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Client Alert: An Overview of New York’s Newly Enacted Paid Family Leave Insurance

Oct 5, 2016
During the 2016 legislative session, New York State established Paid Family Leave Insurance (“Paid Family Leave”). This program supplements the Temporary Disability Insurance (“TDI”) program so as to provide eligible workers with wage replacement during a leave taken for a worker to bond with a new child, care for a seriously ill family member, or attend to certain military needs. New York’s Paid Family Leave program will begin on January 1, 2018. The maximum leave period during which replacement wages are paid will be 8 weeks in 2018, phasing into 12 weeks of leave in 2021. Workers can take leave under this program to (1) bond with a new child (including adopted and foster children), (2) care for a seriously ill child, parent, parent-in-law, spouse, domestic partner, grandchild, or grandparent, or (3) address certain needs when a family member is called to active military service. “Military needs” under New York’s new Paid Family Leave program are the same as under the Federal Medical Leave Act (FMLA) and include attending to legal or financial issues, attending ceremonies or counseling associated with the leave, and spending time with the military member when they are home. Availability of leave under the Paid Family Leave program is calculated on an annual basis, not per qualifying event, and must be taken within 12 months of the qualifying event. Workers must provide notice and proof of need. While on Paid Family Leave, workers are entitled to job protection and the continuation of health insurance benefits. The amount of wage replacement a worker will receive while on leave is a percentage of their salary up to a percentage of the statewide average weekly wage. The amounts workers are entitled to receive will increase over the first four years of the program, and ultimately workers will receive 67% of their average weekly wage up to the cap of 67% of the statewide average weekly wage in 2021 when fully phased in. There will be no cost to employers for this program. Paid Family Leave is funded by small deductions taken from an employee’s pay of about $1.00 per week. Because Paid Family Leave is an insurance program, employers will not be paying the wage replacement when an employee is on leave. Wage replacement will be paid by the insurance company. The employer can use the money they would normally pay to the employee to address costs associated with the work needed to be done while that person is on leave, such as overtime for other employees. Paid Family Leave is administered through the TDI system, and many of the current requirements of TDI are applicable to the Paid Family Leave program. The TDI program provides wage replacement of $170 per week when a worker is hurt off the job and cannot work. A maximum of 26 weeks of leave can be taken in a calendar year under TDI, this will include the Paid Family Leave benefit. While receiving benefits under TDI or Paid Family Leave, a worker cannot collect unemployment or disability benefits. With some exceptions, TDI covers private sector employees. Public employees are not covered under the TDI system. However, they can be included in Paid Family Leave if their employer or union opts into the program. The mechanism for opt-in was not spelled out in the law but is expected to be addressed during the regulation process. TDI covers pregnancy-related complications or disability, including physical recovery from child birth. Under the Paid Family Leave law, a worker can take leave for physical recovery from child birth under TDI followed by leave to bond with the new child under Paid Family Leave. Leave for recovery from child birth will be at the TDI rate, currently $170 per week. Wage replacement for bonding will be the applicable rate at the time under Paid Family Leave. To qualify for TDI, an employee must work 4 weeks for a covered employer. The period to qualify for Paid Family Leave is 6 months for full-time employees. Part-time employees are eligible after working 175 days for a covered employer. Regulations will be forthcoming and will shed light on how some aspects of the Paid Family Leave program will operate. We can expect to see more details in the areas of notice, appeals, opt-in for public employees, and other areas. An important aspect of the regulation process will also be the start date for deductions from payroll for the Paid Family Leave program, an item that was not addressed in legislation. Meyer Suozzi will provide updates on these details as they become available.