New York Paid Family Leave Law: A Memo for Employers

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1 Pro Bono Partnership would like to thank the hardworking team at O Melveny & Myers LLP, who devoted many hours to researching these questions. This information is not intended to provide legal advice or replace the need to consult individual, experienced counsel. It is meant only to provide general information. New York Paid Family Leave Law: A Memo for Employers The New York Paid Family Leave Law ( PFLL ) was passed as part of the 2016 state budget and will take effect on January 1, This FAQ includes statutory information relevant to not for profit organizations, but does not include or summarize the full text of the statute. The full text of the statute can be found at: public.leginfo.state.ny. us/lawssrch.cgi?nvlwo:. 1 The New York Workers Compensation Board has proposed regulations applicable to the PFLL, which have not yet taken effect, as they are subject to comment periods and revisions before final issuance. The full text of the proposed regulations can be found at: To the extent helpful, relevant proposed regulations have been included as footnotes throughout the FAQ. What is PFLL? PFLL provides wage replacement to employees to help them care for a close relative stricken with a serious medical condition, bond with a child, or assist the family if a close family member is called to active military service. PFLL is an extension of the state s Disability Benefits Law. As such, short term disability policies, which many companies are already required to carry, will include PFLL coverage in the policy. PFLL is funded entirely through employee contributions deducted from their payroll. What should New York employers do now? Employers must either arrange for self-insurance or purchase a paid family leave insurance policy though their New York Disability Benefits carrier. Employers must prepare to post notice and explanatory materials of the PFLL by January 1, Employers must ensure that their payroll departments are ready to make appropriate deductions from employees paychecks. 2 Section 1 - Overview What life events qualify an employee for family leave benefits? Employees may take leave: o (1) to provide care for a family member 3 made necessary by a serious health condition 4, or 1 The PFLL statutory language can be found by clicking on Workers Compensation and then Article 9 Disability Benefits. 2 The proposed rules not yet in effect clarify that employers may begin deductions from employee s payroll as early as July 2017 but are not required to do so. N.Y. COMP. CODES R. & REGS. tit. 12, (2017). 3 Family member means child, parent (including biological, foster, adoptive, parent-in-law, stepparent, legal guardian, or other person who stood in loco parentis to the employee as a child), grandparent, grandchild, spouse, or domestic partner. N.Y. WORKERS COMP. LAW 201 (Consol. 2017). 4 Serious health condition means an illness, injury, impairment, or physical or mental condition that involves inpatient care in a hospital, hospice, or residential health care facility, continuing treatment, or continuing supervision by a health care provider. N.Y. WORKERS COMP. LAW 201 (Consol. 2017).

2 o (2) to bond with the employee s child within the first 12 months of birth or adoptive placement, or o (3) to assist the family if the employee s spouse, domestic partner, child, or parent is on active duty in the armed forces of the United States. Unlike the federal Family and Medical Leave Act ( FMLA ), employees are not permitted to claim benefits for their own serious health conditions under the PFLL. Source: N.Y. WORKERS COMP. LAW 201 (Consol. 2017). How many weeks of family leave are available to employees? PFLL is designed to phase in over a four year period. Employees are eligible for a certain amount of paid weeks off per 52-week calendar year. The 52-week period starts on the first day the employee begins his or her family leave. 5 Year Weeks of Leave Available 1/1/ /1/ /1/ /1/ Source: N.Y. WORKERS COMP. LAW 204 (Consol. 2017). What wages are employees eligible to collect during family leave? Employees are eligible to collect a percentage of their weekly wage, which shall not exceed a percentage of the New York state average weekly wage. The New York state average weekly wage is updated annually on July 1, and is available at: Year Max % of Employee Cap % of State Average Average Weekly Wage Weekly Wage 1/1/ % 50% 1/1/ % 55% 1/1/ % 60% 1/1/ % 67% For example, in 2019, an employee on family leave who earns $1,000 per week would receive a weekly benefit of $550 (55% of $1,000). However, another employee on family leave who earns $2,000 per week would only receive a weekly benefit of $ (55% of $1,305.92, New York s current average weekly wage, not 55% of $2,000). An employee who has accrued but unused vacation time or personal leave available may choose whether to charge all or part of the family leave to accrued but unused vacation or personal leave and to receive their fall salary, if offered by the employer. Source: N.Y. WORKERS COMP. LAW 205(2)(c) (Consol. 2017). 5 Neither the statute nor the proposed rules address the number of weeks of leave available to an employee whose leave spans two calendar years allowing for different amounts of leave.

