As promised in my blog post yesterday, here are the details about the compensable leave requirements under the Workflex in the 21st Century Act. Yesterday I wrote about the fact that companies that wish to be covered by this act must have a Qualified Flexible Workplace Arrangement (QFWA) plan under ERISA. To be qualified this must include paid leave.
The amount of time companies must provide employees under a QFWA varies depending on company size and the length of service each employee has with that company. The chart below provides an overview of these numbers.
|Number of employees employed by an employer||Maximum number of compensable days of leave per plan year|
|Employees with 5 or more years of service with the employer as of the beginning of the plan year||Employees with fewer than 5 years of service with the employer as of the beginning of the plan year|
|1000 or more||20 days||16 days|
|250 to 999||18 days||14 days|
|50 to 249||15 days||13 days|
|Less than 50||14 days||12 days|
As you can see the number of days mirrors what many companies already offer at Paid Time Off (PTO) and in some cases may even be less than what some companies offer. Companies that offer more would not have to reduce that is offered. This Act sets the minimum standard. The minimum requirement does allow employers to count up to six paid federal or state holidays towards satisfying the Act’s compensable leave requirement. Most companies already provide paid time for holidays so that would not be a big burden for most employers.
As with any plan, details are important. So here are some the other details.
- Accrual permitted- As an employer, you have the ability to provide all the compensable leave at the beginning of the plan year or you may institute an accrual plan that makes the time available on a schedule of “earned” time. My experience has been that companies do both, based on management philosophy or experience with their employee population. So this is nothing that employers are not used to.
- How to determine company size- A company would determine its size based on the number of monthly employees it employed during the previous plan year.
- Years of service- Initially as an employer you have to determine, and credit to the employee, the years of service they have performed with you. After that, the years of service must be determined in a manner consistent with ERISA rules, as found in Section 203(b)(2).
- Carryover- Employers may allow employees to carry over days from one plan year to another, but are not required to do so.
- Cash out- Employers may allow employees to cash out unused time at termination.
- Compensable leave applies to both full-time and part-time employees, with part-time employees getting a pro-rata share.
- Employers are allowed to restrict the use of time by new employees in the first 90-days of employment.
- Employers can decide to allow the use of compensable time to either full-days or partial-days when designing the plan. Employers are also allowed to restrict the use of compensable time at times that may unduly disrupt the work schedule.
As you can see the rules around compensable time are very similar to what most companies already have set up for the current use of paid time off.
Next up: Workflex options