State Paid Leave & Disability Guide

September 2025

Background

Historically a handful of states had mandatory employee disability programs, where employees and employers were required to contribute to a state program that paid benefits similar to short-term disability (STD) benefits if the employee was unable to work because of a non-work-related injury or illness. However, over the last several years, many of these states have expanded their programs to cover other types of leave, such as the birth of a child or caring for a family member with a serious health condition. Numerous other states have adopted comprehensive paid leave programs that likewise cover a wide variety of leaves, including leaves due to the employee’s own medical condition. We refer to these programs collectively as state paid family and medical leave (PFML) programs.

What these programs have in common is that they are mandatory for almost all employers with any employees working in the state in question, they cover almost all employees working in the state (full-time, part-time, temporary, etc.), and they provide the employee with compensation when taking time off for a qualifying reason. Some of these programs also include job and benefit protections similar to FMLA, while others are strictly income replacement benefits requiring the employee to look to other federal and state leave laws for job protection.

This document will cover the benefit-related aspects of these PFML programs such as funding mechanisms and interaction with existing STD and other paid leave programs. It will not address the HR and employment law related aspects such as details regarding which employers and employees are subject to these laws, the amount of contributions or benefits, the reasons for leave, or job protections.

For a current list of states with PFML requirements, including those states who have passed PFML laws that will be implemented in the near future, see Appendix A. This chart also contains links to state web page(s) and citations to the statutes and regulations for the state’s PFML program.

Application of State PFML Laws

PFML laws apply based on the state where the employee works, not the state where the employer is headquartered or where the employee lives. It is the physical location where the work is performed that matters, meaning an employee who works remotely in a PFML state will be subject to that state’s PFML law even if the employer has no other presence in that state. Employees without fixed work locations or who regularly work in multiple states may have to be evaluated individually to determine which state’s PFML law applies.

Example 1: Erica works at a location in Washington state (PFML) for Big Co. who is headquartered in Oklahoma (no PFML). Erica is covered by, and Big Co. must participate in, Washington’s PFML program. Example 2: Nigel lives in New Jersey (PFML) but works for NewE Inc. in Pennsylvania (no PFML). Nigel is not covered by, and NewE does not have to participate in, New Jersey’s PFML program. Example 3: Helena works from home in Colorado (PFML) for Virtua LLC and reports to a manager located at Virtua’s headquarters in Kansas (no PFML). Helena is covered by, and Virtua must participate in, Colorado’s PFML program.

Existing STD & Paid Parental Leave Plans

Many employers already offer some sort of STD plan, either employer-paid or voluntary, to their employees. Some employers also offer some sort of paid parental leave to new parents. In most cases, these existing plans will not satisfy the employer’s PFML obligation for employees working in a PFML state. These existing plans likely do not extend to all PFML eligible employees, do not provide benefits for all PFML qualifying reasons, and may pay less than the required PFML benefit amount.

Employers with such existing plans will still be required to either make contributions to the state program or purchase a separate PFML policy, where available. Employers will also want to understand how their existing STD and paid parental leave plans interact with each state’s PFML program to determine if it makes sense to continue to offer separate STD and paid parental leave benefits to employees in PFML states (see Coordination of Benefits below).

State Leave Laws & Sick and Safety Time

In addition to its PFML law, a state may also have separate state leave laws. These laws are analogous to federal leave laws like FMLA. State leave laws:

• Typically provide for unpaid leave (unlike PFML which is paid);
• Usually include job protection (which PFML may or may not do); and
• Reasons for leave may either overlap with PFML (in which case any leave will usually count toward the employee’s leave entitlements under both laws) or be different from PFML (in which case time off under the state leave law will not count towards the employee’s PFML leave entitlement and vice versa).

PFML states may also have mandatory sick and safety time (SST) laws. An SST program is also separate from the state PFML program and provides paid time off on the scale of hours or days (compared to weeks under most PFML programs) and is intended for short-term, routine illnesses (as opposed to disabilities and serious health conditions covered by PFML) and dealing with safety issues like domestic violence.

Any given state may have one, two or all three of these programs (PFML, state leave, and SST). It’s important to recognize what programs exist in each state and that compliance with the state’s SST law does not mean the employer has satisfied its PFML obligations or vice versa.

Funding Mechanisms

The details of how each state funds its PFML program vary enormously, but broadly speaking, these programs are funded in one of three ways.

