New Hampshire – Paid Family Leave Legislation Takes Effect January 2023

In late June 2021, the New Hampshire State Legislature passed the Granite State Paid Family Leave Plan (PFL) as part of the state budget legislation, making New Hampshire the 10th state (after CA, NJ, RI, NY, WA, DC, MA, CT and OR) to enact a paid leave law to be financed through payroll taxes.

The PFL plan will replace 60% of covered workers’ wages for a period up to six weeks of benefits to care for a family member with a serious health condition, to bond with a new child within the first 12 months following birth or adoption, and for qualifying military exigencies.  Covered wages will be capped at the Social Security taxable wage base, as indexed by inflation.

However, the state law, which goes into effect January 1, 2023, contains a unique twist:  with the exception of state governmental employers, who will be required to provide a benefit to its workers, it is voluntary for other employers.

The PFL plan legislation establishes an RFP and rate setting process for private insurers to vie for approval to insure the state Family Medical Leave Insurance (FMLI) pool.  The deadline for the RFP process is March 31, 2022.  The statute adopts a purchasing pool through which the program will be funded for small employers and individuals.  Private employers and workers whose employers decide not to participate in the program can voluntarily opt into the pool.  Larger employers who want to participate on a voluntary basis (with more than 50 employees) can contract directly with the selected administrator.  The Act also authorizes a state payroll tax credit of 50% of the paid family leave premium to participating employers who sponsor paid family medical leave programs.

For reference, here is a summary of the Granite State PFL Program and a copy of the text of the bill, which was enacted on June 25, 2021. The Research & Compliance Team will continue to monitor developments as further guidance is released.

This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.

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