3 If the employee s wages during family leave are less than $100 per week, the employee shall receive his or her full wages (and not a percentage of his or her average weekly wage). Source: N.Y. WORKERS COMP. LAW 204 (Consol. 2017). Which employers are covered under PFLL? A private employer that employs one or more employees at least 30 days in a calendar year is a covered employer and is required to comply with the new law. This coverage does not by default extend to the state, a municipal corporation, local governmental agency, other political subdivisions or public authority (however, a public employer may opt into the program). Source: N.Y. WORKERS COMP. LAW 202 (Consol. 2017). Can an employer who is not covered by the PFLL voluntarily become a covered employer under PFLL? Yes. An employer who is not covered by the PFLL may voluntarily elect to provide for payment of benefits. However, this election is subject to approval by the chairman of the workmen s compensation board of the State of New York ( Chair ) and more than 50% of the employees must agree 30 days before such approval is granted. This obligation may be discontinued after at least one year of providing benefits by the employer on 90 days notice in writing to the Chair and the employees. Source: N.Y. WORKERS COMP. LAW 212 (Consol. 2017). Which employees are eligible for benefits under PFLL? Full-time employees in the employment of a covered employer are eligible for family leave benefits if the employee works for 26 or more consecutive weeks for that employer. 6 Part-time employees regularly in the employment of a single employer on a work schedule less than the employer s normal work week become eligible for family leave benefits on the 175 th day of such regular employment. Source: N.Y. WORKERS COMP. LAW 203 (Consol. 2017). Which employees are exempt from the requirements of PFLL? The following employees, even if in the employment of a covered employer, are exempt from the new law: o ordained, commissioned, or licensed ministers, priests, or rabbis; o sexton, Christian science reader, or member of a religious order; o minor child; 6 Neither the statute nor the proposed rules provide whether time worked prior the effective date of the PFLL counts towards these minimums, but it would make sense that employees can begin using these benefits upon the effective date if they are eligible. The proposed rules not yet in effect clarify that employees working 20 or more hours per week become eligible to take family leave upon completion of the 26 th consecutive work week for the covered employer. Employees working less than 20 hours per week are considered part time for the purposes of PFLL. N.Y. COMP. CODES R. & REGS. tit. 12, (2017).

4 o executive officer of a company who owns all of the issued and outstanding stock of the corporation; o executive officer of an incorporated religious, charitable, or educational institution; 7 o persons engaged in a professional, teaching, or volunteering capacity in or for religious, charitable, or educational institutions; o persons participating in and receiving rehabilitative services in a sheltered workshop operated by a religious, charitable, or educational institution under a certification issued by the United States Department of Labor; o recipients of charitable aid from a religious or charitable institution who perform work in or for the institution which is incidental to or in return for the aid conferred, and not under express contract of hire. 8 Further, the following jobs do not qualify as eligible employment for the purposes of receiving family leave benefits: o services performed for the state, a municipal corporation, local governmental agency, other political subdivision, or public authority; o employment subject to the federal Railroad Unemployment Insurance Act; o service performed on or as an officer or member of the crew of a vessel on the navigable water of the United States or outside the United States; o service as farm laborers; o service as golf caddies; o services performed as a licensed insurance agent, broker, or media sales representative if substantially all of the remuneration for the services performed is directly related to sales rather than the number of hours worked. Source: N.Y. WORKERS COMP. LAW 201 (Consol. 2017). When are otherwise eligible employees not entitled to family leave benefits? Otherwise eligible employees are not entitled to receive family leave benefits: o (1) for any day of family leave during which the employee performed work for remuneration or profit, o (2) for any day of family leave for which the employee is already entitled to otherwise receive remuneration from his or her employer in an amount equal or greater to that which he or she would be entitled to under the new law, o (3) for any period in which the employee is subject to suspension of unemployment benefits, o (4) if they are not employed or are on administrative leave from employment, or o (5) if they are collecting sick pay or other paid time off from the employer. Employers are not required to permit more than one employee to use the same period of family leave to care for the same family member. If spouses work for the same 7 Religious, charitable, or educational institution means corporations, unincorporated association, community chest, fund, or foundation organized and operated exclusively for religious, charitable, or educational purposes, with no part of the net earnings existing for the benefit of private shareholders or individuals. N.Y. WORKERS COMP. LAW 201 (Consol. 2017). 8 The proposed rules not yet in effect also exempt independent contractors, livery and black car operators, and jockeys. N.Y. COMP. CODES R. & REGS. tit. 12, 355.2(c) (2017).

