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Legal, Legislative, & Regulatory


As more and more states adopt paid family leave laws, the PEO industry is confronted with both challenges and opportunities as we adapt and manage these laws on behalf of our worksite employer clients. Like the Americans with Disabilities Act (ADA) or the Family Medical Leave Act of 1993 (FMLA) or the Occupational Safety and Health Act (OSH Act), and other laws that have been bestowed on us, we are in a great position to use what we have learned and accomplished over the years to handle the challenges brought on by state paid family leave laws. 

One of the first codified protections for a worker taking leave to address family or personal health was the FMLA, passed in 1993.  In a 12 month period, an eligible employee, public or private, can take up to 12 weeks of UNPAID leave for birth, adoption, serious health condition of self or immediate family members, or for military exigency support. Employers are required to keep the same or similar jobs available and in some way have all previous benefits intact upon their return.  When FMLA came out, NAPEO and member companies worked fervently to have FMLA be applicable to worksite employers (with over 50 employees) only, and not applicable to PEOs as a whole, which, of course, have far more than 50 employees on their W-2 payroll.  The industry took similar action to have the ADA, OSH Act, and other employment laws rest upon the worksite employer for responsibility, so the challenge relating to current paid leave situation is not new.   

The next federal law to bolster the federal employees needing leave was to require the 12 weeks of leave to be paid during the leave.  The Federal Employee Paid Leave Act of 2019 (FEPLA) amended FMLA to provide for PAID leave for federal employees.  While there is no requirement under the law for private employers to provide similar paid leave, they are encouraged to do so by claiming a tax credit of up to 25% of paid wages to qualified employees, through December 2025. 

There are currently eight states with active paid family leave laws, and five more with paid leave laws that will be implemented over the next few years. More will follow. PEOs are learning to adapt to the paid leave laws. Some states are extremely organized and have developed a logical approach as it relates to co-employment. Some other states need our help, and for those not yet implementing such laws we can be of assistance so that the notion of co-employment is considered as the new laws are promulgated.    

States (including DC) with active laws as of this writing include: Massachusetts (effective 2019/2021); Connecticut (2021/2022): District of Columbia (2020): New Jersey (2009); New York (2018); Rhode Island (2014); Washington (2019/2020); and California (2004). States that have passed paid leave laws that will become effective in the near future are:  Colorado (Jan. 2024); Delaware (Jan. 2026); Maryland (Jan. 2025); Oregon (Sept. 2023); and New Hampshire (2023).  Of course these state paid leave laws are not uniform in eligibility, type of leave, timing of leave and more, creating a complex puzzle of administration for PEOs with worksite employees in multiple states. While there is not enough space here to go over the details of each state’s paid leave law, there are excellent on line resources that summarize these. See  

New York’s law, for example, applies to all private employers and employees, full-time or part-time, who have worked 26 or more consecutive weeks for a covered employer. Public employers have the choice to opt in. Benefits include up to 12 weeks per year for birth of a child, placement of a child in adoption or foster care, caring for a family member with a serious health condition, or to assist loved ones when a covered parties are deployed abroad on active military service.  The law provides leave to care for child, spouse, parent, parent-in-law, stepparent, grandparent, grandchild, sibling, domestic partner, or a person with whom the employee has or had an in loco parentis relationship.  
California’s law, by contrast, applies to private employees who have worked for an employer for at least 12 months, and who have 1250 hours of service during the 12 months prior to the leave.  Benefits include up to eight weeks of paid leave to care for a seriously ill child, spouse, parent, or registered domestic partner, or to bond with a new child. The benefit amount is approximately 55% of an employee’s weekly wage, from a minimum of $50 to a maximum of $1067. The program is funded through employee-paid payroll taxes and is administered through the state’s disability program.    The other active states have equally disparate provisions requiring PEOs to be prepared to address all.  

To address the challenges of interacting and reporting to each state, there are different approaches PEOs are finding they need to undertake.  Massachusetts, for instance, recognizes the PEO client as the responsible employer and follows that state’s unemployment insurance laws, and only requires employees of covered client employers to be included in paid family leave workforce calculations.   I strongly encourage you to review the NAPEO member forum ( conversations on paid family leave to learn what our members are experiencing with respect to how PEOs are working with each state, and what processes are in place that benefit our position that the laws are applicable to worksite employer clients only. Some states are not similarly prepared. In Oregon, for instance, state officials are taking the position that the PEO is the responsible employer for its paid leave law. Reportedly, officials did not consider co-employment relationships when the Oregon laws and regulations were promulgated, and the state’s internal systems have no way to address multiple employers in a reporting file. 

For states such as Oregon, and for other states contemplating paid family leave laws, PEOs operating in those states need to work with applicable state agencies to ensure that the interests of PEOs and of the worksite employers are protected. 


This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs. 




PEO Auxillary 

Madison, WI 

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