New York Employers Can Begin Payroll Deductions for Paid Family Leave as of July 1
Although New York’s paid family leave (“PFL”) benefits are not available until January 1, 2018, employers should begin preparing for the implementation of this benefit now. Specifically, beginning July 1, 2017, employers may begin making deductions from employee payroll to fund PFL benefits and related insurance premiums. Because PFL benefits will be funded exclusively through employee contributions, the goal is to ensure that there will be a sufficient pool of funds collected to begin to provide PFL benefits by the effective date of January 1, 2018. Employers that fail to collect employee contributions and fail to provide coverage by purchase of an insurance policy or self-insurance will be liable for the payment of family leave benefits. Therefore, employers should coordinate with their payroll providers and insurance carriers (unless they plan to self-insure) now about appropriate payroll deductions and coverage to ensure compliance with the new law.
By way of brief background, in 2016, Governor Andrew Cuomo signed the New York Paid Family Leave Benefits Law, whereby New York joined California, Rhode Island, and New Jersey as the only states in the nation that provide PFL benefits. In fact, when fully implemented in 2021, New York will have the longest and most comprehensive PFL program in the nation. Virtually all private employers in New York are subject to the program, and nearly all employees are entitled to it. Full-time employees will be eligible for PFL benefits after 26 weeks of employment, and part-time employees will be eligible after they have completed 175 days of employment. Employees can utilize PFL to bond with a baby in the first year after a child’s birth, adoption or foster placement; to care for a family member with a serious health condition; or for any qualifying reason arising from a call to military duty.
The program will be implemented in four phases over the course of four years and the benefits will increase on an annual basis. The four phases are as follows:
- As of January 1, 2018, employees may take up to 8 weeks of PFL in any 52 consecutive week period at a rate of the lesser of 50% of the employee’s weekly wage or of the State’s current average weekly wage, which was $1,305.92 for calendar year 2016.
- As of January 1, 2019, employees may take up to 10 weeks of PFL and receive the lesser of 55% of employee’s weekly wage or of the State’s current average weekly wage.
- As of January 1, 2020, employees may take up to 10 weeks of PFL and receive the lesser of 60% of the employee’s weekly wage or of the State’s current average weekly wage.
- As of January 1, 2021, employees may take up to 12 weeks of PFL and receive 67% of the lesser of the employee’s weekly wage or of the State’s current average weekly wage.
Under the law, employees may supplement PFL benefits up to their full salary or wages with accrued vacation or personal leave time. However, employers may request reimbursement from the employee for any paid leave benefits the employee received from the state during that period.
During the duration of an employee’s PFL, employers must protect the employee’s job and maintain the employee’s existing health benefits so long as the employee continues to pay his or her share of the premiums. While employees are not necessarily entitled to continue to accrue certain benefits, such as sick per personal days, while out on leave, they are entitled to their already accrued benefits. Accordingly, in addition to implementing payroll deductions and obtaining insurance coverage, employers should also start reviewing their family and medical leave policies and benefit claim procedures as well as any existing agreements, including collective bargaining agreements, to ensure compliance with these and all other aspects of the law’s requirements. Employers must also post a conspicuous notice for all employees and applicants containing information about PFL, including how to file a claim or complaint, in a form prescribed by the Chair of the Department of Workers’ Compensation.
 On June 1, 2017, the New York Department of Financial Services set the maximum rate of contribution at 0.126% of an employee's weekly wage, with a maximum contribution of 0.126% of the current statewide average weekly wage, i.e. $1.64 per week.
For more information on this topic, please contact your Chiesa Shahinian & Giantomasi PC attorney or the author listed below.
Lindsay Smith Dischley | Associate | email@example.com | (973) 530-2110