Short-Term Disability Vs. FMLA Vs. PFML: How Do They Compare?

Employees may have a variety of reasons for taking more than a brief leave because of a condition that impacts their ability to perform their job. And when they do, short-term disability (STD), the Family Medical Leave Act (FMLA), or state paid family medical leave (PFML) may apply. Do you know what the difference is between these types of leave?

Here, we’ll help you understand these leave options, what they cover, eligibility requirements, and what you need to do to meet your responsibilities. After reading this, you’ll know the differences between STD, FMLA, and PFML so you can help your employees get the wage and/or job protection they need while staying in compliance with applicable laws and regulations.

What is short-term disability?

Short-term disability is a type of insurance that partially covers income for employees who need to take time off of work because they can’t perform their job duties due to a non-job-related illness or an injury. You may offer short-term disability insurance as part of your employee benefits package or, if not, employees can purchase it on their own from private insurance companies.

What is FMLA?

Enacted in 1993, the federal Family and Medical Leave Act (FMLA) is a labor law that requires employers with more than 50 employees within a 75-mile radius to provide employees with up to 12 weeks of unpaid, job-protected leave per year for qualifying reasons. (Keep in mind that some states also have medical and parental leave laws that may have more generous provisions than the FMLA.)

What is PFML?

While there are no federal legal requirements for paid sick leave, a handful of states require employers to participate in insurance programs that provide job-protected, paid leave to employees who must miss work due to family and medical reasons. (Some cities also require paid family leave.) The Massachusetts Paid Family Medical Leave program is one example. Under the program, eligible workers can take up to 20 weeks for their own serious health condition, 12 for a family member’s, and 12 for the birth or adoption of a child.

How are STD, FMLA, and PFML different?

While all three types of leave provide some type of protection to employees who need to take a qualified leave from work, there are differences in their coverage, term, and requirements. Here we’ll look a little closer at those.

Short-term Disability

• Benefits: Coverage varies, but typically STD policies provide employees between 50% and 60% of their pre-disability base salary. The coverage term also varies but generally benefits last for 3 or 6 months; some policies have a cap on the maximum amount an employee can receive each month.
• Eligibility: Depending on the policy, employees may have a waiting period, also called an elimination period, before benefits begin.
• Qualifying Reasons: Each policy will outline what it covers, but typical conditions, which must be diagnosed by a healthcare provider, include:
  • Pregnancy and pregnancy complications
  • Digestive orders
  • Back and joint disorders
  • A non-work-related injury
  • Surgery recovery
  • A short-term illness
• Leave Determination: The insurance company makes the determination of whether to approve the leave.
• Cost: If you offer a plan, you can choose to contribute to the cost of coverage or not. For example, you may pay to cover the first $30,000 of an employee’s annual salary then allow them to pay for the coverage over that amount.
• Mandated Benefit?: No, unless you are an employer in certain states, including California, Hawaii, New Jersey, New York, and Rhode Island, you’re required to purchase STD insurance for your employees.
• Notice Requirements: None 

FMLA

• Benefits: The law provides for up to 12 weeks of unpaid leave for specified family and medical reasons and up to 26 weeks to care for a covered service member with a serious injury or illness. When an employee returns from FMLA leave, they must be restored to the job they had when leave began or an equivalent role with equal pay, benefits, and other terms and conditions of employment.
• Eligibility: Employees must have worked for you for at least a total of 12 months (these don’t need to be consecutive) and for at least 1,250 hours during the 12-month period immediately before the leave
• Qualifying Reasons:
  • The birth and care of the employee’s newborn child
  • Placement of a child with the employee for adoption or foster care
  • Care of a family member with a serious health condition
  • The employee’s own serious health condition
  • Military family leave (up to 26 weeks for a qualifying exigency involving a family member or to care for a covered service member – spouse, child, parent, or next of kin – with a serious injury or illness)
• Leave Determination: The employer decides to approve or deny leave. They must base their decision on information received from the employee; however, they can request additional information and, depending on the situation, can also ask for documentation of the family relationship as well as certification.
• Cost: There’s no cost to employers.
• Mandated Benefit?: Yes, if you are a covered employer, which are:
  • Private employer with 50 or more employees
  • Public agency
  • Public or private elementary or secondary school
• Notice Requirements: The law requires employers to display or post a general notice about the FMLA in plain view, even if there are not any employees currently eligible for leave.

