The New York State Workers’ Compensation Board has issued final regulations for paid family leave in New York, along with an Assessment of Public Comment that provides some additional clarifications. Starting January 1, 2018, eligible employees can receive paid family leave benefits through New York’s disability benefits law. The paid family leave law allows, but does not require, employers to begin collecting employee contributions on or after July 1, 2017, for paid leave benefits payable in 2018.
New York is the latest state to adopt paid family leave. California, New Jersey and Rhode Island also have paid family leave programs in operation. Washington, D.C., enacted a paid family leave law in 2017, which calls for benefits to begin in 2020 (that program will be funded by employers). Washington State enacted a family leave law in 2017 that calls for employee contributions beginning in 2019 and makes benefits available in 2020. In addition, President Trump’s fiscal 2018 budget proposes to provide six weeks of paid leave for new parents, including adoptive parents.
Eligibility for New York paid family leave
All employees in the state of New York who are regularly scheduled to work at least 20 hours per week and have worked at least 26 consecutive weeks are eligible for paid family leave. Part-time employees who regularly work fewer than 20 hours per week will become eligible for the benefits after working 175 days. The assessment clarifies that the 175-day requirement applies only to days worked and thus does not include nonworking, unpaid weekends and holidays. According to the regulations, however, scheduled vacations and other paid time off (PTO) count toward the thresholds for full-time and part-time workers. Time off for short-term disability does not count toward weeks of employment or days worked.
The assessment clarified that employees who work primarily in New York with only incidental work elsewhere are eligible for paid family leave, whereas employees who work outside of New York and only incidentally work in New York are not covered. It also stated that employees who do not perform their work in any one state but perform some work in New York are eligible for paid family leave as long as they are based in New York, controlled from New York or live in New York.
Qualifying circumstances for New York paid family leave
Eligible employees will be entitled to paid family leave in three situations:
- During the first 12 months after the birth, adoption or fostering of a child
- While caring for a spouse, domestic partner, child, parent, parent-in-law, grandparent or grandchild with a serious health condition
- While assisting loved ones when a spouse, child, domestic partner or parent is deployed abroad on active military duty
Employers must inform all employees of their rights and obligations in writing, including how to file a claim, and post a notice about paid family leave. The final regulations also clarify that, when the need for family leave is foreseeable, employees must notify their employer at least 30 days in advance.
New York paid family leave benefits
The benefits are a percentage of the employee’s average weekly wage or of the state average weekly wage, whichever is less. Both the percentage of pay and duration of leave are slated to gradually rise, starting at 50% of pay for eight weeks of leave in 2018 and rising to 67% of pay for 12 weeks of leave in 2021 (see table below). Employees are entitled to job protection and continuation of their health insurance during paid family leave.
||Maximum leave period
||Percentage of pay replaced*
*If the employer and employee agree, paid family leave benefits may be supplemented up to 100% of salary with accrued vacation, sick, personal or other PTO. Where employees receive a full salary while on leave, employers may request reimbursement from the insurance carrier providing paid family leave benefits in the same way they would seek reimbursement for workers compensation benefits.
Funding for New York paid family leave
The law intends for paid family leave to be fully funded by employees. Contributions are set at 0.126% of employees’ weekly wages (or the state average wage, if less) and will be deducted from their paychecks. For 2018, the maximum employee contribution is roughly $1.65 per week (or $85 per year). This amount is subject to change each year on September 1.
Employers may fully insure or self-insure the benefits. Under the final regulations, all insurance carriers that provide disability benefits in New York must also provide paid family leave benefits, with the terms defined in a rider to the disability benefit policy. While it is unclear whether insurance carriers can charge employers more than employee contributions, most carriers do not plan to do so. The program clearly intends for the employee contributions to cover employers’ insurance premiums, and for such premiums to at least equal the cost of the benefits paid out.
Employers that self-insure their disability benefits may also self-insure paid family leave benefits, although doing so triggers a few additional requirements:
- Employers that decide to self-insure must make their election by September 30 and, as part of the process, submit a full annual payroll report, including reports for any self-insured subsidiaries as of December 31, 2016.
- Also as part of the election process, self-insuring employers must post additional security and enter into a binding agreement accepting all liability for any benefits paid that exceed employee contributions (provided the contributions were at the mandatory maximum).
- Contributions collected by self-insured employers for disability and paid family leave benefits must be deposited into a single dedicated trust fund.
While the program is supposed to be fully funded by employee contributions, the final regulations clarify that employees may not be required to pay more than their maximum contribution. So, it appears that self-insured employers could potentially incur costs for any benefit payouts that exceed employee contributions.
Additional takeaways from the final regulations
- Calculation of look-back period. Employers should not count the week the employee goes on leave as part of the eight-week look-back period when calculating average weekly wages (to avoid reducing the benefit due to a partial absence during that week).
- Calculating average wage. In converting average weekly wage to an average daily wage, the average number of days worked per week can reflect fractions of a day.
- Mandated waivers. The final regulations state that employees who work too few hours to be eligible for paid family leave must be offered the option to waive their right to family leave benefits (and thus not make contributions). The proposed regulations had implied the waiver was optional.
Additional takeaways from the assessment
- Employee’s illness. Employees are not eligible for paid family leave due to their own illness, and may not receive both paid family leave benefits and sick pay for the same period.
- Coordination of disability and paid family leave benefits. An employee who is eligible for both disability benefits and paid family leave during the same 52-consecutive-week period may take a combined 26 weeks of both benefits. Any disability benefits received in 2017 will count toward the employee’s total combined disability and paid family leave benefits available in 2018. (The 52-week look-back period for 2018 will extend back into 2017.)
- Paid family leave and the FMLA. Unless the employer specifies otherwise, leave available under the Family and Medical Leave Act (FMLA) can run concurrently with paid family leave, as long as the employer provided the required FMLA notices. For a subsequent unrelated disability, an employee may seek benefits up to the maximum number of weeks permitted. The assessment emphasized that employees with a qualifying event in 2017, such as the birth of a child, may be entitled to leave in 2017 and again in 2018.
Implications for New York employers
Employers with employees in New York should consider taking the following actions (in consultation with legal counsel) to comply with New York’s paid family leave law before 2018:
- Determine whether and to what extent New York’s law overlaps with the organization’s leave policies.
- Decide whether to fully insure or self-insure paid family leave, and either contact the disability carrier to obtain a policy or file an election with New York to self-insure by September 30.
- Adopt a written paid family leave policy before January 1, 2018, that includes all required information and informs employees that overlapping leaves under the FMLA and company policy will be run concurrently whenever possible.
- Start training HR and any others responsible for administering paid family leave benefits about employees’ rights and obligations under the law.