Understanding the complexities of leave of absence laws is a significant undertaking for any employer, particularly as state-level legislation begins to diverge from long-standing federal standards. For Ohio business owners and employees, Ohio Senate Bill 396 (SB 396) represents a fundamental shift in how medical and family leave is structured. While both the federal Family and Medical Leave Act (FMLA) and the proposed SB 396 aim to support workers during life-altering events, they operate on vastly different mechanics regarding financial support, eligibility, and scale.
In this blog we are going to compare and contrast these two programs and how they will affect your small business in Ohio.
Paid Benefits vs. Unpaid Job Protection
The most critical distinction between these two programs is the financial impact on the worker. Under the federal FMLA, leave is strictly unpaid. This will serve as primarily as a job-protection mechanism, ensuring that an employee’s position (or an equivalent one) is held for them during their absence. It does not, however, provide any form of paycheck.
In contrast, SB 396 is designed as a comprehensive family and medical leave insurance program. It establishes a state-run fund to provide partial wage replacement for eligible individuals. If passed, Ohioans would receive weekly benefits based on a percentage of their average wages, offering a financial safety net that the federal law simply does not provide.
Expanding Coverage: Eligibility and Business Size
Eligibility requirements under SB 396 are significantly broader than those of the federal FMLA, which often excludes workers at smaller firms or those with shorter tenures. Federal FMLA generally only applies to private-sector employers with 50 or more employees, and workers must have completed at least 12 months and 1,250 hours of service to qualify.
SB 396 seeks to be far more inclusive by covering almost all employees in Ohio, including those at small businesses that fall below the federal 50-employee threshold. This is a big change for Ohio business owners.
As a business owner do not focus strictly on tenure with a single employer, eligibility under SB 396 is typically tied to a minimum earnings threshold during a specific “base period,” making benefits accessible to a much larger portion of the state’s workforce.
How Will Ohio Fund SB 396?
The federal FMLA is unpaid, it requires no central funding mechanism. That is one big thing that makes SB 396 in Ohio different. If passed, SB 396 would be an insurance-based system, SB 396 requires a steady stream of contributions to remain solvent. The program is intended to be funded through small payroll contributions from employees. The program has the potential for employers to set up payroll contributions, depending on the final legislative language. These contributions are pooled into a state-managed fund used to pay out benefits when workers need to take leave for qualifying medical or family reasons.
Key Comparisons at a Glance
While SB 396 is still moving through the legislative process. The goal is clear: to bridge the gap between job protection and financial stability for Ohio’s working families. By moving from a model of “unpaid time off” to “paid insurance,” the bill seeks to modernize how we approach the balance between our professional lives and our most pressing personal needs.
Why Do You Need ClarityHR Help to Navigate these Changes?
Navigating leave of absence laws can feel like a full-time job, especially with new state-level legislation entering the conversation. For Ohio workers and employers, Senate Bill 396 (SB 396) represents a significant departure from the federal standards we have followed for decades under the Family and Medical Leave Act (FMLA). While both aim to support employees during major life events. They operate on fundamentally different mechanics regarding pay, eligibility, and scale. Contact us today to learn more about SB 396 Vs FMLA and how this could impact your workforce.
FAQ for SB 396 VS. FMLA for Ohio Small Business Owners
Q: Does SB 396 apply to me if I have fewer than 50 employees?
A: The bill provides a specific exemption for small businesses. Employers with fewer than 15 employees are not required to pay the employer portion of the payroll contribution. However, workers at these small businesses are still covered by the program. Workers would still contribute their individual half (0.4%) of the premium to remain eligible for benefits.
Q: How will the paid leave be funded?
A: This program is designed to be funded through a social insurance model with a shared payroll contribution. As introduced, the total contribution is estimated to be 0.8% of an employee’s wages. That is roughly $0.80 for every $100 earned. This cost is expected to be split equally between the employer and the employee. Which means the employer’s direct cost would be approximately 0.4% of wages.
It is important to note that the Director of the Ohio Department of Job and Family Services would have the authority to adjust this rate over time based on the program’s actuarial needs and funding status.
Q: Are employers still obligated to pay for health insurance for workers using the SB 396 plan?
A: Yes, beyond the direct payroll tax, employers are required to maintain group health insurance coverage. This must be done under the same terms and conditions as if the employee had continued working. Consequently, if an employer typically pays a portion of an employee’s health premium, they must continue to do so during the 14 to 18 weeks of protected leave.
Q: Will my employees still have job protection?
A: Yes. SB 396 includes provisions to establish family and medical leave insurance while maintaining protections for the worker’s employment status.
Q: How do my benefit amounts get calculated?
A: Your benefit amounts for employees under Senate Bill 396 are designed to provide progressive wage replacement. This means that lower-wage earners receive a higher percentage of their typical pay compared to higher-wage earners. Which ensures the program is accessible to those with the most financial need.
The calculation for weekly benefits is based on how an individual’s average weekly wage compares to the state’s average weekly wage (SAWW). The proposed formula generally follows these tiers:
- Lower Earners: Employees earning 50% or less of the state average weekly wage would receive 90% of their average weekly wage.
- Higher Earners: Employees earning more than 50% of the SAWW, your benefit is calculated as 90% of the portion of your wages up to that 50% threshold. Plus 50% of any wages earned above that threshold.
Q: What are the qualifying reasons for leave under SB 396?
A: Like FMLA, qualifying reasons generally include caring for a new child. Or it could kick in if someone faces a serious health condition. There are also previsions for certain exigencies related to military service. Understanding the Shift: How Ohio’s SB 396 Differs from Federal FMLA.