New York employers should by now be aware that the state passed paid family leave (PFL) legislation in April of 2016. Since then, a second set of draft PFL regulations were set forth and the notice and comment period closed on June 23, which means it’s time for local businesses to prepare.

(Related: DMEC Chief: Paid Leave Has Momentum)

Like any new law, many questions still remain about how the plan will be administered, despite the rapidly approaching effective date. But let’s start with what we know thus far: The law applies to any employer in New York state that is required to carry statutory short-term disability through Disability Benefits Law (DBL).

The benefit is to be made available to employees, regardless of their physical location, beginning on Jan. 1, 2018. Unlike the DBL, the PFL law will provide job protection.

There are a number of qualifiers for employees to access the leave, including:

  • Bonding/placement.

  • PFL is provided for bonding with a newborn or for finding foster care/adoption placement.

  • It must be taken within one year of birth/placement.

  • Birth mothers may choose to take DBL for their disability, and then take PFL for child bonding; or, they may take PFL child bonding benefits immediately.

  • Serious health condition of a family member.

  • PFL is given to care for a family member. In this instance, a family member is defined as a parent, parent-in-law, spouse/domestic partner, child, grandchild, or grandparent.

  • Qualifying serious health conditions include an illness, injury, impairment, or physical or mental condition that involves inpatient care in a hospital, hospice, or residential health care facility.

  • Birth mothers may choose to take DBL for their disability, and then take PFL for child bonding; or, they may take PFL child bonding benefits immediately.

  • Active duty/qualifying exigency leave.

  • Absence is granted for Family and Medical Leave Act (FMLA) qualifying exigencies arising out of a family member call/impending call to active duty in the US armed forces.

  • In this instance, a family member is defined as a parent, parent-in-law, spouse/domestic partner, or child.

The benefit schedule will graduate from 2018 to 2021 and will remain the same from 2021 onward.

Who’s eligible?

Nearly every full-time and part-time private working employee in New York will be eligible for PFL coverage.

Benefits phase-in schedule (Image: RSC)

(Image: Pauline Sobelman/RSC)

Public employees (e.g., employees of a municipality) may receive coverage if their employers opt into the program, or if they are part of a union and PFL is collectively bargained.

What will it cost employees?

The program is 100% employee funded.

  • The weekly contribution rate is .126% of the employee’s weekly wage, capped at New York State’s Average Weekly Wage (SAWW). (New York state’s average weekly wage is currently $1,305.92.).

  • This translates to a maximum contribution of $1.65 per week in 2018.

Many employers have been anxious about the state’s provision that employers could begin taking deductions from employee paychecks starting on July 1. However, there are major hurdles for any employer who may still want to do so prior to final regulations being issued:

  • When this article went to press, taxability of contributions had yet to be determined. Similarly, the question of benefit taxability was still unanswered.

  • How can employers hold contributions was also still up in the air. Will employers be required to hold the funds in a trust, etc.?

  • Employees may push back on employers taking deductions in 2017 for a benefit that they cannot receive until 2018.

Practically, only the employers who will self-insure the PFL benefit might be willing to start deductions at this point.

As an employer, what should be considered now?

Paid leave benefits are being introduced throughout the country. More states, cities and municipalities are enacting forms of paid leave that may or may not play nicely with existing FMLA regulations. San Francisco, Seattle and multiple municipalities in New Jersey are among those with paid sick leave ordinances. For instance, New York PFL benefits are paid in daily increments while FMLA can be paid in hourly increments. Additionally, FMLA can be used for an employee’s own illness, whereas New York PFL cannot.

In most instances, ordinances will not be attached specifically to an insurance benefit (as New York PFL is), so while a company may receive updates from an insurance broker or advisor, the most reliable source of information will be reputable employment and labor law firms.

As responsibility for coordinating competing leave laws across the country fall on the employer, courts have begun holding human resource officials individually liable for errors in leave administration. (For example: In Schultz v. Advocate Health and Hospitals Corp. an employee sued his former employer for unlawful termination while protected by FMLA.  The jury awarded the employee $10.75 million from the employer and an additional $900,000 individually from the two supervisors.)

Thus it is critical for companies to determine if they want to maintain leave administration in-house or seek an outsourcing solution. Some key questions to help assess the need for an outsourcing solution include:

  • Is your company subject to FMLA?

  • Does your company operate in more than one municipality?

  • How many leaves do you administer each year?

  • Of those, how many are intermittent leaves, which are notoriously difficult to track?

  • How do you validate a sick leave request? Do you require medical documentation?

  • Does your company have an employment and labor law firm on retainer to provide continuous updates?

There are many variables, but generally, once a company is subject to FMLA and operates in more than one municipality, it is very likely a good time to start considering a leave management solution. Several short-term disability insurance carriers offer these services, and the risks of non-compliance far outweigh the administrative charges. Moreover, once you open the door to leave management, you may be pleasantly surprised to learn that a carrier or administrator can manage not just sick leave, but just about any leave you can imagine: jury duty, military leave, even pet adoption (really).

Be prepared and speak with your insurance advisor to help advise you on the best path forward for your company’s particular circumstances.

— Read Paid Family Leave Comes Up During Presidential Debate on ThinkAdvisor