Small employer exemptions from PFML, state by state

“Small employers are exempt” is the single most repeated and most misleading statement about paid family and medical leave. In most states, being small removes the employer’s share of the premium and nothing else. You still register, still withhold from employees, still remit quarterly, and still file. The obligation does not go away; the invoice gets smaller.

This guide sets out which states offer relief, what the relief actually consists of, and the counting rules that decide whether you qualify.

What relief actually means

There are three distinct things a state can do, and they are often conflated:

• Waive the employer share. The most common. The total premium falls to the employee portion, which you still withhold and remit. Washington, Oregon, Massachusetts, Maine, Colorado and Maryland all work this way.
• Reduce the total rate. Minnesota drops the whole premium from 0.88% to 0.66% for qualifying small employers, and the employer still pays a share of the reduced figure.
• Exempt entirely. Rare. Delaware is the only jurisdiction here where the smallest employers — under ten in-state employees — owe nothing at all.

State by state

The remaining 6 jurisdictions — California, Connecticut, District of Columbia, New Jersey, New York, Rhode Island — offer no small-employer relief of any kind. The full rate applies from your first covered employee. Note that four of those five are entirely employee-funded anyway, so there is no employer share to waive; the District of Columbia is the outlier, charging every employer 0.75% regardless of size.

The counting rules decide everything

Nationwide vs in-state

Most states count your employees everywhere, not just in their state. A company with six people in Colorado and 90 in California is not a Colorado small employer; Colorado counts all 96. Delaware is the exception in this dataset, counting only its own in-state employees.

This is the rule that most often surprises a distributed company. Having a handful of people in a state feels small. The state does not see it that way.

When the count is taken

Size is generally determined once a year from a prior period, not recalculated as you hire. Washington’s Employment Security Department, for example, assigns your size for the year based on the previous calendar year’s headcount. Crossing a threshold in March does not usually change your rate until the following January — which cuts both ways, and is worth knowing before you plan around it.

Who counts as an employee

Definitions vary. Massachusetts counts “covered individuals,” which can include 1099-MISC contractors where they make up more than half of your workforce. Oregon uses an average across the year rather than a point-in-time count. Minnesota applies a second test entirely: to qualify for its reduced rate you need 30 or fewer employees and an average wage below 150% of the state average annual wage. A small, well-paid team can fail the second test while passing the first.

What crossing a threshold costs

Washington has the largest step in the dataset. Below 50 employees you owe no employer share; at 50 you owe 0.3228% of subject wages. On an $80,000 average wage:

One additional employee moves the employer’s cost from nothing to roughly $12,914 a year. That is not a reason to avoid hiring, but it is a real number that belongs in a headcount plan rather than being discovered in January.

What to do about it

• Count once, correctly, per state. Build a single headcount figure on each state’s basis — nationwide or in-state — and record which you used.
• Do not stop withholding when you qualify. Relief almost never removes the employee deduction. Confirm what specifically was waived.
• Watch the second tests. Minnesota’s average-wage condition and Massachusetts’s contractor rule both disqualify employers who assume headcount is the only question.
• Model the step before you cross it. Run your projected headcount through the calculator at both sides of the threshold.

Every threshold above is shown with its verification date and agency source on the individual state pages — Washington, Minnesota, Massachusetts and Delaware are the ones with the most easily misread rules.

Estimates only. Confirm current rates with your state agency before filing or budgeting.