In May 2022, the Healthy Delaware Families Act (HDFA or the Act) was signed into law. The HDFA is designed to offer paid leave benefits to employees starting in 2026. This new benefit is funded through employee payroll deductions set to begin in January 2025. In many respects, the Act closely tracks the federal Family and Medical Leave Act (FMLA) and is not as expansive as many other states’ paid family and medical leave laws. This program will be managed by the Delaware Department of Labor (“Department”).

The amount of paid leave benefits depends on employer size. Only parental leave is offered to employees of smaller employers (those with at least 10 employees in Delaware); whereas parental, caregiving and medical leave are offered to employees of larger employers (those with 25 or more employees in Delaware).

A few unique points about the Act include:

• Eligibility for benefits is the same as FMLA – an employee must have worked at least 1,250 hours in the previous 12 months

• Family member is defined the same as under the FMLA

• Employers – not the state – approve or deny an employee’s application for benefits

Until Delaware issues regulations offering greater detail, below is a high-level summary of some of the key provisions of the law.

Background

Covered employers

Employers with employees working in Delaware are covered under the HDFA. An employer must provide paid leave based on employer size as follows:

The HDFA does not apply to federal government employers or to any business that is closed in its entirety for 30 consecutive days or more per year.

Small businesses (those with fewer than 10 Delaware employees) may opt in to provide any of the three leave benefits by providing notice to the Department. A small business must opt in for a period of at least three years and may only opt out by providing 12 months’ notice to its employees and the Department.

Employee eligibility for paid leave benefits

A covered employee is an individual who primarily reports to work at a Delaware work site. Other individuals are not considered covered employees unless the employer elects to classify them as such.

Certain state employees employed on a temporary basis or employed by an entity covered by state employee benefits are not covered employees.

Like FMLA eligibility, a Delaware employee is eligible for benefits under the HDFA after being employed for 12 months and after having worked 1,250 hours in the previous 12-month period.

Reasons for leave

An eligible employee may take leave under the Act (with type of leave dependent on employer size) for the following purpose and lengths of time:

Parental leave may be taken within 12 months following the birth, adoption or placement of a child through foster care. An employer employing both parents may limit parents to taking 12 weeks of leave taken together for the birth, adoption or placement of a child through foster care.

Lockton comment: The Act permits an employer with fewer than 25 employees to limit parental leave benefits to no less than six weeks in a 12-month period during the first five years of benefits availability. To do so, the employer must provide notice to both employees and to the state of their intent to limit parental leave benefits. It is unclear whether this election may continue during any period the employer has 25 or more employees in the prior 12-month period once such election has been made.

Family caregiving leave may be taken to care for a family member with a serious health condition or due to a qualifying exigency related to military leave. A family member is a child, parent or spouse as defined under federal FMLA. Certification from a healthcare provider of the family member’s serious health condition is required.

Lockton comment: The Act permits future regulation addressing a limitation on employees taking leave when more than one employee is entitled to take family caregiving leave for the same family member so further limitation may occur.

Medical leave may be taken for an employee’s own serious health condition (such that the employee is unable to perform their job functions). Certification from a healthcare provider of the employee’s serious health condition is required.

Lockton comment: Consistent with FMLA rules, the Act permits intermittent or reduced leave to be taken only when a healthcare provider certifies that such leave is medically necessary. As such, intermittent or reduced leave is not available for parental leave.

The amount of paid leave benefits

The HDFA is structured like other state paid leave laws so that lower-income employees will receive a higher proportion of weekly wages. The weekly benefit will be 80% of the employee’s average weekly wage (AWW) during the 12 months before the employee applies for benefits.

For 2026 and 2027, the projected minimum weekly benefit is $100, except when the employee’s AWW is less than $100 a week, in which case the benefit will equal the employee’s full wages. The projected maximum weekly benefit is $900. After 2027, the maximum weekly benefit will increase in proportion to the annual average increase, if any, in the consumer price index.

The Department intends to adopt regulations identifying how benefits are to be calculated for employees with more than one source of wages and when 12 months of wages preceding the application are not available to the Department. Further, the Department may modify benefit amounts if the program is not funded adequately.

The HDFA will be funded through payroll contributions

The Department will establish a family and medical leave insurance program funded through employee payroll contributions. Employers must remit payroll contributions quarterly for the period beginning on Jan. 1, 2025. For employers with 25 or more employees, the contribution rate will equal 0.8% of wages for 2025 and 2026. For employers with 10 to 24 employees, the contribution rate will be 0.32% of wages during that same period. Further contribution rates will be established annually. The 2025/2026 contribution rates based on leave type are broken out as follows:

• Parental leave: 0.32% of wages

• Medical leave: 0.4% of wages

• Family caregiving leave: 0.08% of wages

An employer may elect to pay all or any portion of the employee’s share of any of the three contributions, but in no event may an employee contribute more than 50% of the required contribution. If an employer fails to timely deduct and remit employee contributions, that employer will be liable to make up any of those missed contributions.

