New York Employers Should Prepare for the New York Paid Family Leave Law

UPDATE:  On July 19, 2017, the New York Workers’ Compensation Board issued final PFL regulations.  A key change in these regulations is the requirement that employees hired for a short period of time, who do not expect to work long enough to qualify for PFL benefits, must be given a waiver to allow them to opt-out of payroll deductions set forth in the PFL.  In the draft regulations, providing this waiver was optional.  The waiver requirement is discussed in No. 6 below.

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Effective January 1, 2018, private New York employers must comply with the New York Paid Family Leave Law (“PFL”). This new law provides paid leave benefits, funded by employee payroll deductions, to eligible employees who require time away from work to (a) bond with a newly born child, or child placed with the employee for adoption or foster care; (b) care for a close relative with a serious health condition; or (c) help relieve family pressures when someone is called to active military service.

The regulations implementing this new law have not been finalized, and we understand that they may be subject to additional changes. In the interim, however, this alert provides a brief overview of key elements of the PFL.      

1.  Eligible Employees and Covered Employers.

Under the current draft of the PFL regulations, the following employees are eligible for paid family leave:

(a)  An employee whose regular employment schedule is 20 or more hours per week will become eligible to take paid family leave during his or her employment if he or she has been:

•  employed by the covered employer for at least 26 consecutive workweeks; or

•  employed by the covered employer during the work period usual to, and available during, the 26 consecutive weeks preceding the first full day the leave begins, in any trade or business in which he or she is regularly employed and in which hiring from day to day of such employees is the usual employment practice.[1]

(b)  An employee whose regular employment schedule is less than 20 hours per week will become eligible to take paid family leave from such employment after working 175 days for the covered employer.

Employers are covered by this law if they have one or more employees on each of at least 30 days in any calendar year.

2.  Paid Family Leave Benefits.

Under this new law, an eligible employee may receive certain wage replacement benefits when he or she is absent from work: (a) to participate in providing care, including physical or psychological care, for a family member of the employee made necessary by a serious health condition of the family member; (b) to bond with the employee’s child during the first twelve months after the child’s birth, or the first twelve months after the placement of the child for adoption or foster care with the employee; or (c) because of any qualifying exigency (as interpreted under the Family and Medical Leave Act) arising out of the fact that the spouse, domestic partner, child, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the armed forces of the United States. An employee is only eligible for these paid family leave benefits during his or her employment.

Additionally, the PFL provides that eligible employees have certain rights to (a) continue their health insurance while on paid family leave; (b) be reinstated to their job following this leave; (c) protection against retaliation for seeking or obtaining benefits under the law.  

The following chart sets forth the number of weeks of wage replacement benefits available under the PFL, and the amount of such benefits (which are a percentage of the employee’s average weekly wage, capped at the state average weekly wage).

Year	Weeks of Paid Leave Available	Maximum % of the Employee’s Average Weekly Wage	Cap % of State Average Weekly Wage
1/1/2018	8	50%	50%
1/1/2019	10	55%	55%
1/1/2020	10	60%	60%
1/1/2021	12	67%	67%

For example, in 2018, an employee who makes $1,000 a week would receive a benefit of $500 a week (50% of $1,000). Another employee who makes $2,000 a week would receive a benefit of approximately $652.96 because this employee’s benefit is capped at one-half of New York State’s Average Weekly Wage (“NYSAWW”) —currently $1,305.92. Half of that amount is the $652.96 benefit. (The NYSAWW is set every year after a comprehensive analysis by the New York State Department of Labor.)

The regulations provide a procedure that the employee must follow to receive these weekly benefits, which involves the employee submitting a request and certain other information to the employer’s insurance carrier (or to the employer, if the employer is self-insured, see Section 7).

