Christie Vetoes Proposed Expansion to New Jersey’s Paid Family Leave

On July 21, 2017, Governor Chris Christie conditionally vetoed bill A-4927, which would have expanded New Jersey’s Family Temporary Disability Leave law, otherwise commonly referred to as, New Jersey’s Paid Family Leave (NJPFL) program[1], reasoning that:

This bill is a costly expansion, especially to the Paid Family Leave program, that will result in increased taxes to be paid by working citizens of New Jersey.

The legislation would make it increasingly difficult and expensive to run a business, especially a small business, which may not be able to absorb the short-term absence of an essential employee or have the tools to compete for short-term employment coverage.

As Christie explains, in 2016, approximately $88.7 million was paid in benefits and the proposed legislation is estimated to increase benefits to $236 million. Specifically, the vetoed amendments would have impacted small businesses by including employers with only 20 employees, rather than 50. It would have also expanded other key coverage provisions, such as, expanding coverage to employees using surrogates and permitting paid leave for care for in-laws, siblings, grandparents and grandchildren. Finally, the amendments would have doubled the amount of available paid leave from six weeks to 12 weeks and increase benefits to 90% of an employee’s average weekly pay.

Currently, the law provides for six weeks of unprotected paid leave through the State’s Temporary Disability Fund at two-thirds of an employees’ average weekly pay with a maximum set annually. In 2016, the maximum benefit was $633. Ultimately, Christie’s recommendations include a greater focus on resources educating employees about benefits already available.

New York Recently Enacts Paid Family Leave Program

On July 19, 2017, New York’s Workers’ Compensation Board adopted final regulations on Paid Family Leave. Beginning January 1, 2018, New York’s Paid Family Leave Program (NYPFL) will provide New Yorkers with job-protected, paid leave to bond with a new child, care for a loved one with a serious health condition, or to help relieve family pressures when someone is called to active military service. Notably, NYPFL is unavailable for an employee’s own serious health condition. An employee, however, may be eligible for paid leave under New York’s existing short-term disability benefits program. An Employer Fact Sheet can be found here.

NYPFL will provide eligible employees with job-protected leave while still being paid a portion of their income. Like the federal Family & Medical Leave Act, employees are also guaranteed the continuation of their health insurance during paid leave, so long as employees timely pay their respective portion of premium costs while out on NYPFL.

NYPFL is designed to phase-in over four years in order to ultimately provide up to twelve weeks of benefits to eligible employees. The maximum benefit is eight weeks in 2018, ten weeks in 2019, and twelve weeks in 2021. Initially, NYPFL will cover 50% of a worker’s average pay, capped at 50% of New York State’s average weekly wage - currently $1,266.44. Over four years, this percentage will rise and eventually replace 67% of average pay, capped at 2/3 of the state’s average weekly wage.

It is unnecessary to physically work in New York in order to qualify for benefits if the New York office is directing the employee’s work. An employee qualifies for benefits in instances where he or she: (1) physically works in New York; (2) does not have a worksite in New York, which can include out-of-state employees; however the employer who directs or controls the work is within New York; or (3) the employee does not have a worksite in any specific state but resides and works from his or her home in New York. NYPFL will be available to employees, regardless of the number of employees the business employs.

NYPFL is entirely employee funded through payroll deductions. Notably, the payroll deduction is mandated by the State of New York and is not optional for employees. The maximum employee contribution in 2018 is 0.126% of an employee’s weekly wage, capped at 0.126% of the annually-calculated New York State Average Weekly Wage. Employers can begin making these payroll deductions now.

Benefits will be administered through the employer’s worker’s compensation carrier and many carriers are already in the process of establishing detailed claims processes.

Upon return from paid family leave, employees are entitled to be reinstated to their same or comparable job. Employers that fail to reinstate employees after paid family leave may encounter employee discrimination and retaliation claims.

The Bottom Line.

New York employers should begin preparations now by reviewing their policies and handbook and revising where necessary. New York will publish the appropriate Notice later this year which will need to be displayed amongst other workplace rights posters.

All employers should carefully consider employee requests for leave and seek advice from counsel. The interplay between unpaid job protection leave statutes (Federal Medical Leave Act and New Jersey’s Family Leave Act) and NJPFL can be tricky. Small employers (with less than 50 employees) may also be required to reinstate employees following six weeks of leave under certain circumstances.