Final Regulations Issued On The New York Paid Family Leave Law

Written by Eva A. Rasmussen

 

On January 1, 2018, the New York Paid Family Leave (“PFL”) Law will become effective. Eligible employees who take PFL will continue to receive a portion of their wages while on leave. They will also be guaranteed reinstatement and their health coverage will be continued during the leave as long as they pay their share of the premiums, if any. The law is currently designed to be fully paid for by employees.

Who’s Eligible?

Virtually all employees of private employers in New York are eligible for PFL coverage. To be eligible: (a) an employee who works at least 20 hours per week must have worked for the employer for at least 26 weeks and (b) an employee who works less than 20 hours per week must have worked at least 175 days for the employer. Employees of a public entity, such as a municipality, may be eligible for PFL if the employer elects to participate.

Reasons for Paid Family Leave

Paid family leave may be taken (a) to bond with a child within 12 months of the child’s birth, adoption or foster placement (even if the child was born or placed prior to 2018), (b) to care for a family member (spouse, child, parent, parent‑in‑law, domestic partner, grandparent or grandchild) who has a serious health condition, and (c) due to qualifying events related to a family member’s active military duty deployment. An employee may not take PFL for his/her own illness or disability although the employee may be eligible for disability or Workers’ Compensation benefits.

Who Pays for This Coverage?

Coverage for the New York PFL is paid for by employees through payroll deductions. For 2018, the maximum employee contribution will be 0.126% of an employee’s weekly wage up to the annualized NYS Average Weekly Wage as determined each year by the NYS Department of Labor or $1.65 per week. Employers may have started deductions as early as July 1, 2017 even though coverage doesn’t start until 2018. Starting deductions early will result in greater reserves to fund the benefits for insurers or, in the case of self-insured plans, employers.

Deductions are taken from an employee’s pay during the initial service period even though the employee is not yet eligible for PFL. Participation in the program is mandatory unless the employee will not satisfy the initial service period based on his regular work schedule.

Benefits

PFL is scheduled to be phased in over four years starting in 2018 based on the following:

Year         Weeks
Available      
Max % of Employee Average Weekly Wage     Cap % of State Average Weekly Wage 
2018 8 50% 50%
2019 10 55% 55%
2020 10 60% 60%
2021 12 67% 67%

The maximum PFL may be taken within any 52‑week period and may be taken intermittently. If the reason for the leave is foreseeable, an employee must provide 30 days’ advance written notice. If it is not foreseeable, the employee must provide notice as soon as practicable. If an employee is taking intermittent leave, the employer may require the employee to provide notice before each day of intermittent leave. An employer may require that PFL be taken concurrently with FMLA as long as employees are notified

Insured v. Self‑Insured PFL Benefits

Effective January 1, 2018, every policy providing NYS Disability Benefits must include PFL benefits in the disability policy and the insurer is responsible for paying the PFL benefits even if employer hasn’t updated the policy to cover such benefits. An employer who purchases disability insurance benefits from the NYS Insurance Fund or a private insurer must purchase PFL coverage from the same carrier.

Private employers who self‑insure for NYS Disability Benefits may elect to self‑insure PFL benefits.

Taxes

The New York State Department of Taxation and Finance has issued guidance on the taxation of benefits and the tax treatment of the deductions from an employee’s pay. Pursuant to this guidance:

  • Deductions – Premiums will be deducted from an employee’s after–tax pay. The contributions should be reported on Form W‑2 using Box 14 – State disability insurance taxes withheld.
  • Benefits – Benefits will be taxable non‑wage income. Taxes will not be automatically withheld from benefits although an employee may request voluntary tax withholding. The benefits will be reported by the NYS Insurance Fund on Form 1099‑G and by all other payers on Form 1099‑MISC.

Next Steps

Employers should take the following steps to comply with the PFL Law:

  • PFL Coverage – Determine if PFL coverage will be provided through your NYS Disability insurer or if you wish to self‑insure PFL benefits;
  • PFL Policy – A written PFL policy must be adopted before 2018;
  • Payroll Policy – Advise the payroll department or administrator to add another deduction for PFL;
  • Notification of Employees – Employees should be notified of the PFL Policy (within an employee handbook if one exists) and the amount of deduction;
  • Training – Adopt PFL forms enabling employees to apply for PFL benefits and train the benefits staff on the obligations of the employer and the employees under the PFL Law.
About the Author
Eva A. Rasmussen
Benefits Counsel
Eva A. Rasmussen concentrates on the design, implementation and communication of qualified plans and deferred compensation arrangements as well as...
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