Preparing for New York State Paid Family Leave

Ivanka Trump recently wrote a Wall Street Journal op-ed that said “Providing a national guaranteed paid-leave program – with a reasonable time limit and benefit cap – isn’t an entitlement, it’s an investment in America’s working families.” Although there is bi-partisan support for a national paid family and medical leave program, several states have taken the lead. In New York State, the Paid Family Leave Benefits Law (PFL) was recently finalized and will impact all New York State private employers who have at least one employee. PFL is designed to be phased in over four years, with the first phase effective January 1, 2018.

As an amendment to New York’s Workers’ Compensation Law, PFL works in conjunction with NYS statutory disability. It provides wage replacement and job protection to eligible employees who are unable to work due to certain circumstances.

In anticipation of employee requests for PFL benefits as early as January 1, 2018, I have outlined the fundamentals below:

Paid Family Leave Basics

Eligibility: All NYS private-sector employers, regardless of size, are required to provide PFL. Full-time employees who have worked over 20 hours per week with 26 weeks of continuous employment are eligible for PFL benefits. Part-time employees who work less than 20 hours per week become eligible after working 175 days for the employer. The definition of work includes approved paid time off.

Eligible employees qualify for partial wage replacement and job protection in three specific situations:

When needed to care for a family member with serious illness;
For bonding with a newborn, including in the case of adoption or foster care (within 12 months from birth or adoption/placement); and
To relieve family pressure when a family member is called for active military leave, as defined under the federal Family and Medical Leave Act (FMLA) as the employee’s spouse, domestic partner, child, or parent.

Family member in the case of serious illness is defined as child, parent, grandparent, grandchild, spouse, or domestic partner. Parent is defined as biological, foster or adoptive parent, a parent-in-law, a step-parent, a legal guardian, or other person who assumed parental responsibilities for the employee when the employee was a child.

PFL requires that:

Employees be reinstated to previous (or similar) position,
Employees’ health insurance benefits continue while on leave,
Employees be protected from discrimination or retaliation when taking leave,
PFL run concurrently with FMLA if both leaves apply,
Notice of leave, when foreseeable, must be made at least 30 days in advance, or as soon as practicable.

Leave Benefits: Effective January 1, 2018, eligible employees may take up to eight weeks of leave and receive 50 percent of their average weekly wages or 50 percent of state average weekly wage, whichever is lower. The state average weekly wage is currently $1,305.92. Therefore, in 2018, an employee making $1000 per week would receive $500 while another employee making $2000 per week would receive $652.96 (vs. $1000) since total benefits are capped at the lesser of employee’s average weekly wages or the NYS average weekly wage.

PFL benefits are expected to be phased in over four years, with benefit amounts and leave lengths gradually increasing. On January 1, 2021, when PFL is fully phased in, an eligible employee will be able to take up to 12 weeks of paid time off per 52-week period and will be compensated 67 percent of their average weekly wage or 67 percent of the NYS average weekly wage.

Funding of PFL Benefits

PFL is designed to be fully funded by employees through payroll deductions. Insurance carriers who provide statutory short-term disability insurance are adding PFL riders to these policies. The NYS Department of Financial Services, using actuarial principles, has set the premium rate at 0.126 percent of an employee’s weekly wage up to and not to exceed the state average weekly wage. In 2018, an employee making $1000 per week will have a weekly payroll deduction of $1.26. An employee making $2000 per week is capped at a deduction of $1.65 per week based on the statewide average weekly wage of $1,305.92.

Employees who are not eligible for PFL because of limited work schedules may waive/opt out of paying the weekly deduction. Employees may file a waiver for paid family leave benefits if their regular employment schedule is:

20 hours or more per week however the employee will not work 26 consecutive weeks; or
less than 20 hours per week and the employee will not work 175 days in a 52 consecutive week period.

The Workers’ Comp Board (WCB) will provide a waiver template for employers to use.

Employers have the option of self-insuring for PFL but should discuss the risks of self-insurance with their broker, given the uncertainty of how frequently PFL may be used and whether it will result in a decrease in short-term disability requests.

Preparing Now for PFL

Employers should expect PFL requests almost immediately after January 1, 2018. Any employee who meets the eligibility requirements may take PFL as early as the first of January, especially in the case of birth or adoption/foster placement occurring in 2017.

A checklist for PFL preparation includes the following:

Work with your benefits broker to obtain PFL coverage for 2018.
Ensure your payroll system is set up for new deduction codes.
Set up your timekeeping system with an additional time off code for PFL.
Ensure your leave tracking system can accommodate various leaves running concurrently.
Work with your broker to determine when employee deductions will begin.
Determine your insurance company’s process for claims submission and administration.
Ensure that a written PFL policy is adopted and communicated to employees before January 1, 2018.
Prepare updates for your employee handbook that address how PFL will work with other time off policies (FMLA, short term disability, paid time off).
Employers in multiple states should define NYS employees in policies.
Communicate to employees that:
- PFL and FMLA will run concurrently whenever possible,
- Short-term disability may not be used during PFL,
- Employees may use PTO to supplement their wages while on PFL,
- A PFL waiver/opt out option is available to employees who are not eligible for PFL as well as that a revocation of the waiver will be made if employees’ work schedules change and they become eligible for PFL.
Display and post a printed PFL notice, to be published by New York State later this year.
Prepare for an increase in leave requests and absences.
Provide supervisor training on PFL.

Conclusion

Given the recent finalization of the Paid Family Leave Benefits Law, there likely will be added clarification and possibly amendments over the next few months.