19 Del. Admin. Code § 1401-6.0

Current through Reigster Vol. 28, No. 6, December 1, 2024

Section 1401-6.0 - Contributions

6.1 If the employer is participating in the PFML public plan, the Division requires that contributions be paid at least quarterly, or more frequently if and as the Division regulates, based on the relevant information received during the period of coverage. Payroll contributions will be assessed against wages paid on or after January 1, 2025. Payroll contributions are assessed against individual employee's wages on the first day of employment or on the first day that the employer's employee count rises above the threshold number or when the employee's waiver is revoked or when a reclassification form is submitted.

6.1.1 Payroll contributions for an employer shall begin the first day of the payroll period after the employer adds an employee and rise above the threshold number for 1 or all of the mandated lines of coverage under the Act.

6.1.2 Payroll contributions shall cease being assessed against individual employees on the day that they either sign a waiver or a declassification form, when the employee's wages reach the FICA limit, or when they are no longer employed by the employer.

6.1.3 Payroll contributions for the employees of an employer shall end on the first day of the payroll period after an employer is no longer required to provide 1 or all mandated lines of coverage due to a sustained drop in the employee count or on the day that any eligible employer should permanently end operations.

6.1.4 Payroll contributions shall be submitted to the Division on a quarterly basis on the 30th day after the end of each quarter (or, if the 30th day after the end of a particular quarter falls on a weekend or holiday, the first business day after the 30th day). At its discretion, the Division may provide up to a 6 business-day grace period during which contributions can be submitted after the due date without late fees or penalties or both.

6.1.5 Employer overpayment of contributions. The Division shall refund, without interest, any contribution and interest paid by an employer that is in excess of the amount determined to be legally due and payable. For administrative efficiency, any refund amount due an employer may be applied by the Division as a credit to an employer's contribution account or used to satisfy any other amount due the Division from the employer.

6.2 Form of the contribution. Contributions shall be paid quarterly and in a lump sum that combines the employee and employer shares for each of the 13 weeks in each quarter, accompanied by the information specified in subsection 6.4 of this regulation.

6.3 An employer must select its employer/employee contribution split if it differs from the Act's default of 50/50. Employers may contribute more than 50% of the total contribution, but not less than 50%. If an employer decides to contribute a variation of 50/50, the employer must properly notice the employer's variation to all affected employees and file the change with the Division through its online portal system.

6.3.1 Any change in an employee/employer contribution split, either increase or decrease, shall be noticed to the Division and to all employees of the employer by December 15 of the year prior to the January 1 effective date the following year.

6.3.2 Employers may have different employee/employer contribution splits for different classes of employees, if:

6.3.2.1 The split applies equally to all that employee classes' lines of coverage; and

6.3.2.2 The employee classes are defined without reference to protected classes.

6.3.3 All rules regarding employee/employer contribution splits shall also apply to voluntary plans where an employer opts into PFML coverage.

6.4 Manner of Contribution. Funds and information must be submitted to the Division in electronic form; cash and checks will not be accepted. The Division may elect to allow employers to submit contributions by credit card, with an additional fee set by the Division for the convenience. In addition to monies, all employers shall be required to provide the following information, itemized by employee:

6.4.1 Employer name and employer identification number or individual tax identification number (for sole proprietorships);

6.4.2 Employee name & unique identifier (social security number, individual tax identification number, permanent resident card, or visa foil number);

6.4.3 Weekly hours (broken into Delaware vs. non-Delaware hours, if appropriate);

6.4.4 Weekly wages (broken into Delaware vs. non-Delaware wages, if appropriate).

6.4.5 Contributions and benefits shall be calculated according to the employee's FICA wages. The Division will perform these calculations on the data provided quarterly by the employer, which is recorded and tracked by the Division.

6.4.5.1 If a self-employed individual has opted into the Delaware Paid Leave program, contributions are based on the individual's self-employment earnings, as reported on their Federal Income taxes. If Schedule C is completed, self-employment earnings are found on line 31. If Schedule SE is completed, self-employment earnings are reported on line 6. Self-employed individuals shall calculate their quarterly earnings by dividing their self-employment earnings found on their most recently filed income tax return by 4.

6.4.5.2 The Division may require copies of tax returns, bank records, self-attestations, or any other documents to verify or determine the income of a self-employed individual electing PFML insurance coverage.

6.4.5.3 Self-employed individuals and independent contractors are responsible for paying 100% of the required contribution for the PFML insurance program.

6.4.6 For full-time salaried employees for whom the employer does not track hours, the Division will accept 37.5 hours (or 40 hours, if appropriate), in place of an employee's actual hours worked.

6.4.7 If the Employer's system (or payroll servicing company's system) does not have this information available at a weekly level, but rather only on the basis of a payroll period, then the Division will accept the above information based on an estimated weekly basis.

6.4.7.1 For employers that send out paychecks once every other week, the Division will accept the payroll period information divided by 2 (so that both weeks have the same numbers for all 4 datapoints).

6.4.7.2 For monthly paychecks, the Division will accept estimated weekly information by dividing the monthly wages and hours by the number of days in the pay period, then multiplying it by 7 to arrive at an estimated weekly number for hours and wages (or by some other formula, as appropriate).

6.5 The contribution rates for medical, parental, and family caregiving leave benefits for the years 2025, 2026, and 2027 and each rating period thereafter shall be tracked separately by the Division.

6.6 Current rates are in effect for 52 weeks and will automatically renew at the same rates as stated in the Act. Beginning in 2027, if there is a new rate, the new rate will be changed by modification to this regulation. Employers will be provided at least 90 days' notice of any change in the payroll contributions rates for this program.

