As we reported previously to New York recently joined several other states that offer paid family leave benefits for employees. Effective Jan. 1, 2018, the New York Paid Family Leave Law (PFLL) will provide eligible employees with eight full weeks of paid family leave, funded exclusively through employee payroll deductions. The benefit amount and length of the leave will increase gradually through 2021.
On June 1, 2017, the New York State (NYS) Department of Financial Services (DFS) established the maximum employee contribution rate for PFLL coverage as 0.126 percent of an employee’s weekly wage, not to exceed the current NYS average weekly wage ($1,305.92). Thus, the maximum weekly deduction for employees earning $1,305.92 or more per week is $1.65 (0.126 percent of $1,305.92). The DFS will reset the employee contribution rate annually.
Despite the fast-approaching effective date of the PFLL, we are awaiting publication of the final regulations by the New York State Workers’ Compensation Board (WCB). On May 24, 2017, the WCB issued revisions to its proposed rules for the implementation of the PFLL, and the public comment period for the proposed revisions closed on June 23, 2017. Notably, the proposed regulations permit employers to begin implementing necessary wage deductions for employee contributions under the PFLL as early as July 1, 2017, to fund the benefit. However, because the July 1 date has passed and there are no finalized regulations in place, employers must decide whether to await the publication of the final regulations before implementing the payroll deductions or to begin the deductions as of July 1 (which poses a risk that the final regulations may include a later date as to when the deductions may begin).
Employers with existing family leave policies should be prepared to coordinate the PFLL with existing paid leave policies, if any. The proposed regulations provide that if an employee is eligible for leave under both the PFLL and the Family and Medical Leave Act (FMLA), the leave may be taken concurrently, so long as the employer notifies the employee that the leave will be taken concurrently. One important distinction between the FMLA and the PFLL is that an employee may not use leave under the PFLL for an employee’s own serious health condition. The proposed regulations further provide that employees may choose to supplement PFLL benefits, up to their full salary or wages, by using any form of accrued or allotted paid time off, consistent with their employer’s policies, while on leave under the PFLL. If an employee chooses to take advantage of an employer’s paid-time-off policy at 100 percent of his or her salary instead of receiving the benefit available under the PFLL, the employer may request reimbursement from its carrier of any benefits due to the employee. Employers may not, however, require employees to exhaust all available paid time off under other policies prior to using paid leave under the PFLL.
The proposed regulations also leave some unanswered questions. For example, there is no guidance for employers desiring to fund the benefit in lieu of requiring employee payroll deductions. In the absence of any guidance on this topic, the safest approach for employers would be to implement employee payroll deductions. The proposed regulations provide that employers that fail to provide PFLL coverage are liable for a fine up to 0.5 percent of weekly payroll during the lapse and an additional sum of up to $500.
We will continue to provide updates on the PFLL as we approach the effective date. In the meantime, employers should take the following steps to prepare to comply with the PFLL:
- Become familiar with the revised, proposed regulations.
- Visit New York’s website dedicated to the PFLL, which provides answers to frequently asked questions.
- Update existing handbooks and policies concerning the PFLL, or create written guidance for employees regarding the PFLL; prepare to display or post a notice to employees regarding the PFLL.
- Contact a New York disability benefits carrier to learn more about adding or obtaining PFLL coverage.
- Ensure payroll departments or outside payroll vendors are prepared to make appropriate deductions from employee paychecks.