New York employers may begin deducting from employees’ pay to fund paid family leave.
- Employers may begin deducting up to $1.65 per week from employees’ wages.
- Employers must purchase PFL coverage through a disability benefits carrier or arrange for their own self-insurance prior to January 1, 2018.
- Employers should review and revise their policies, procedures and agreements to ensure compliance with the PFLL.
New York’s Paid Family Leave Law (PFLL), the most expansive paid leave law in the nation, goes into effect on January 1, 2018. Leave pursuant to the PFLL will be funded entirely through payroll deductions. To ensure that employers will have sufficient funds to offset the cost of this paid leave program, they are now permitted to begin making such deductions.
As previously reported in our May 2017 client alert, “The Rapidly Evolving Legal Landscape for New York Employers,” the PFLL establishes an employee-funded, partial wage replacement program for employees in New York. Once fully phased in, the PFLL will be the most far-reaching paid leave law in the United States, offering 12 weeks of paid family leave (PFL) in any 52-week period to New York employees when taking leave to bond with a child, care for a close relative with a serious health condition, or assist with familial obligations when a family member is called to active military service.
Maximum Employee Contribution
On June 1, 2017, the New York State Department of Financial Services set the premium rate for family leave benefits and the maximum employee contribution for coverage at 0.126 percent of an employee’s weekly wage up to, and not to exceed, the statewide average weekly wage (which is currently $1,305.92). Accordingly, employers may begin withholding a maximum of $1.65 per week from their employees’ pay.
Updated Proposed Regulations
Since the publication of our original alert, the New York State Workers’ Compensation Board has published updated proposed regulations (Revised Regulations) incorporating 117 formal written comments to the February 22, 2017, proposed regulations. These Revised Regulations offer further clarification and guidance on the PFLL, including on the following topics:
- Deductions from Employees’ Pay The Board confirmed employers could begin making deductions on July 1, 2017, in order to offset the cost of acquiring the mandated insurance coverage. The Revised Regulations also clarify that employers may continue to deduct employee contributions while an employee is receiving disability benefits under Section 204 of the Workers’ Compensation Law.
- Full- and Part-Time Employees Under the original proposed regulations, full-time employees became eligible for benefits after 26 consecutive weeks of employment, and part-time employees (defined as employees working less than five days per week) after 175 days of employment. The Revised Regulations remove references to full-time and part-time employees. Now employees who work 20 or more hours per week are eligible for family leave after 26 consecutive weeks of work, regardless of the number of days worked per week. Employees who work less than 20 hours per week will become eligible after working for 175 days.
- PFLL Interaction with Federal FMLA The revised proposed regulations clarify that an employer may not count federal Family and Medical Leave Act (FMLA) designated leave for an employee’s own serious health condition as PFL because an employee cannot use PFL for his or her own serious health condition. However, if an employee is eligible for leave under both the PFLL and the FMLA, but the employee declines to apply for payment under the PFLL, employers are permitted to designate the leave as both PFL and FMLA leave. The Revised Regulations also clarify that use of accrued paid time off during periods of concurrent PFL and FMLA leave is governed by the FMLA. Accordingly, when an employee is concurrently taking PFL and FMLA leave, the employer may require the employee to use accrued paid time off, sick, personal, or vacation leave. However, when an employee is taking PFL alone, employees may elect to use any accrued paid time off, but employers may not require employees to do so.
- Notice of Intermittent Leave The Revised Regulations provide that employers may require employees who are using intermittent PFL to provide separate notice for each day of PFL.
- Waiver Pursuant to the PFLL, employers must provide employees whose regular schedules will render them ineligible for PFL (i.e., those scheduled to work less than 26 weeks or employees who will not work 175 days in a consecutive 52-week period) with the option to file a waiver to exempt them from the required wage deductions. The Revised Regulations provide that the Board will develop a waiver form to inform an employer and employee of their rights and obligations.
What Employers Can Do Now to Comply with the PFLL
Even though final regulations are still pending with the Board, employers should begin taking steps now to ensure compliance as of January 1, 2018, when the PFLL takes effect:
- Get PFL Insurance Coverage – Employers should obtain PFL coverage through a disability benefits carrier or set up their own self-insurance.
- Begin Making Employee Deductions – In order to offset the cost of acquiring the PFL insurance coverage, employers can now make deductions from employees’ paychecks.
- Check and Revise Employment Handbook Policies and Employment Agreements – Employers should begin to analyze their current leave policies and procedures to ensure compliance with the protections and notice requirements under the PFLL. Employers should also begin to analyze how any existing leave policies will work in tandem with PFL.