Article co-written with Dennis Fiszer, First Vice President and Chief Compliance Officer for HUB International – East Region
Taking time off for the birth of a child and other similar caretaking requirements can be a considerable obstacle for new parents who work in the food and restaurant industry. While many restaurants are progressing on this issue throughout the country, those in New York will soon be obligated to do so by law.
The New York Paid Family Leave Law (NYPLL), which officially goes into effect on January 1, 2018, requires virtually all New York employers, regardless of size, to provide eligible employees with 12 weeks of paid leave to engage in what the statute refers to as “family care.” Specifically, responsibilities stemming from child care following birth, adoption or foster care placement; provide physical or psychological care for a family member suffering a serious health condition; or to engage in certain permitted activities when a family member is on, or called to, active duty in the armed forces of the United States. The New York law parallels the federal Family and Medical Leave Act (FMLA) in notable ways, but also generates a broader protective reach.
Although the law is effective at the beginning of next year, employers with one or more employees began payroll deductions to fund the leave program as early as July 1, 2017. The New York Department of Financial Services (DFS) recently took an important step forward by setting the weekly employee contribution amount for 2018. Under NYPLL, employees themselves fund the monetary pool used to pay for benefits when a triggering event occurs. Employers are authorized to begin collecting premiums on July 1, 2017, for the 2018 benefit year.
The DFS set the initial premium rate for Paid Family Leave at 0.126% of an employee’s average weekly wage, or the statewide average weekly wage, whichever is less. This means employees will contribute a percentage of income with the statewide average weekly wage representing a ceiling level. For workers earning less than the statewide average weekly wage, the contribution solely reflects a percentage of earned income. For those earning above that rate, collected amounts are still capped at that percentage of the statewide average weekly wage.
What benefits do these contributions yield?
In 2018, an employee who makes $1,000 a week would receive a benefit of $500 a week (50% of $1,000). By contrast, an employee who makes $2,000 a week would receive a benefit of approximately $653, because this employee is “capped” at collecting only a maximum of 50 percent of New York State’s average weekly wage.
How do paid leave benefits in New York now differ from disability benefits?
Similar to short-term disability benefits, the NYPLL regulations require an employee to file a formal application for paid family leave, and supply copies of supporting documentation (e.g., a birth certificate or medical certification) that give the details surrounding the family leave requested. Safeguards are being put in place through the application process (and will be further refined) to preclude “double dipping” from both New York’s disability program and the NYPLL.
Although the NYPLL dramatically impacts New York employers, employers have lead time to prepare for these substantive obligations. In the months ahead, you should focus on adjusting payroll functions to integrate this new deduction for paid family leave benefits. Care should also be taken to amend employer paid time off, leave of absence and family and medical leave policies to comply with the new law.
Speak to your insurance broker to learn more about how your company will be specifically impacted by the Paid Family Leave Law and what you can do to prepare in the meantime.