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"Paid family leave" is used loosely for three different things: a federal right to take unpaid, job-protected time off; state programs that replace part of a worker's wages; and insurance an employer can buy to fund paid leave for its own staff. Mixing them up leads to expensive assumptions, such as believing an employee's job is protected because they receive a benefit check, or that a policy automatically qualifies for a tax credit. This article separates the three, then looks at how a Florida employer and a California employer approach the same decision.
The Family and Medical Leave Act, as the U.S. Department of Labor describes it, gives eligible employees of covered employers unpaid, job-protected leave for qualifying family and medical reasons, and requires group health benefits to continue on the same terms during that leave. Eligible employees can take up to 12 workweeks in a 12-month period for reasons that include the birth or placement of a child, caring for a spouse, child or parent with a serious health condition, the employee's own serious health condition, and certain military family exigencies. Military caregiver leave can run up to 26 workweeks.
Coverage has thresholds on both sides:
The key word is unpaid. The Department of Labor's Women's Bureau paid leave page states that there is currently no federal law providing or guaranteeing paid family and medical leave for private-sector workers, and that some states have their own programs. Any paycheck during leave comes from a state program, the employer, or insurance.
Paid family and medical leave insurance is a policy that pays a benefit, usually a percentage of wages up to a cap, while a covered employee is on qualifying leave. The employer pays premiums across the covered workforce every year, including years when nobody takes leave, and the insurer pays claims under the policy's terms.
Those terms do most of the work. Before comparing prices, look at:
It is also a separate policy from the liability and property coverage in a business insurance program, with its own terms and premium. And an insurance benefit is not job protection: whether an employee's position is protected during leave is a separate employment-law question.
California employees already have a state wage-replacement program. According to the California EDD, Paid Family Leave pays short-term benefits to people who take time off to bond with a new child, care for a seriously ill family member or support a family member's military deployment. Eligible workers can receive benefits for up to 8 weeks in a 12-month period, with a weekly benefit between $50 and $1,765.
The program is funded through State Disability Insurance, which shows up on paystubs as "CASDI", and a worker must have earned at least $300 with SDI withheld in the prior 18 months. The EDD is explicit that PFL provides benefit payments but not job protection; the FMLA or the California Family Rights Act may protect the job. A California employer considering private coverage is therefore deciding whether to add to a state benefit, not whether to create one from nothing.
Florida's law on the subject is section 627.445, added in 2023. It does not create a benefit fund. Instead, it authorizes paid family leave insurance policies and sets rules for them. Covered circumstances can include caring for a family member with a serious health condition, bonding with a child in the first 12 months after birth or placement, certain military exigencies, caring for a family member injured in the line of duty, and other leave the policy specifies.
The section requires each policy to spell out the benefit length for every covered circumstance, which cannot be less than 2 weeks in a period of 52 consecutive calendar weeks, along with any waiting period, the benefit amount, how wages are defined and calculated, any offsets and how often payments are made. It also lists limitations a policy may include, such as periods without the required notice or certification, or periods when the employee receives other employer-paid leave. For a Florida employer, the practical question is what to offer and whether to fund it directly or through a policy written under this section.
The federal employer credit is in 26 U.S.C. § 45S. As amended in 2025, for taxable years beginning after December 31, 2025, an eligible employer can elect a credit based on either wages paid to qualifying employees while on family and medical leave, or premiums paid for a paid family and medical leave insurance policy in force during the year. The Women's Bureau notes that the credit, created in 2017, became permanent in 2025.
The credit rate starts at 12.5 percent and rises by 0.25 percentage points for each point the benefit rate exceeds 50 percent of wages, up to 25 percent. To be an eligible employer, the business needs a written policy that gives full-time qualifying employees at least 2 weeks of annual paid family and medical leave (prorated for part-time staff) and pays at least 50 percent of normal wages. Other limits apply:
Buying a policy does not, by itself, make a business eligible. A tax adviser confirms eligibility, which method to elect and how the credit interacts with deductions.
Does a PFML insurance benefit protect an employee's job?
No. An insurance or state benefit replaces part of a paycheck. Job protection comes from laws such as the FMLA or, in California, the California Family Rights Act, when they apply to the employer and employee.
Is a 30-person Florida business covered by the FMLA?
Generally not. A private employer is covered when it has 50 or more employees in 20 or more workweeks in the current or previous calendar year. A smaller employer can still adopt its own leave policy or buy coverage.
Can a California employer claim Section 45S on state PFL benefits?
Section 45S excludes leave paid by a state or required by state law from the credit amount. That state leave is still taken into account when measuring how much leave the employer provides, which is one reason the calculation needs professional review.
Does buying PFML insurance guarantee the tax credit?
No. The employer still needs a qualifying written policy, qualifying employees and the right election, and a tax adviser has to confirm each piece.
Truscott's paid leave and tax credit assessment takes about a minute, needs no documents or employee names, and shows what a qualifying plan would require. Truscott reviews coverage options where licensed and appointed, and your tax professional confirms the credit.
Sources checked September 24, 2026. This article is general information, not tax or legal advice; a tax adviser confirms eligibility and the credit election, and an employment lawyer confirms leave rights.
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