This summer, New York joined the small group of U.S. states that offers paid family leave to employees. New York’s Workers’ Compensation Board adopted final regulations implementing paid family leave, the Paid Family Leave Benefits Law (“NY PFL law”), which goes into effect on January 1, 2018. The New York law has been dubbed one of the most comprehensive paid family leave programs in the nation. The NY PFL applies to all employers with employees working in New York for 30 or more days in a calendar year. The New York law is a benefit for people who work in New York; it does not matter where the employer is headquartered or where the employee lives.
The new law covers both full-time employees that have worked at least 20 hours per week for at least 26 consecutive weeks and part-time employees that have worked at least 175 days within a 52 consecutive-week period. Once an employee has met one of the two aforementioned eligibility requirements, paid leave will be granted in the following situations:
• To provide physical or psychological care and support to a family member due to a family member’s serious health condition;
• To bond with a newborn child during the first year of the child’s life or, if an adopted or foster care child, for the first year after the placement of a child with the employee; or
• For any qualified reason as provided for under the federal Family and Medical Leave Act (“FMLA”) arising from the employee’s spouse, domestic partner, child, or parent being active military duty, or being notified of an impending call or order to active military duty.
Employees on leave will receive up to 50% of the state’s average weekly wage for up to eight weeks in 2018 and this amount will gradually increase during the coming years, reaching 67% of the state average weekly wage for up to twelve weeks by 2021. The program is mandatory for private employers with one or more employees while public employers may opt into the program.
New York’s law is significantly more generous than the FMLA, which does not require paid leave and only applies to employers with 50 or more employees within a 750-mile radius of the worksite at which the employee is employed. Another key difference is that while FMLA requires employees to first use accrued Paid Time Off (“PTO”), an employer under the NY PFL law cannot require employees to use PTO before paid family leave unless that employee is eligible for both FMLA and NY paid family leave. Other benefits under the NY PFL law include continued health benefits during leave as if the employee continued to work, and reinstatement to the same or comparable prior position of employment without reduction in accrued benefits.
The NY PFL law does contain some restrictions on when employees can utilize paid family leave. For example, employees who are eligible for disability benefits and paid family leave benefits may only receive a combined amount of 26 weeks of disability and paid family leave benefits in a 52-consecutive calendar week period, and may not collect benefits for short term disability and paid family leave concurrently. The regulations also list various situations in which paid family leave benefits may not be available to the employee, such as when the employee is collecting sick pay or PTO from the employer, receiving total disability payments pursuant to workers’ compensation, or working part of the day with pay for the employer or any other employer.
Funding for paid family leave will come from employee contributions of up to $1.65/week for 2018. While it is unclear whether the short-term disability insurance carriers required to provide paid family leave benefits will be able to charge an amount in excess of the employee contributions, the intent behind the law is to ensure that the employee contributions are sufficient to fund all paid family leave costs. Employers who either currently self-insure for short-term disability benefits or who provide paid family leave to public employees not represented by employee organizations are given the option to self-insure for paid family leave, but must do so before September 30, 2017. However, self-insurance comes with a risk of bearing paid family leave costs not covered by employee contributions.
In addition to the heightened benefits, the NY PFL law adds notice requirements that may not be ignored. Employers must provide written notice to employees regarding their rights under the NY PFL law, including how to file a claim for leave. Employers must also post a prescribed notice regarding the NY PFL. Employees are also subject to notice requirements, as the law mandates 30 days’ advance notice of intent to take paid family leave.
Looking forward, employers should determine whether to obtain separate coverage for these benefits. Employers that insure short-term disability benefits should contact their insurance carriers to determine when payroll deductions for paid family leave should go into effect. Private employers that self-insure short term disability must determine whether they will elect to self-insure paid family leave, and must do so no later than September 30, 2017. The NY PFL law is much broader than FMLA, meaning that more employees can take leave than before and various leave policies will overlap in a new and complicated manner. Employers should review and update their employee handbooks, notices, plan documents, summary plan descriptions, and leave forms to ensure compliance with the new law.