Payroll Tax Contributions	• Typically mandatory employee contributions but may also require employer contributions. • In most states, this is the default funding mechanism (notable exceptions are NY and HI which require purchase of an approved insurance policy).
Private Insurance Policy	• Requires purchase of a separate approved policy or rider and/or application to the state for approval to offer a private plan. • Not available in all states.
Self-Funding	• Employer can apply to the state for permission to self-fund (usually not worth the effort and cost).

The employer’s payroll company can usually assist where the employer must, or opts to, fund PFML through payroll tax contributions. The employer’s benefit broker can usually assist where the employer must, or opts to, purchase a private PFML insurance policy. Employers who choose to self-fund PFML will likely need to retain a TPA to assist with plan administration. Leave administration vendors may also be able to assist with PFML funding and administration.

See Appendix B for information on funding mechanisms by state.

Coordination of Benefits

PFML benefits may overlap with other benefits offered by the employer, most often in the form of STD policies (fully-insured or self-funded), paid parental leave, and general paid time off / vacation / sick leave (collectively PTO). How PFML coordinates with these other benefits again varies from state to state but may include:

• Employees can opt to use employer-provided benefits in lieu of PFML.
• Employer-provided benefits can be used to supplement PFML, either at the employee’s discretion, the employer’s discretion, or by mutual agreement.
• Employer-provided benefits will reduce the amount of PFML benefits.
• PFML benefits will reduce the amount of employer-provided benefits.
• Employee must apply for PFML as a condition of receiving employer benefits.
• Employees cannot use both PFML and employer-provided benefits for the same absence.

Coordination between PFML and other paid leave benefits, such as STD and PTO, works in both directions. First, other paid leave benefits may affect the amount of PFML an employee can receive. Second, PFML benefits may impact the amount payable under STD or other leave plans. The PFML law itself may address both issues – for example, it may reduce PFML benefits based on STD or PTO received, or require the employer or STD carrier to adjust their payments so that, when combined, the total benefits do not exceed the employee’s base weekly wage.

If the PFML law itself does not require a particular outcome, the employer must also check its own STD and paid leave policies to see what impact the PFML payments will have on those benefits. For example, the state PFML benefits may be unaffected by any STD benefits the employee receives, but the STD policy itself may provide that the amount of STD benefits is reduced by the amount of PFML benefits the employee receives from the state; or the state PFML law may allow the employee to use PTO during the PFML waiting period, or to make up the difference between the PFML benefit and the employee’ normal weekly wages, but the employer’s own PTO policy may not allow for the use of PTO to fill in gaps in this manner.

Taxation of PFML Benefits

Until recently, it was unclear how state PFML contributions and benefits were treated for purposes of federal income taxes. In January 2025, the IRS issued Revenue Ruling 2025-4 which describes when state PFML premiums and penalties received through a state PFML program are subject to income tax, summarized in the table below.

The IRS was clear, though, that this guidance only applies to premiums and benefits through a state PFML plan. It does not apply to premiums and benefits where the employer chose or was required to purchase a private plan. Employers with private plans may need to check with the carrier and their tax advisor on how to treat premiums from a tax perspective. Employees receiving benefits from a private plan will need to consult with their own tax advisors on how to handle taxation for such benefits.

Contributions

Type of Contribution	Consequence to Employer	Consequence to Employee
Employer contribution	Deductible as a business expense	Not included as wages on employee’s on Form W-2
Employee contribution	Included as wages on employee’s Form W-2	Employee may deduct as State income tax, if employee itemizes deductions on Federal income tax return subject to limit on state tax deductions
Employer picks-up portion of employee contributions	Pick-up payment deductible as a business expense. Pick-up payment must be included as wages on employee’s Form W-2	Employee may deduct the pick-up payment as State income tax if employee itemizes deductions on Federal income tax return subject to limit on state tax deductions

Benefits

Type of Benefit	Amount Attributable to Employer Contribution	Amount Attributable to Employee Contribution
Family leave benefits	Amount attributable to employer contribution to family leave benefits is included in Federal gross income. State must file Form 1099 to report these payments.	Amount attributable to employee contribution to family leave benefits and any employer pick-up of employee contribution is included in Federal gross income. State must file Form 1099 to report these payments.
Medical leave benefits	Amount attributable to employer contribution to medical leave benefits is included in Federal gross income except as otherwise provided in §105. Sick pay reporting rules for third party payers of sick pay who are not an agent of the employer apply.	Amount attributable to employee contribution to medical benefits as well as any employer pick-up of the employee contribution are excluded from employee’s Federal gross income.