5 employer, that employer can deny family leave to one of the two spouses to care for a family member or bond with a child. However, if spouses work for different employers, they are both eligible to take family leave concurrently. Source: N.Y. WORKERS COMP. LAW 205(3)(b-d)-206(3, 5) (Consol. 2017). Are employees guaranteed return to their employer following family leave? Yes. Any eligible employee of a covered employer who takes family leave is entitled to return to the employer for which they were working before taking leave. The employee is to be restored to their previous position of employment, or to a comparable position with comparable benefits, pay, and other terms and conditions of employment. Source: N.Y. WORKERS COMP. LAW 203-b (Consol. 2017). Are employees required to provide notice of intention to take family leave? Yes. If the necessity for family leave is foreseeable (e.g., expected birth, adoptive placement, or family member s medical procedure), the employee shall provide the employer with at least 30 days notice before the date of leave is to begin. If the necessity for family leave is unforeseeable, the employee shall provide such notice as is practicable. 9 Are employees required to furnish proof of need to take family leave? Employees are required to provide written proof of the need for family leave to the employer within 30 days of the commencement of leave. 10 o Failure to provide proof of the need for family leave within 30 days does not invalidate the employee s claim to benefits, but absolves the employer from providing benefits for any period more than two weeks prior to the date on which 9 The proposed rules not yet in effect clarify that an employee wishing to make a claim for paid family leave must make the request in the form prescribed by the Chair (Form PFL-1). There is no draft of this form currently available. Once the employer receives the request for family leave, completes the required sections of the form, and returns it to the employee, the employee must submit the completed request for family leave together with the information supplied by the employer and with the necessary proof of claim documentation (medical or otherwise) to the designated insurance carrier. N.Y. COMP. CODES R. & REGS. tit. 12, (2017). 10 The proposed rules not yet in effect clarify that when leave is taken because of a serious health condition of a family member, employee must obtain a medical certification from a health care provider containing (1) contact information of the provider, (2) the date the serious health condition commenced and its probable duration, (3) certification regarding the patient s health condition, and (4) an estimate of the frequency and duration of the leave requested. When leave is taken because of a qualifying military exigency, the employee may be required to provide a copy of the military member s active duty orders or other documentation issued by the military which indicates that the military member is on covered active duty. When leave is taken to bond with a child, the parents must provide either (1) a birth certificate, (2) documentation of pregnancy from a health care provider, or (3) voluntary acknowledgement of paternity or court order of filiation. When leave is taken by adoptive parents, employees must provide either (1) a court document indicating that the adoption process is being finalized, or (2) a document evidencing that the adoption process is underway (e.g., signed statement from an attorney, adoption agency, or adoptionrelated social service provider). NY. COMP. CODES R. & REGS. tit. 12, (2017).

6 the required proof is furnished (unless it can be shown to the Chair not to have been reasonably possible to furnish such proof). Source: N.Y. WORKERS COMP. LAW 205(5)-217 (Consol. 2017). Section 2 - Contribution, Payment, and Alternate Plans Who provides for the cost of the paid family leave benefits? Every employee in the employment of a covered employer shall contribute to the cost of providing family leave benefits. No employer will be required to fund any portion of the family leave benefits. The employer shall act as the agent of the employee and only use employee contributions to provide family leave benefits. Source: N.Y. WORKERS COMP. LAW 209 (Consol. 2017). What is the maximum amount of money that may be deducted from employees? Employers are authorized to make payroll deductions from employees in the amount set by the Superintendent of Financial Services. The New York State Department of Financial Services set the maximum employee contribution rate at percent of an employee s weekly wage, up to but not exceeding the New York s average weekly wage. Source: New York State Department of Financial Services Decision on Premium Rate for Family Leave Benefits and Maximum Employee Contribution for Coverage Beginning January 1, 2018, available at When are family leave benefits paid? Benefits provided should be paid periodically and promptly. The first payment is due within four days of the 14 th day of family leave, and thereafter due and payable biweekly. Source: N.Y. WORKERS COMP. LAW 208 (Consol. 2017). How are the family leave benefits to be paid? A covered employer may provide family leave benefits to employees in one or more of the following ways: o (1) insuring and keeping insured the payment of the collected benefits in the state fund, or o (2) insuring and keeping insured the payment of the collected benefits with a stock or mutual corporation or reciprocal insurer authorized to conduct the business of health insurance in New York, or o (3) insure and pay the collected benefits themselves by furnishing proof to the Chair of the employer s financial ability to do so. The Chair may require a security deposit that the Chair deems necessary to ensure the employer s ability to pay the benefits. PFLL benefits will be included under the disability insurance policies that most employers are already required to carry. As such, the transition to offer family leave

