By Robert Lerose
Starting on January 1, 2018, New York will become the fifth state to make paid family leave mandatory for almost all private employers, including small businesses. To comply with the New York State Paid Family Leave Program, businesses should familiarize themselves with its provisions and begin making preparations now.
Here is a summary of the law’s major points:
Even small businesses that have a single employee must take part and provide the stipulated benefits. Employee participation is not optional either.
The law covers employees who need time off for urgent family situations, including: caring for a newborn or adopted child, looking after a family member with a serious health condition, or helping out when a family member is away on military duty abroad or will soon be called up to serve.
The law affects businesses with offices in the state of New York, even if their headquarters are located in another state. Similarly, employees do not have to reside in New York to be eligible, but they must meet certain labor requirements. For example, an employee must work 20 hours or more per week for at least 26 weeks before they’re covered. Employees who work fewer than 20 hours a week will be eligible after 175 days of employment.
Although employers are required to offer coverage, they are not responsible for paying for it. The cost of these new benefits are paid entirely by employees through a deduction in their wages.
“It’s an insurance-based benefit. Employees pay 0.126 percent of their weekly wage, which for most people is a couple of cents,” says Abigail Kagan, an associate at Arent Fox, a law firm handling labor and compliance issues with an office in New York City. “But regardless of how much each employee puts in, every employee covered by this law gets the same benefit at no cost to the employer. I think that’s key.”
Benefits paid out
The length of paid time off and the amount of the benefit will gradually increase over the next few years. For 2018, eligible employees can take up to eight weeks of paid leave. The rate of their benefit will be the lower amount of either 50 percent of their weekly wage or 50 percent of the New York State Average Weekly Wage, which is about $1,305 in 2017—or a weekly payout to employees in the program of $650. “It’s important for employees to know that they’re not getting their full paycheck. But still—that’s an incredible benefit for the employee to get at zero cost to the employer,” Kagan says.
If an employer knows that an employee will not be around for the minimum amount of time to qualify for these benefits, then the employer must have them sign a waiver so that the insurance deduction will not be subtracted from their pay.
On the other hand, an employer might decide to keep a short-term or temporary employee for the long-term. In that event, the employer should notify the employee that they will be there longer than 26 weeks or 175 days, whichever situation applies, and then start taking deductions.
The law also offers some job protection. Employees must be able to resume their old position or accept a comparable job when they come back from their paid leave. Otherwise, the employer could be at risk for fines or penalties. During their leave, employees are entitled to receive their regular health insurance benefits.
Employers are required to put up a poster at their place of business that describes and explains the paid family leave law and benefits. Posters can be obtained from the business’s insurance carrier.
According to a fact sheet issued by New York State, “Paid Family Leave coverage is funded by employee payroll contributions…and generally will be included under an employer’s existing disability benefits policy.” However, the state adds, it is the responsibility of the employer to “contact their disability insurance carrier about obtaining Paid Family Leave coverage.” If they don’t provide it, Kagan says, then the employer is obligated to find a carrier who does.
The law requires that a business have policies in writing—such as part of a company handbook—to make employees aware of the paid family leave, how they can implement it, the benefits they’re entitled to, the coverage it provides, and so on.
Employers should make sure that their payroll department or outside provider is aware of the new requirements, how and when to begin deductions, and the amounts to deduct. Employers should also notify employees before they begin making deductions from their paychecks to prevent confusion or surprise.
If an employee intends to use their paid family leave benefits, they should give at least 30 days notice. In instances where a change in an employee’s family situation is unforeseen, then notice should be given as soon as is feasible.
For more information, go to New York State Paid Family Leave.