New York's Paid Family Leave Policy - What Does This Mean For Me?

Amie Vanderpool, CPA (Sep, 2017)

In April 2016, Governor Cuomo signed into law the New York State Paid Family Leave Benefits Law (PFLBL).  This law is being touted as the "nation's strongest and most comprehensive" policy of it's kind.  But what will it mean for businesses who need to comply with the PFLBL, or with the employees who might need to use it?

The PFLBL is actually a series of amendments and updates to workers' compensation laws, and therefore applies to all employers who are currently paying worker's compensation insurance.  It is funded entirely by employee contributions, and all benefits will be paid for by a state insurance fund. Under the new Paid Family Leave policy, eligible employees will be able to take time off while receiving a portion of their pay, along with job protection, for maternity or paternity leave, caring for a sick relative, or when a family member is called to active duty by the US Armed Forces.  Paid Family Leave Benefits cannot be used for an employee's own illness.  An employee is eligible for Paid Family Leave after working for an employer for 26 consecutive weeks (or 175 days if they work less than 20 hours a week).  Effective January 1, 2018, employees will receive eight weeks of paid leave at 50% of their average weekly wage, up to the New York State Average Weekly Wage (NYSAWW).  The amount of paid leave increases to 10 weeks at 55% of the average weekly wage for 2019, 10 weeks at 60% for 2020, and finally capping out at 12 weeks of paid leave in 2021 at 67% of the average weekly wage, up to the NYSAWW.  For 2017, the NYSAWW is $1,305.92, meaning that the maximum weekly amount for paid leave is $652.96. 

Employers will not have to foot the bill for this new law - it is entirely employee funded, although employers are responsible for collecting the premiums from employees through payroll deductions.  Beginning on January 1, 2018, employers are required to enroll in an insurance plan (in general, this will be automatically added to a company's existing disability plan) and begin payroll deductions from employees' paychecks for the insurance premiums related to the Paid Family Leave Benefit.  The deduction is 0.126% of an employees' average weekly wages, and is capped at 0.126% of the NYSAWW, or $1.65 per week for 2018.  Businesses can begin complying with this portion of the law any time after July 1, 2017.  If your business has not yet begun to withhold payroll deductions for employees, please contact your payroll and disability insurance providers now to ensure you will be ready to comply for next year.

In addition to the payroll deductions, there are a few more things businesses must do to be in compliance with the new law.  The business must first look at its current policies and procedures and update any policies to be in compliance with the new rules.  Any employee handbooks or manuals should be updated, and by January 1, 2018, the company should post a notice informing employees of their rights under the new law.  Businesses should also be aware of some of the exceptions to the Paid Familiy Leave Policy.  For example, if an employee is part of a union covered by a collective bargaining agreement, no deductions are needed provided the agreement is "at least as favorable" in terms of a paid leave policy. Also, temporary employees who do not anticipate working at least 175 days can sign a waiver to be exempted from the payroll deductions. 

Employees should also be familiar with the requirements of the law, so that they are aware of their rights and obligations in the event they need to use it.  Employees must give 30 days notice to their employers whenever possible (maternity/paternity leave, planned medical procedures, etc.), along with any documentation of the need for the paid family leave.  If the leave is not forseeable, notice should be given as soon as possible.  While employers can give an employee the option to use accrued vacation or sick days at full pay in lieu of, or addition to, the paid leave, employers cannot force an employee to use up accrued time off.  Employees can't double dip by taking benfits while also being covered by full disability. 

While on leave, employees will not lose any of their health benefits or any other benefits they have accrued.  An employer can stop the clock on accruing any additional benefits during the period of family leave, but they must start it up again from the same position as soon as the employee goes back to work.  At the end of the paid family leave, the employee has a right to return to the same position, or to one which is comparable.  No employee can be fired or discriminated against as a result of taking Paid Family Leave.

If you are an employer, your responsibilities under the PFLBL can be summarized into 3 key points - (1) get an insurance plan for family leave and begin employee payroll deductions, (2) update your policies and procedures to be in compliance with the law, and make sure your employees are aware of the changes, and (3) when an employee takes paid family leave, make sure to continue health and other benefits during their leave, and restore them to the same or comparable position upon returning to work.  As an employee, your responsibility is even simpler - (1) pay up to $1.65 per week through payroll, and (2) know your rights under the new law so that when you need time off to spend with a new baby, sick family member, or when a family member is called for active duty, you are able to take full advantage of its provisions.    


The information reflected in this article was current at the time of publication.  This information will not be modified or updated for any subsequent tax law changes, if any.

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