Preparing for New York State’s Paid Family Leave Benefits Law

Covered Employers

With limited exceptions, a private employer that has one or more New York employee(s) for at least 30 days in any calendar year is a “covered employer” and must comply with the PFLL. Generally, any employer providing required New York State statutory short-term disability insurance coverage for its employees will (as of January 1, 2018) be required to provide paid family leave (PFL) insurance coverage. Employers do not pay for this coverage, but as set forth more fully below, they are responsible for undertaking certain obligations in administering it.

Eligible Employees and Paid Family Leave Benefits

Starting on January 1, 2018, the PFLL provides eligible New York employees – i.e., those employed for a covered employer for 26 or more consecutive weeks (if regularly scheduled to work 20 or more hours per week) or for at least 175 days (if regularly scheduled to work less than 20 hours per week) – with initial benefits of up to eight weeks of PFL within a 52-week period. Benefits are paid at a rate of 50% of the employee’s average weekly wage, capped at 50% of the statewide average weekly wage (SAWW).^[1]  Benefits are scheduled to increase over the next few years, although this increase is not guaranteed. As presently contemplated, when fully phased in on January 1, 2021, the maximum benefit will be 12 weeks of PFL, paid at a rate of 67% of the employee’s average weekly wage, capped at 67% of the SAWW. 

Purposes of Leave and Job Protection

Starting January 1, 2018, eligible employees may take job-protected leave and receive PFLL wage-replacement benefits for any of the following “family leave” purposes:

• To bond with a new child within the first 12 months after birth, adoption or foster care placement
• To care for a family member with a serious health condition
• For qualifying exigencies arising when the employee’s family member is on, or called to, active duty in the U.S. Armed Forces 

Leave for an employee’s own illness, however, does not qualify as a basis for paid family leave under the PFLL.

During any qualifying leave under the PFLL, employers must maintain the employee’s health insurance coverage on the same terms as if the employee had not taken leave, and upon an employee’s return from leave, the employee must be restored to the same position or a “comparable position,” with limited exceptions.^[2]

Employer Obligations and Payroll Deductions

While employers do not pay employees these wage replacement benefits under the PFLL (as paid leave is funded by an insurance policy), employers ARE required to secure such PFL insurance coverage. The premiums for such insurance are funded/paid for by employees through payroll deductions. The maximum amount that may be deducted, as set by the Superintendent of Financial Services, is 0.126% of an employee’s weekly wage, not to exceed 0.126% of the SAWW (thus capped at $1.65 per week).  Effective January 1, 2018, with limited exceptions, New York State statutory disability insurance policies must include PFL coverage.

The final regulations have confirmed that employers are permitted, but not required, to commence making such payroll deductions for PFL insurance premiums as early as July 1, 2017, before the start of coverage on January 1, 2018. Thus, employers may begin employee wage deductions under the PFLL at any time between now and January 1, 2018. While the regulations do not specifically require employers to provide employees with notice of the deductions, employers are required to provide employees with written guidance concerning employees’ rights and obligations under the PFLL, which must be included in a handbook if the employer has one. There is a separate requirement for employers to post a notice concerning the PFLL in a form to be prescribed by the Board, but the form of notice has not yet been issued. These notices will be available through insurance carriers.

Optional Waivers Must Be Offered to Certain Employees

The final regulations have clarified that employers must provide employees who are not eligible for PFL – i.e., those whose regular work schedules will yield fewer than 26 weeks (for employees scheduled to work 20 or more hours per week), or fewer than 175 days in a consecutive 52-week schedule (for employees regularly scheduled to work less than 20 hours per week) – the option to file a waiver of PFL benefits. If the employee opts for such a waiver, the employee would be exempt from the obligation to have PFL contributions deducted from his or her wages.

Consequences of Noncompliance

Failure to collect payroll deductions and provide PFL insurance coverage effective January 1, 2018, or otherwise to comply with the requirements of the PFLL, may subject an employer to civil fines and civil and criminal liability under the PFLL. 

• Civil fines can be up to 0.5% of weekly payroll for the period in which insurance coverage is not obtained, plus an additional sum not to exceed $500, to be paid into the Special Fund for Disability Benefits. 
• In the event an employer fails to provide coverage and an employee files a claim for benefits, the employer is subject to separate penalties of up to 1% of payroll for the period of noncompliance or the amount incurred by the state to provide for benefits to the employee, whichever is greater.
• Failure to make provision for payment of family leave benefits is a misdemeanor and, upon conviction, an employer may be subject to additional fines and imprisonment of not more than one year. 
• Disputes as to a claim may be filed with the Workers’ Compensation Board, which may be subject to arbitration.
• An employee also has the right to file a complaint with the Workers Compensation Board against his or her employer for discrimination or retaliation against, or failure to reinstate, the employee who exercises or seeks to exercise rights under the PFLL. The employer may be held liable for compensation and attorney’s fees as fixed by the Board.

What Should Employers of New York Employees Do to Prepare for the PFLL?

• Employers should contact their short-term disability insurance carrier regarding PFL insurance coverage, confirm the required amount of payroll deductions for employees and discuss the procedures for administering leave and benefit requests under the PFLL. 
• Employers should also contact their payroll services provider regarding the implementation of additional payroll deductions for PFL insurance.
• Before January 1, 2018, employers should update their employee handbooks or other written leave policies to include information concerning the PFLL and employees’ rights and obligations under the law. 
• As soon as the required forms of notice become available, employers should obtain the required notice of PFLL rights from their insurance carrier, which must be posted or maintained in a conspicuous place in the workplace.

If you have any questions or need assistance implementing compliance with the New York Paid Family Leave Benefits Law, please contact Albert J. Solecki, Jr., Eric Roth, or any other Goodwin employment law specialist.