Delaware PFML Going Where No PFML Plan Has Gone Before - Grandfathering

by Shelby Felton, Esq. - Director and Product Compliance Counsel

October 30, 2023


Not content to simply follow the PFML path forged by others, Delaware is charting a new course that will allow employers to grandfather their existing leave benefits programs in lieu of participating in the Delaware Paid Leave, Family and Medical Leave Insurance Program (also referred to as the Healthy Delaware Families Act).

While we're sure you recall all of the details of Delaware Paid Leave from our prior blog, we'll briefly sum them up again. Contributions start January 1, 2025, and benefits start January 1, 2026.

  • Contribution rates are based on the type of leave and employers can require employees to contribute up to 50%.
  • Benefits equal 80% of an employee's average weekly wage up to a maximum of $900 per week through 2027. Eligible employees may take leave for the following qualifying reasons: (1) parental leave, (2) care of a family member with a serious health condition, (3) the employee's own serious health condition, or (4) a qualifying military exigency.
  • Based on employer size, employees may be able take up to 12 weeks per benefit year for parental leave and 6 weeks in any 24-month period for their own medical needs, family caregiving leave, or military exigency.
  • Employers with less than 10 employees can opt into parental leave.
  • Employers with 10-24 employees must provide parental leave only but can opt into medical and caregiver leave.
  • Employers with 25 or more employees must provide all leave types.

Delaware's Grandfathered Paid Leave Benefits path will allow employers with paid leave benefits that were in existence on May 10, 2022, to opt out of Delaware Paid Leave. By submitting a grandfathering application, an employer seeks to use their existing benefits to meet the paid leave obligations created by Delaware Paid Leave. Employers wanting to grandfather their paid leave benefits will apply through the state's online Grandfathering/Parental Leave Duration Application Portal from October 1, 2023, through January 1, 2024. Grandfathered benefits can be used by an employer for a period of five years.

An employer is not required to have existing paid leave benefit coverage for all four types of mandated leave. An employer can apply to have just one type of leave grandfathered, up to all four types of leave. Leaves not grandfathered must be covered by the state's PFML plan or a private plan.

The existing benefits to be grandfathered must have been in place and documented as of May 10, 2022, in (1) a fully-insured plan, (2) a self-funded plan, or (3) an employee handbook or policy. The existing benefits must be "comparable" to Delaware Paid Leave benefits. "Comparable" means:

  • the cost to the employee is no greater than the cost of DE PFML,
  • the benefit percentage, maximum benefits, and benefit duration must be within 10% of DE PFML,
  • there must be coordination with other benefits, and
  • there must be similar eligibility rules.

What does this mean practically? Consider the following examples.

  • Employee wage replacement benefits equal 80% of the employee's average weekly wage ("AWW"). For an existing paid leave benefit to be approved for grandfathering, it must pay at least 72% of the employee's AWW.
  • Employees cannot receive more than $900 per week while on PFML leave. For an existing paid leave benefit to be approved for grandfathering, the maximum benefit cannot be less than $810 per week.
  • Employees can take 6 weeks in a 24-month period for their own serious health condition, family caregiving, or a qualified exigency. For existing benefits to be grandfathered, they must offer at least 5.4 weeks, or 27 days.
  • Employees can take 12 weeks of leave within a 12-month period for bonding. For an existing benefit to be grandfathered, it must offer at least 10.8 weeks, or 54 days, of Parental Leave.
  • Employees are eligible for Delaware Paid Leave if they work primarily in Delaware (60% of their hours must be physically in DE) for 12 months & 1,250 hours for that employer within the previous 12 months. To be approved for grandfathering, existing paid leave benefits cannot have additional eligibility requirements.

An employer with approved grandfathered benefits will not be required to make contributions to Delaware Paid Leave, as long as the grandfathered benefit is in effect. If a grandfathering application is denied, an employer has 30 days from the denial to appeal.

Up until December 1, 2024, employers with approved grandfathered benefits may decide to discontinue those benefits and use a private plan or may decide to opt into the state plan up until the day before contributions are accessed (12/31/24).

Employers who do not want to apply to grandfather their existing paid leave benefits or that are only grandfathering some of the mandated benefits, will either participate in the state's PFML plan or apply for a private plan. Employers will be able to apply for private benefit plan approval from September 1 through December 1, 2024.

One last note about Delaware Paid Leave, from October 1, 2023, through January 1, 2024, employers with 10 to 24 employees can reduce their employees' maximum Parental Leave benefit duration from the normally required 12 weeks to anywhere between 6 and 11 weeks. Such a reduction will be in place until December 31, 2030. Employers can do this through the same online application process as the grandfathering application. If an employer does temporarily reduce the length of Parental Leave, the employer is required to notify employees, in writing, by December 1, 2024.

Reliance Matrix Can Help!

Reliance Matrix offers employers leave administration, including state paid family and medical leave solutions and accommodation services. For more information, contact your Reliance Matrix account manager or send us a message to [email protected].

Through its insurance and administrative services entities, Reliance Matrix offers integrated leave management services involving the FMLA, state-mandated paid family and medical leave and accommodation solutions. Product features and availability may vary by state. For more information, please contact your Reliance Matrix account manager, or reach us at [email protected].