Written by: Jacqueline M. Kelleher, Esq.
As appeared in Strictly Business August 2017 Issue

On January 1, 2018, a new mandatory insurance benefit goes into effect in New York, making all private sector employees eligible for paid time off to care for a family member. Unlike the Family Medical Leave Act (FMLA), which only applies to companies with 50 or more employees, New York’s new law will apply to all private sector employers of one or more employees. Employees who have been employed 20 hours or more for 26 weeks, or 175 work days in a year for part-time employees, will be eligible for Paid Family Leave, which will be administered through the state’s disability insurance program. Currently, it will be paid for by workers, at a maximum weekly cost of 0.0126 percent of weekly wage, whichever is less.

Paid Family Leave may be taken to participate in providing care, including physical or psychological care for family members, to bond with the employee’s child during the first 12 months after the child’s birth or the first 12 months after the placement of a child for adoption or foster care, and for qualified military exigencies defined in the FMLA. Family members include children, parents, parents-inlaw, grandparents, grandchildren, spouses, or domestic partners.

The program will be phased in beginning January 1, 2018, when up to eight weeks of leave will be available at 50 percent of the employee’s average weekly wage. In 2019 and 2020, up to 10 weeks of leave will be available at 55 percent and 60 percent of the employee’s average weekly wage, and beginning January 1, 2021, the employees will be entitled to up to 12 weeks of leave at 67 percent of the employee’s average weekly wage. Like Workers’ Compensation and disability benefits, there is a cap on the amount that will be paid based on the State Average Weekly Wage. In 2018, the maximum weekly rate will be $652.96. The amount will increase annually based on the CPI.

This family care benefit is substantially more generous than short-term disability benefits currently available in New York State. There are two reasons for this. First, the employer is required to continue to contribute to the employee’s health insurance and benefits at the same rate the employer was contributing while the employee was active. More importantly, unlike Workers’ Compensation and short-term disability, the employer is required to hold the person’s job for them until they are able to return. This is expected to create a major hardship on small employers. An employer with two or three employees will have a hard time coping with the eight-week absence of one employee and temporary help may be impossible to find.

Final regulations for Paid Family Leave were announced on July 19, 2017. Insurers and employers are still scrambling to understand what is required, and are looking for answers to questions which the regulations do not necessarily provide. While many questions remain, some answers are clear. First, all insurers offering disability benefits in New York State must offer Paid Family Leave. The premium can be deducted in whole from employee’s paychecks, or the employer can choose to subsidize some or all of it. The law also provides a waiver for a limited group of employees. Only those employees who will not be employed for 26 weeks or those employees who will not be able to reach 175 work days in a year will be able to opt out. It is predicted this waiver will largely be limited to seasonal employees. If an employee’s schedule changes, so that the employee will likely work 20 hours a week or more for 26 weeks or 20 hours per week or less for 175 days within a calendar year, the employer must institute Paid Family Leave coverage, and the employee will be required to pay premiums retroactively.

Finally, it is important to remember that the bonding leave for children includes any child joining the family via birth, adoption, or foster care within the last 12 months. It is widely expected that parents who had children join the family in 2017 may take advantage of this benefit during 2018, perhaps causing a “bubble” in the use of the benefit. Furthermore, employers may see the average time for leave related to the birth of a child expand. Currently, employees only receive disability, which is quite limited, during the period of the mother’s disability, unless an employer has an additional paid parental leave policy. Now, an employee may receive maternity or disability pay immediately after giving birth, and both parents will be eligible to take Paid Family Leave in addition to disability leave.

Don’t miss next month’s follow-up article, which will provide practical pointers to administer the new benefit.

Jacqueline Kelleher is an attorney with the law firm of Stafford, Owens, Piller, Murnane, Kelleher & Trombley, PLLC, who represents employers before administrative agencies and advises on day to day questions.