PFML

• Benefits: PFML benefits differ depending on the state. For example, in Massachusetts, workers can take 12 weeks for the arrival of a new child, a close family member’s serious health condition, or close family member’s deployment, and 20 weeks for the worker’s own medical leave. During this time, the employee will receive pay based on their average weekly wage, the state average weekly wage for Massachusetts workers, and the type of leave they are taking; the maximum benefit is $1,084.31 per week.
• Eligibility: Each state’s law has different requirements for eligibility. In Connecticut, employees are eligible if they have earned wages of at least $2,325 in the highest-earning quarter of the first 4 of the five most recently completed quarters.
• Qualifying Reasons: Like other aspects of the state programs, the allowable reasons for taking leave also vary. These can include the birth, adoption, or foster placement of a child; the employee’s own or a family member’s serious health condition; family violence; or a family member who has incurred a serious illness or injury while on active duty. You’ll want to check your state’s program to understand the qualifying conditions.
• Leave Determination: Each state may have a unique process for making decisions on an employee’s leave request. In Massachusetts, for instance, the Department of Family and Medical Leave first receives the application, then will give it to you as the employer for your review. You have 10 business days to complete the review and provide any additional information to the Department to help inform their decision. If you don’t complete your review, the Department will make a decision based on the employee’s application.
• Cost: Most plans are funded by premiums paid by employees and employers. For example, in Washington, the premium rate is 0.6% of each employee’s gross wages, not including tips, up to the 2022 Social Security cap of $147,000; 73.22% can be paid by the employee and about 26.78% is the employer’s share.
• Mandated Benefit?: PFML is mandatory unless you’re exempt under your state law. For example, in Massachusetts, the law applies regardless of employer size but in Oregon, where the Family Leave Act takes effect in 2023, employers with fewer than 25 employees are exempt. In addition, while PFML may be required, in some states, your employer contributions may not be. That’s because you may need to have a certain number of employees before you’re required to pay into the program. In Washington, for instance, if you have fewer than 50 employees, then you don’t have to pay the employer portion of the premiums. It’s important to note that you may be eligible for an exemption from PFML requirements if you have an approved private plan with paid leave benefits that are equal to or more generous than those provided under your state’s program.
• Notice Requirements: Again, the requirements for notifying employees will vary by state, but generally speaking, you’ll need to inform your employees about the program by posting a notice in a place customarily used to post other employment-related notices.

Can employees use STD, FMLA, and PFML at the same time?

In certain situations, employees may combine FMLA, PFML, and/or STD and have the benefits run concurrently. However, there are factors that you’ll need to be aware of that may impact your employee’s benefits.

In Massachusetts, PFML is the primary leave, meaning it pays first. So most disability insurers will estimate the paid leave benefit amount then offset it from the STD policy.

The integration of the various types of leaves may also affect your responsibilities. For instance, in New York, if an employee has an event that qualifies for leave under both FMLA and Paid Family Leave, and you’re a covered employer under both laws, you can require them to run concurrently. In order for the two types of leaves to run together, you must notify the employee that the leave qualifies for both FMLA and Paid Family Leave, and that it will be designated as such.

How to Best Comply with Leave Requirements

As you can see, there are lots of considerations when it comes to providing your employees leave benefits. In some cases, you may be required to offer certain types of coverage while other times, offering a leave benefit is voluntary. Deciding on the best approach requires careful consideration of the laws in your state and your business’ objectives. To find out more about available options that may fit the needs of your business, employees, and budget, read our next article on types of employee leave.