6.7 Employers can only withhold contributions from employees' paychecks at the time that the contribution was assessed. If the employer makes an error which would call for additional "back contributions" to be collected from the employee, once the paycheck that would have been reduced by the error has been issued, the employer cannot require the employee to pay their "share" of the employer's error.

6.8 The Division determines that an unpaid contribution as of the date it is due and payable shall accrue interest at a rate of 1.5% per month regardless of the total amount owed, from and after the due date until payment plus the accrued interest is received by the Fund. The employer is responsible for paying both any unpaid contribution amounts and any interest accrued to the Division as the employer is responsible for collecting the employee's contribution share, if any, from the employee.

6.9 Opting to file a waiver. If both the employer and the employee agree that the employee was not hired to work on a permanent basis or not expected to work at least 25 hours per week or both, so that they reasonably don't expect the employee to be covered by the Act, the employee and employer can apply to waive coverage.

6.9.1 To do so, the employer and employee must both sign the waiver of coverage form provided by the Division and return it to the Division via the Division's online electronic system.

6.9.2 The waiver will be accepted by the Division unless the Division has a substantial and verifiable reason compelling them to not accept the waiver, including reasonable proof that the employee is not temporary or will be expected to work over 25 hours per week.

6.9.3 Any waivers that were signed by the employee under any type of duress, intimidation, or coercion, whether explicit or implied, will be considered null and void. If evidence is obtained to indicate that a waiver was signed under any condition indicating that it was not voluntarily chosen by the employee, the case may be referred to the Delaware Department of Justice for consideration.

6.10 An employer's notice to an employee that the employee's work schedule or length of employment, on a permanent or temporary basis, does not meet the requirements for eligibility for PFML benefits, must be provided in writing within the most recent quarter of when that situation occurs.

6.10.1 The employer must then file either a waiver form or a reclassification form, as the situation dictates, with the Division through its online portal.

6.10.2 In its discretion, the Division may waive coverages and the employee's portion of the payroll contribution for prior quarters, if the employer's failure to submit the waiver on a timely basis was due to clerical error. The employer's contribution shall not be waived for prior quarters.

6.10.3 Waivers will be effective in the quarter they are received.

6.10.4 A fully executed waiver will constitute the notice required by subsection 6.10 of this regulation.

6.11 Removal of waiver. If an employee is subject to a waiver but is approaching the eligibility requirements to receive paid family and medical leave benefits, to avoid being penalized, the employee should be voluntarily removed from waivers.

6.11.1 The Division will have available, on its website, a form which shall be signed by both the employer and the employee, to voluntarily remove the employee from waivers.

6.11.2 Upon removal of the waiver, the employer will be responsible for the required paid leave contributions for this employee from the effective date of the waiver or the 52 weeks prior to the removal of the waiver, whichever is earlier. This back contribution payment shall be due in the quarter it is assessed and will not be subject to interest or penalties if paid timely.

6.11.3 Once the removal of waiver is filed with the Division, through its online administrative system, the employee will be automatically enrolled in the Delaware Paid Leave program. The employer shall begin withholding an employee's share of contributions, if any, and will be required to pay contributions on behalf of this employee.

6.12 Failure to remove an employee from waivers. If an employer fails to remove an employee from waivers prior to the employee reaching the eligibility requirements to receive paid family and medical leave benefits, the Division will revoke the waiver. Upon revocation of a waiver, the employer will be responsible for the required paid leave contributions for that employee, plus interest, from the effective date of the waiver or the 52 weeks prior to the removal of the waiver, whichever is earlier. This back contribution payment and interest shall be due in the quarter it is assess and may be subject to penalties if not paid timely.

6.13 Should an employee on waivers separate from their employer for any reason prior to the time they would become eligible for paid family and medical leave benefits, an employer will not be responsible for any back paid leave contributions for that employee.

6.14 Form of waiver. The Division has adopted a form for each a waiver and a removal of waiver which shall be available on the Division's website and the online portal.

6.15 Reclassification and Declassification Forms. Employers may reclassify an employee who primarily reports for work at a worksite in another state as working primarily in Delaware through the duration of that individual's tenure at the out-of-state worksite. Employees who are subject to another state's paid family medical leave program may not be reclassified as an employee for purposes of the Delaware program.

6.15.1 The purpose of this reclassification provision is to either:

6.15.1.1 Continue to provide coverage for those Delaware-based employees who are temporarily assigned to an out-of-state location; or

6.15.1.2 To make eligible for coverage those employees who are telecommuting or who work on a continuing basis out-of-state when they would normally be located in the State of Delaware.

6.15.2 A reclassification shall be memorialized through a reclassification form signed by both the employee and employer stating that, while the employee is not physically located in the State of Delaware, the employer and employee voluntarily agree to designate the employee as a Delaware-based employee for the purposes of paying payroll contributions into the PFML insurance program and to be eligible to apply for paid leave under the terms of this program.

6.15.3 Once an employee is reclassified in this manner, they will remain so until the employer declassifies the employee. Upon declassification, the employer and employee will no longer be subject to the provisions of the PFML insurance program with respect to that particular employee.

6.15.4 Any reclassification form signed by the employee under any type of duress, intimidation, or coercion, whether explicit or implied, will be considered null and void. If evidence is obtained to indicate that a reclassification form was signed under any condition indicating that it was not freely chosen by the employee, the case may be referred to the Delaware Department of Justice for consideration.

6.15.5 While an employee is covered under a reclassification form, they will be included in the employer's count towards the various thresholds for coverage (either more than 10 or more than 25 employees).

6.15.6 Once an employer has signed and filed a declassification form with the Division, the employee will no longer be counted towards any of the employer's threshold numbers.

6.16 While an employee is on leave, no contribution payments are required under the public plan.

19 Del. Admin. Code § 1401-6.0

28 DE Reg. 147 (8/1/2024) (Final)