7 benefits should be straightforward if the employer already offered disability coverage under New York s Disability Benefits Law. Any increase in premiums for employers are expected to be funded by employee contributions through payroll deductions. Source: N.Y. WORKERS COMP. LAW 211 (Consol. 2017). What happens to existing paid family leave plans? Can alternate paid family leave plans be implemented by employers? Existing plans that are at the discretion of the employer to terminate may be accepted by the Chair as satisfying the obligation to provide family leave benefits if such plan provides benefits at least as favorable as the PFLL benefits. If the employees are entitled to receive family leave benefits under an existing plan (i.e., it was bargained for and cannot be terminated at the sole discretion of the employer), the employer will be relieved of making contributions towards the cost of that existing family leave plan based on a determination by the Chair. 11 A new family leave plan may be accepted by the Chair as satisfying the company s obligation to provide paid family leave benefits so long as the plan provides benefits at least as favorable as the benefits provided under PFLL, and does not require employee contributions in excess of the statutorily mandated amount. If any existing plan or new family leave plan does not provide benefits for all employees, then the benefits afforded by the new law will apply to those remaining employees. Source: N.Y. WORKERS COMP. LAW 211 (Consol. 2017). What happens to accrued benefits upon death? Benefits due to an employee that are unpaid at the time of his or her death are payable to the estate of the individual, or the surviving spouse, parent(s), or child or children. Benefits not claimed after one year will be paid into a special fund for disability benefits. Source: N.Y. WORKERS COMP. LAW 236 (Consol. 2017). Section 3 - Interaction with other Laws and the Rule Against Duplication There is a general rule against collecting duplicate benefits (e.g., collecting both disability and family leave benefits). Source: N.Y. WORKERS COMP. LAW 206 (Consol. 2017). Is the employee entitled to health insurance while on paid family leave? While on paid family leave, the employer is required to continue to maintain any existing health benefits for the duration of the leave. Source: N.Y. WORKERS COMP. LAW 203-c (Consol. 2017). 11 The process for obtaining determinations by the Chair regarding alternative family leave plans is not delineated in the statute or the proposed regulations.

8 How does PFLL interact with the FMLA? Benefits available under the FMLA must be used concurrently with benefits available under PFLL. 12 Source: N.Y. WORKERS COMP. LAW 206(4) (Consol. 2017). What are the primary differences between PFLL and the FMLA? Unlike PFLL, FMLA provides for leave for an individual s own serious health condition. Unlike FMLA, PFLL is a paid benefit and also has far less stringent eligibility requirements both for employees to qualify for coverage and for businesses to be considered covered employers. An employer s status as a covered employer, and the eligibility of their employees for paid family leave benefits, may not be the same under FMLA and PFLL. How does PFLL interact with employee disability benefits? The amount of paid time off available to eligible employees under PFLL, coupled with disability leave benefits, may not together exceed 26 weeks. This means that if an employee has already taken 24 weeks of disability leave, they will only be eligible for two weeks of paid family leave, even if they otherwise would have been eligible for 12 weeks. An employee may not collect both total disability, and family leave benefits, concurrently. An employee may collect both if they are receiving partial disability benefits through a workers compensation claim. However, in that instance, the combined benefits of family leave and disability may not exceed New York s average weekly wage. Source: N.Y. WORKERS COMP. LAW 205(2)(a)-206(3)(a) (Consol. 2017). Are employees receiving Social Security benefits exempt from receiving paid family leave under the PFLL? Yes. Any employee who is receiving social security benefits under title 2 of the federal Social Security Act is exempt from any requirement to contribute toward the cost of family leave benefits. The employer is likewise relieved of responsibility to provide for the payment of any benefits to such employees. Source: N.Y. WORKERS COMP. LAW 235 (Consol. 2017). Do New Jersey and Connecticut offer similar Paid Family Leave Laws? New Jersey offers a similar, 100% employee funded, family leave program. o For additional information, please visit the New Jersey Department of Labor and Workforce Development site: Connecticut does not offer a comparable paid family leave program. A paid family leave bill recently passed a state legislative committee in March 2017, but has not yet passed in either house of the Connecticut legislature. 12 The proposed rules not yet in effect clarify that if an employee takes leave under a benefit afforded by the FMLA that is not afforded by PFLL (e.g., leave for his or her own serious health condition), that leave does not reduce the amount of paid family leave to which the employee is entitled to under PFLL. N.Y. COMP. CODES R. & REGS. tit. 12, (2017).

