New Forms of Parental and Sick Leave are Signed into Law in Chicago, New York, Maine & Vermont

At a glance

• The main takeaway: To support working parents and employees requiring immediate sick leave, Chicago, New York, Maine, and Vermont have signed new forms of paid leave into law.
• The impact on your business: While the new legislation carries different implications and requirements for taxpayers depending on jurisdiction, employers and self-employed workers must prepare appropriately to comply with these changes to state tax laws.
• Next steps: Aprio’s Employment Tax Services team can help to ensure your business meets compliance with the latest legislation in your area.

Schedule a consultation today to learn more.

The full story:

Payroll and employment tax laws are constantly evolving to provide clarity and guidance amidst changes in economic conditions, technological advancements, labor market trends, and the like. Navigating the complex landscape of payroll and employment taxes is a perennial challenge for businesses of all sizes and can have significant implications that can affect a company’s cash flow and financial planning.

Recently, three states and the City of Chicago have passed new legislation for paid parental leave within their jurisdiction. Businesses in Chicago, New York, Maine, and Vermont should act immediately to ensure compliance is met.

Chicago’s new Paid Leave and Sick Leave Ordinance

Effective July 1, 2024, employers in Chicago will be responsible for complying with the new paid leave and sick leave ordinance, which covers all employees who work at least 80 hours within a 120-day period.

Under the new ordinance, employees will accrue one hour each of paid leave and paid sick leave for every 35 hours worked, starting July 1, 2024, or from their first day of employment. A maximum of 40 hours of each type of leave can be accrued annually; however, employees can carry over up to 16 hours of paid leave and up to 80 hours of paid sick leave annually. While paid leave can be used for any reason, sick leave is specifically for illness, injuries, and certain public health emergencies. This leave will be compensated at the employee’s regular rate, including healthcare benefits, or the applicable minimum wage, whichever is higher.

Employers may require reasonable notice of up to seven days for foreseeable leave or as soon as possible for unforeseeable leave. If leave is denied in a way that prohibits access, the employer must increase the carryover amount by the denied leave amount. Exceptions for 2024 include limited payouts for employers with 51-100 employees and no payout requirement for employers with 50 or fewer employees under certain conditions.

New York signs budget bill for new Prenatal Leave; COVID-19 Sick Leave law expires in 2025 

New York Governor Kathy Hochul signed a budget bill into law that amends New York State’s Paid Sick Leave law to provide prenatal personal leave, effective January 1, 2025. Under the newly amended Paid Sick Leave law, New York employers will be required to pay pregnant employees 20 hours of paid personal leave per 52-week period for doctors’ appointments, procedures, and other types of prenatal care. The paid prenatal personal leave covers all New York employees, with no minimum employee threshold, and is applicable to both full-time and part-time employees. This leave will be provided in addition to paid sick leave accruals of up to 40 to 56 hours, depending on employer size, that employers must already provide to employees annually. Employees may take this leave in hourly increments at their regular rate of pay or minimum wage, whichever is greater. 

The Paid Prenatal Care Leave law does not provide direction or clarification on related topics, including documentation and employee notice requirements, carry-over from year-to-year, interplay with other types of paid time off, and whether an employee is permitted to use all 20 hours of paid leave immediately upon hire. However, the New York Department of Labor is expected to publish regulations or FAQs to clarify these and other interpretative questions in the coming months.  

Beginning June 19, 2024, New York employers are also required to provide paid lactation breaks for employees under an amendment to New York’s Labor Law, Section 206-c, detailing the Right of Nursing Mothers to Express Breast Milk. Previously, the law allowed employers to offer reasonable unpaid break time for employees to express breast milk in the workplace. New York’s paid lactation leave law requires employers to provide paid 30-minute breaks each time an employee needs to express breast milk in the workplace and permit employees to use other existing paid breaks and mealtime to express breastmilk when they need more than 30 minutes to do so. Employees can use this leave for up to 3 years after childbirth.

The state’s mandated COVID-19 Paid Sick Leave law will expire on July 31, 2025, after which employers will no longer be required to provide a separate fund as well as 5 to 14 days of job protection for COVID-19 sick leave or related illnesses. Upon expiration of the COVID-19 Sick Leave law, employees will be able to use paid sick leave for COVID-19 illnesses. 

Maine institutes Paid Family & Medical Leave insurance program

Effective January 1, 2025, covered Maine employers will be required to withhold and remit employee contributions and pay employer contributions for a new paid family and medical leave insurance program. This law, signed by Governor Janet Mills, makes Maine the 13^th state to establish a paid family and medical leave program. 

Administered by the Department of Labor (DOL), the Paid Family and Medical Leave Program (PFML) provides up to 12 weeks of paid leave for family, military, medical, or safe leave. The law applies to all Maine employers and employees, who can begin accessing benefits on May 1, 2026. The contribution rate per employee may not exceed 1% of the employee’s wages, split between the employee and employer. The PFML will require employers to file contribution reports and remit premiums on a quarterly basis.  

An employer with 15 or more employees is required to remit 100% of the premium, up to 50% of which is deducted from employee wages. Employers with less than 15 employees are required to remit 50% of the premium and may deduct the 50% from employee wages. Because small employers are only required to deduct and remit employee contributions, employer contributions are not required. Beginning 2028, the DOL will set the premium contribution rates based on various factors.

Vermont’s new Childcare Contribution payroll tax 

Effective July 1, 2024, Vermont employers and self-employed individuals are required to make contributions for new state payroll tax to provide funding for childcare.  

After the governor’s veto of the bill, state legislature voted to override this decision and pass the Vermont Child Care Contribution tax into law. Per Act 76 of 2023, employers will pay a 0.44% payroll tax on wages paid, while self-employed workers will pay 0.11% on self-employment income. Employees can see the new tax information, such as the tax amount withheld by their employer as well as the employer-paid portion, on their paychecks after July 1, 2024. 

An employer may deduct and withhold no more than a quarter of the 0.44% (0.11%) of the required contribution; the remaining portion must be paid by the employer. Employers will remit contributions to the Vermont Department of Taxes. 

The bottom line

With many of these changes to state legislature already in effect, prioritizing compliance is critical to ensure mandated employer contributions for the new state program are satisfied. If your business has not yet taken the necessary steps to prepare and comply with the new legislation, we encourage you to reach out to a member of Aprio’s Employment Tax Services team to get started right away.

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