Delaware differs from other state paid family and medical leave laws in that it permits employees with an option to waive payroll contributions (and benefits) when the employee’s work schedule or length of employment is not expected to meet the eligibility requirements for leave benefits (e.g., summer interns). The Department will adopt forms for this waiver process.

The HDFA claims process

Unlike other state paid leave programs, in Delaware, it is the employer (or an approved private plan) that is responsible for determining whether an employee is entitled to benefits. The Act, like the FMLA, requires healthcare provider certification for medical-related leave, permits recertification under the same rules, and permits employers to seek second and third opinions at their own expense.

Timing is outlined under the Act. Within five days of receiving a claim for benefits, an employer must approve or deny the employee’s application for leave When an application is denied, notice must include the reason(s) for that denial. Within three business days of approving a claim, the employer must notify the Department of such approval. The Department will then issue the employee’s first payment of benefits within 30 days of such notice. Subsequent payments are made every two weeks.

If a claim is denied, the employee may request that the Department review the denial within 60 days of the determination. The employee then has the right to request an appeal to the Insurance Appeal Board within 30 days of notice from the Department that it upholds the employer’s original determination. Appeals decided by the Insurance Appeal Board are final and binding.

If an employee is determined to have willfully made a false statement or misrepresentation regarding a material fact, or willfully failed to report a material fact, to obtain benefits, they will be disqualified from entitlement to benefits under the Act for three years.

Job protection and continued fringe benefits

Like FMLA leave, an employee taking HDFA leave has job protection and must be restored to the position held when the leave began or to a position with equivalent seniority, status, employment benefits pay and other terms and conditions of employment including fringe benefits and service credits.

During covered leave, the employer must maintain healthcare benefits with the employee continuing to pay the employee’s share of the cost.

The HDFA prohibits employers from interfering with, restraining or denying an employee’s right to exercise or attempt to exercise any right protected under the law. Retaliation against individuals exercising their rights under the Act is likewise prohibited.

Coordinating paid leave with the FMLA and other employer benefits

Leave taken under the HDFA runs concurrently with federal FMLA. An employer may require that payment made under the Act be made concurrently or otherwise coordinated with payment made or leave allowed under the terms of disability or family care leave under a collective bargaining agreement (CBA) or employer policy. An employee may not receive more than 100% of the employee’s weekly wages when all eligible benefits are combined. Employers must give written notice to employees when benefits will be coordinated.

Employers may require the use of unused accrued paid time off (including vacation and sick leave) before accessing family and medical leave benefits. The use of accrued PTO may count toward the total length of leave provided under the Act if the employee is not required to exhaust all PTO.

Lockton comment: The Act appears to indicate that if an employee is required to use all paid time off during a qualifying leave, that the time will not offset the period of paid family leave benefits available. The law is vague on this issue, so we would hope to see regulations provide greater clarity by outlining how much time could be required and still be applied against available paid leave under the Act.

Employers are obligated to comply with a CBA, employer policy or any other law providing more generous benefits than those under the Act.

Notice

Employers must provide a notice summarizing the HDFA upon hire, when the employee requests a leave covered by the Act or when the employer has knowledge that a leave may qualify for HDFA.

Employers must also display a poster in a conspicuous place accessible to employees at the employer’s place of business. Further regulations are expected relating to notice and poster requirements and to provide templates for employers.

Private plans

Employers are permitted to adopt a private plan rather than participate in the state option, with state approval. A private plan may be self-funded or may be obtained from an approved carrier and must provide the minimum benefits offered under the Act (but may provide greater benefits without imposing greater cost to the employee). The employer may cover some, but not all, types of leave under a private plan and obtain remaining coverage using the state program. A self-funded private plan adopted by a private employer requires the employer to furnish a bond running to the state.

Further regulation is expected to offer specific guidance on private plan requirements and the state approval process.

Steps to take now

While contribution requirements are years down the road, and benefits begin even later, it’s not too early for employers to consider whether existing policies will be impacted and, if so, what modifications or notice to employees may be needed to comply with the Act. Employers with existing private plans to address other state paid family and medical leave laws may want to investigate that option for Delaware as well. The new paid family leave benefit is also something to consider if an employer intends to begin hiring in the state of Delaware.

We will continue to keep you updated as information becomes available.

Full alert (opens a new window)Not legal advice: Nothing in this alert should be construed as legal advice. Lockton may not be considered your legal counsel, and communications with Lockton's Integrated Absence Solutions (IAS) group are not privileged under the attorney-client privilege.