9 o To track the status of the proposed legislation please visit the Connecticut General Assembly site: um=hb06212&which_year=2017. Section 4 - Non-Compliance and Related Issues What happens if the employer does not make provisions to pay the required benefits? If the employer fails to make provisions for the payment of family leave benefits within 10 days of becoming a covered employer, the employer faces (1) a fine of up to $500, (2) imprisonment for not more than one year, and (3) a fine of up to one-half of 1% of the employer s weekly payroll until provisions are put in place by the employer. Where the employer is a corporation, the President, Secretary, Treasurer, or officers exercising similar functions will be liable under this provision. Source: N.Y. WORKERS COMP. LAW 220(1-2) (Consol. 2017). What happens if the carrier does not pay the required benefits? If the Chair determines that a carrier failed to make the prompt payment of family leave benefits without just cause, the carrier will be fined not more than 25% of the amount of benefits that were not paid. Source: N.Y. WORKERS COMP. LAW 220(4) (Consol. 2017). What occurs if the claim for family leave benefits is contested or rejected by the employer? Employers that reject an initial claim for family leave benefits must notify the employee within 18 days of the filing of the proof of claim. Failure to reject a claim in this amount of time constitutes a waiver of objection to the family leave claim. If the claim is rejected by the employer, the employee has the right, within 26 weeks, to file with the Chair a notice that his or her claim for family leave benefits has not been paid. The Chair will then review both the employee s proof of his or her entitlement to family leave, and the employer s reason for declining to pay the benefit. The Chair has full authority to provide for alternative dispute resolution procedures for claims arising under family leave. Source: N.Y. WORKERS COMP. LAW 221 (Consol. 2017). If the claim is contested (as opposed to rejected) by the employer, the Chair may direct the claimant (or recipient of family leave if claimant is caring for a family member) to submit to examination by a physician designated by the employer or carrier. If the claimant or family member refuses examination, they will be disqualified from all benefits for the period of such refusal. Benefits already paid will not be rescinded. Source: N.Y. WORKERS COMP. LAW 217 (Consol. 2017). Are employers required to provide a notice of rights to employees? Yes. Covered employers must post information about workers rights under PFLL in an area visible to the employees The proposed rules not yet in effect clarify that if the employer maintains written guidance for employees concerning benefits or leave rights in an employee handbook, information regarding PFLL

10 Whenever an employee of a covered employer takes paid family leave, the employer is required to provide the employee with a written statement of the employee s rights under PFLL. The statement of rights must be provided within five business days after the employee s seventh consecutive day of leave or within five business days after the employer has received notice that the employee is on leave, whichever is later. Source: N.Y. WORKERS COMP. LAW 229 (Consol. 2017). This document is provided as a general informational service to volunteers, clients, and friends of Pro Bono Partnership. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does distribution of this document create an attorney-client relationship. Copyright 2017 Pro Bono Partnership, Inc. All rights reserved. No further use, copyright, dissemination, distribution, or publication is permitted without the express written consent of Pro Bono Partnership, Inc. August * * * should be included in that handbook. The posting of PFLL information must be done so in the form prescribed by the Chair, which has not yet been released. N.Y. COMP. CODES R. & REGS. tit. 12, (2017).