Appendix A – State PFML and/or Disability Programs

State	PFML	Disability	Websites & Legal Citations
California	✓	✓	State Disability Insurance Cal. UI Code §§2601-3272 (SDI); §§3300 – 3308 (PFL) 22 CCR §§2601-1 – 3271-1 (SDI); §§ 3301(a)-3306(b)(1) (PFL)
Colorado	✓	Incl. in PFML	Home | Family and Medical Leave Insurance 8 CRS §§8-13.3-501-524 7 CCR §§1107-1 – 9
Connecticut	✓	Incl.in PFML	CT Paid Leave Conn. Gen Stat. §§31-49e – 49u Conn. Reg. §§31-49p-1 -10
Delaware	✓1	Incl.in PFML	Delaware Paid Leave -Delaware Department of Labor 19 Del. C. §§3701 – 3727 19 De ADC §§1401-1.0 – 26.0
District of Columbia	✓	Incl.in PFML	DOES Office of Paid Family Leave D.C. Code §§32.541.01 – 541.12 7 DCMR §§3400 – 3599
Hawaii		✓	Disability Compensation Division | About TDI HRS §§392-1 – 101 HAR §§12-11-1 -10
Maine	✓2	Incl.in PFML	MDOL: Paid Family and Medical Leave 26 MRS §§ 850-A – R ME ADC 12-702
Maryland	✓3	Incl.in PFML	Paid Family and Medical Leave MD Labor & Employ §§8.3-101 – 1001 MD ADC §§ 09.42.01.01 – .07.07 (draft only)
Massachusetts	✓	Incl.in PFML	Paid Family and Medical Leave in Massachusetts | Mass.gov MGL c. 175M §§ 1 -11 458 MA ADC §§ 2.01-.17
Minnesota	✓4	Incl.in PFML	Minnesota Paid Leave / Minnesota Paid Leave Minn. Stat. §§ 268B.01 – .30 Minn. R. §§ 3317.0010 – .8000
New Jersey	✓	✓	Division of Temporary Disability and Family Leave Insurance NJSA §§ 43:21 -25 – 21-66 NJ ADC §§12:18 – 1.1 -12:18-3.12 (TDB) NJ ADC §§12:21-1.1 – 12:21-3.15 (FLI)
New York	✓	✓	New York State Paid Family Leave Disability Benefits Information for Employers NY WCL §§200-242 12 NYCRR §§355.1 – .9
Oregon	✓	Incl.in PFML	Paid Leave Oregon ORS §§657B.005-.925 OAR §§471-070-0001 – 8540
Rhode Island	✓	✓	RI Paid Leave | RIPL Home RI Temporary Disability Caregiver Insurance RIGL §28-39-1 – 28-41-42 260 CRIR §40-05-1.1 – 1.38
Washington	✓	Incl.in PFML	Washington State’s Paid Family and Medical Leave RCW §§50A.05.005 – 50A.50.200 WAC §§192-500-010 – 810-040

Appendix B – PFML Funding Mechanisms

State	Payroll Taxes	Private Plan (fully-insured)	Private Plan (self-funded)
California	Employee Contributions Only	No	Yes w/ state approval
Colorado	Employee Contributions Employer Contributions (10+ employees)	Yes w/ state approval	Yes w/ state approval
Connecticut	Employee Contributions Only	Yes w/ state approval	Yes w/ state approval
Delaware	Employer Contributions Only (but can require employees to pay up to 50%)	Yes w/ state approval	Yes w/ 100+ employees & state approval
District of Columbia	Employer Contributions Only	No	No
Hawaii	No	Yes from approved carrier	Yes w/ state approval
Maine	Employee Contributions Employer Contributions (15+ employees)	Yes	Yes w/ state approval
Maryland	Employer Contributions Only (but can require employees to pay up to 50%)	Yes (rules not finalized)	Yes w/ state approval (rules not finalized)
Massachusetts	Employee Contributions Employer Contributions (25+ employees)	Yes w/ state approval	Yes w/ state approval
Minnesota	Employee & Employer Contributions	Yes	Yes w/ state approval
New Jersey	PFL – Employee Contributions Only Disability – Employee & Employer Contributions	Yes from approved carrier	Yes w/ state approval
New York	No	Yes from approved carrier	Yes w/ state approval
Oregon	Employee Contributions Employer Contributions (25+ employees)	Yes w/ state approval	Yes w/ state approval
Rhode Island	Employee Contributions Only	No	No
Washington	Employee Contributions Employer Contributions (50+ employees)	No	Yes w/ state approval