3.  Employee Notice Requirements.

(a)  Foreseeable Leave. If an employee’s need for family leave is foreseeable, the employee must provide the employer with at least 30 days’ advance notice of his or her need for leave. Examples of foreseeable reasons for leave include an expected birth, placement for adoption or foster care, planned medical treatment for a serious health condition of a family member, planned medical treatment for a serious injury or illness of a covered service member, or other known military exigency. If 30 days advance notice is not practicable for reasons such as a lack of knowledge of approximately when leave will be required to begin, a change in circumstances, or a medical emergency, notice must be given as soon as practicable. Additionally, the employee shall advise the employer as soon as practicable if dates of scheduled leave change or are extended, or were initially unknown.

(b)  Unforeseeable Leave. If the employee’s need for family leave is unforeseeable, the employee must provide notice to the employer as soon as practicable under the circumstances. The proposed regulations provide that, if an employee becomes aware of an event requiring him or her to take paid family leave less than 30 days in advance, it should be practicable for the employee to provide notice of the need for leave either the same day or the next business day.

(c)  Intermittent Leave. Paid family leave may be taken intermittently (e.g., on certain days, as opposed to a consecutive block of time). When an employee takes intermittent family leave, the employer may require the employee to provide notice as soon as practicable before each day of intermittent leave.

4.  Employer Notice Obligations. If an employer maintains a handbook or other written guidance for employees concerning employee benefits or leaves rights, information concerning leave under the PFL and employee obligations under the PFL shall be included in such handbook or other written guidance. If an employer does not have written policies, manuals, or handbooks describing employee benefits and leave provisions, the employer shall provide written guidance to each of his or her employees concerning the employee’s rights and obligations under the PFL. We anticipate that the Workers’ Compensation Board will prepare materials to assist employers with these obligations prior to the January 1, 2018 effective date of the PFL.

5.  Employee Payroll Contributions. Employers are required to make weekly deductions from employees’ wages and use them to purchase a paid family leave insurance policy or self-insure paid family leave benefits. The amount of this weekly payroll deduction is set by the New York State Superintendent of Financial Services, and is regularly reviewed and updated. Currently, employers must make a deduction of 0.126% of the employee’s weekly wage, up to and not to exceed, the New York State Average Weekly Wage (i.e., currently $1,305.92.) For example:

• The weekly payroll deduction for an employee earning $1,000 per week will be $1.26 (i.e., $1,000 *0.126%).
•  The weekly payroll deduction for an employee earning $2,000 per week (i.e., more than the current average weekly wage of $1,305.92) will be $1.65 (i.e., $1,305.92 *0.126%).

Employers must begin making these payroll deductions on January 1, 2018. Employers may, however, choose to begin making these deductions now, to ensure that adequate funding is in place when this law takes effect on January 1, 2018.

6.  Waiver. Under the current draft of the regulations, an employer may provide an employee with the option of waiving his or her right to paid family leave benefits (and avoiding the payroll deduction) if his or her:

(a)  regular employment schedule is 20 hours or more per week, but the employee will not work 26 consecutive weeks; or

(b)  regular employment schedule is less than 20 hours per week, and the employee will not work 175 days in a 52 consecutive week period.

However, within eight weeks of any change in the regular work schedule of an employee that requires the employee to continue working for 26 consecutive weeks or 175 days in a 52 consecutive week period: (i) any waiver by the employee will be deemed revoked; and (ii) the employee will be obligated to begin making contributions to the cost of family leave benefits, including any retroactive amounts due from date of hire, as soon as the employee is notified by the covered employer of such obligation.

If any employee executes a waiver, the employer must retain a copy of the waiver on file. Such waivers must be produced at the request of the Chair of the Workers’ Compensation Board, for as long as the employee remains in employment with the employer.

7.  Self-Insuring Paid Family Leave Benefits.

Entities that are already self-insured for purposes of complying with New York’s short-term disability law have the option to either: (a) elect to be self-insured for family leave benefits under the PFL; or (b) obtain alternative insurance coverage (through a carrier). The proposed regulations set forth detailed requirements for entities that wish to self-insure paid family leave benefits.

