PFML Notice Requirements

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📢 What’s New in Paid Family and Medical Leave (PFML) — 2025 Updates

1. Federal Developments & Tax Credit Expansion

• Section 45S Paid Leave Tax Credit — Under the proposed “One Big Beautiful Bill,” Congress plans to make the Section 45S tax credit permanent. It would expand eligibility to part-time employees, reduce the six-month employment requirement, and enable credits for short-term disability insurance premiums. Though only ~12,700 businesses claimed it in 2021, these enhancements aim to improve adoption—estimated to cost $5 billion over 10 years (guardianlife.com, washingtonpost.com).

2. IRS Guidance on PFML Act (Federal)

• For 2025, the IRS clarified that employers don’t need to withhold/pay taxes on PFML payments made that year. Standard contribution rate remains 1% of weekly wages, with benefits covering 12 weeks of family leave and 12 weeks of medical leave, replacing up to 80% of average weekly wages (investopedia.com).

3. DOL Rule: PFML + FMLA Intersection

• The U.S. Department of Labor issued guidance (Opinion Letter FMLA2025‑01‑A), reaffirming you cannot require employees to use paid PTO when on overlapping FMLA and PFML leave—unless they opt-in. This aligns PFML with disability/workers‑compensation treatment under FMLA regulations (gtlaw-laborandemployment.com).

4. Colorado FAMLI Program Adjustments

• Weekly Benefit Cap Change: Effective Jan 1, 2025, Colorado’s FAMLI cap shifts to 90 % of State Average Weekly Wage (SAWW), or $1,324.21/week (based on July 2024 SAWW of $1,471.34). A second increase takes effect July 1, 2025—marking a one-time mid-year adjustment; future updates occur annually on July 1 (info.shelterpoint.com).
• Employer Headcount Reporting: Employers must update their annual total-employee counts by Feb 28 or face default assumptions of 10+ employees for FAMLI purposes (famli.colorado.gov).
• Eligibility & Leave: Colorado workers can access up to 12 weeks of benefits for bonding, caregiving, or medical leave. Job protection applies once an employee has been on payroll for at least 180 days (onpay.com).

5. Statewide PFML & Paid Leave Shifts in 2025–2026

• Expanding State Programs: Delaware, Maine, Maryland, Minnesota, and others are phasing in PFML over the next two years (Delaware and Maryland set to begin contributions in 2025 and benefits by 2026) (risk-strategies.com).
• Washington State: Passed HB 1213, lowering employer size thresholds for job protection across 2026–2028. Local government policies must reflect these changes (mrsc.org).

6. Why It Matters

• Employers: Now must adapt payroll, benefits policies, and PTO usage rules to align with federal and state PFML changes. Review and possibly revise policies about PTO substitution, job protection thresholds, and headcount reporting.
• Employees: Face more generous wage replacement, better job security, and clearer rules on leave coordination across various programs

✅ Action Checklist for Employers

• Update payroll systems....Account for Colorado’s 2025 cap changes and tax handling per IRS guidance
• Review policies....Ensure PTO substitution rules comply with DOL's FMLA–PFML guidance
• Monitor state laws....Track PFML implementation dates in states like Delaware, Maine, Maryland, Minnesota, and Washington
• Update employee notices....Post FAMLI notices and adjust employee handbooks/policies accordingly

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PFML is evolving fast—with federal credits, IRS and DOL guidance, and state-level advancements all shifting how leave works. Staying ahead ensures your organization complies with regulations while supporting employee well-being.