can be paid salary, sick leave, and/or vacation pay while receiving disability benefits|