Notably, if an entity elects to self-insure family leave benefits, the regulations require this decision to be made by September 30, 2017. Additionally, by September 30, 2017, the entity must post additional security and execute a binding agreement acknowledging acceptance of all liability for benefits paid that exceed the funds collected from employees (provided that these contributions were at the mandatory maximum rate allowed by law). Further, this entity must, by September 30, 2017, submit to the Workers’ Compensation Board a payroll report on a form prescribed by the Board, which will include the full annual payroll of the self-insurer and its self-insured subsidiaries as of December 31, 2016. (The regulations also provide that a self-insurer may be required to submit additional reports and information, as required by the Board).

8.  Interaction with Other Benefits and Leaves.

If an employee is eligible for both short-term disability benefits and paid family leave during the same period of 52 consecutive calendar weeks, the employee shall not receive more than 26 total weeks of disability and family leave benefits during that period of time.

In many instances, an employee’s leave may qualify the employee for both paid family leave benefits under the PFL and unpaid leave under the federal Family and Medical Leave Act (“FMLA”). In the event that an employee’s paid family leave is also designated as FMLA leave, such leaves will run concurrently. However, if the employer does not formally designate the employee’s leave as FMLA leave (in accordance with the FMLA), such leaves will not run concurrently (i.e., the employee could take FMLA and paid family leave separately, leading to a longer leave period).

Additionally, if an employer offers and the employee agrees, to utilize all or part of his or her paid time off under the employer’s policies to receive full salary during a period of paid family leave (as the PFL provides only partial wage replacement benefits), the employer may request reimbursement out of any family leave benefits due or to become due by filing a claim for reimbursement with its insurance carrier. Employees are not, however, required to take all of their sick leave and/or vacation before using paid family leave.

9.  Interaction with Collective Bargaining Agreements. The draft regulations explain that, if a collective bargaining agreement (“CBA”) provides for paid family leave benefits, an employer will be relieved from providing such benefits under the PFL, as long as the following conditions are met:

(a)  The CBA must provide benefits “at least as favorable” as the benefits required under this law.[2]

(b)  Except for the waiver expressly permitted by the regulations (discussed in Section 6 above), the CBA may not permit an eligible employee to waive his or her rights to paid family leave or otherwise opt out of the PFL.

Additionally, subject to approval by the Chair of the Workers’ Compensation Board, the CBA may provide rules related to paid family leave that differ from the requirements set forth in the law. For example, the CBA may provide rules permitting employees to collectively establish their eligibility for paid family leave benefits through actual time worked at any employer covered by the collective bargaining agreement, so long as the time period for eligibility is not greater than as required by the PFL.

Further, the CBA may also provide that the union, acting as the employer, may be responsible for all time records and payroll deductions related to the administration of the PFL.

10.  Next Steps.

In anticipation of the PFL becoming effective on January 1, 2018, employers should take the following steps:

• Ensure that they have paid family leave insurance coverage in place by January 1, 2018. If an employer will self-insure this benefit, the employer must make the necessary submissions to the Workers’ Compensation Board (as discussed in Section 7 above) by September 30, 2017.
•  Prepare to make the weekly payroll deductions required to fund these new benefits by January 1, 2018. Additionally, employers should consider whether they will start making weekly payroll deductions now (see Section 5) to ensure that adequate funding is in place when this law becomes effective on January 1, 2018.
•  Notify employees of their rights and obligations under the PFL by updating their written policies (or preparing written guidance) and posting necessary materials. (As discussed above, it may be helpful to wait for further guidance from the Workers’ Compensation Board before moving forward with this step.)
•  Update other employment policies that may be impacted by this new law and, if applicable, address how this law will be implemented with respect to employees covered under a collective bargaining agreement.
•  Train staff with Human Resources and Payroll responsibilities regarding the requirements of the PFL and the steps that must be taken to comply with this new law. 

Please do not hesitate to contact any of our attorneys if you have any questions regarding this new law.

[1] This provision of the regulations is unclear. We are hopeful that the next version of the regulations will provide more clarity.

[2] The regulations address what it means to be “at least as favorable” in greater detail.