Understanding New York s Paid Family Leave. Hartford School of Insurance

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1 Understanding New York s Paid Family Leave Hartford School of Insurance

2 Disclaimer Neither The Hartford nor its affiliates, employees or agents provide financial, tax, legal or accounting advice. Employers and claimants should always consult with qualified legal advisors when they have legal questions. 2

3 What is Paid Family Leave (PFL)? Paid leave which allows an employee to receive a portion of or all their wages while taking time off of work Various qualifying reasons, including: Baby Bonding Leave Parental Leave Military Leave Caring for a sick covered family member

4 Paid Family Leave what is it and what it is not Programs that provide income replacement to eligible workers for family caregiving Family Medical leave Pay can come from: Formal (state based) insurance or statutory programs Formal (employer specific) policies Sick leave (statutory or voluntary) Paid Vacation leave Paid time off Employer-sponsored disability coverage Maternity Leave Parental Leave Care for Newborn/Adop tion Family care leave Paternity Leave Leave to care for other family member Medical Leave for Self Short Term Disability Paid Time Off Copyright Disability Management Employer Coalition (DMEC). All rights reserved. Source: DMEC 2016 Virtual Education Forum Parental Leave: Is it a Trend or Going Mainstream? April 19, 2016

5 Paid Family Leave The Impact Economic Better retention Little misuse of other accrual programs Reduced public assistance after birth Social Better baby bonding Employee morale Promotes father bonding as well SOURCE: DMEC 2016 Virtual Education Forum, Parental Leave: Is it a Trend or Going Mainstream?,

6 Paid Family Leave vs. Paid Sick Leave Currently, 4 states have paid family leave funded by employee contributions California New Jersey Rhode Island New York (effective 1/1/2018) Paid family leave, at this point, is not an accrued benefit, but is something that is paid for by contributions, similar to an insured type of benefit. Paid Sick Leave/Sick and Safe legislations relate specifically to accrual of time through being employed, is not an insured benefit, and differs from state to state, with not all states having legislation.

7 What s New: New York Paid Family Leave 2018: 50% weekly earnings up to 8 weeks 2021: 67% weekly earnings to 12 weeks Funded by payroll deductions ($1.09 on average per week per employee with a max of $1.65) Covers full & part time employees after 6 months of employment Job protected leave Applies to all employers, regardless of size

8 Common Issues Definition of covered Family Member NY: child, parent, grandparent, grandchild, spouse, or domestic partner and in-laws NJ: child, spouse, domestic partner, civil union partner, parent FMLA: child, spouse, parent Probationary Period: All state laws require probationary period before paid family leave can be used by new employees Rules differ by state Reasons for Use very similar to FML and other state programs mandatory postings different pay out requirements

9 NYPFL -- Funding NY s Department of Financial Services (DFS) sets NYPFL rates released on 6/1/17 Employee contributions for 2018 Rates are based on an employee s salary Weekly contribution rate for 2018 is 0.126% of an employee s weekly wage* Maximum contribution is $1.65 per week/per employee ($85.56 annually), based on the average weekly wage, regardless of gender, age or other factors. 9 *Capped at NY state is determined every July 1 (estimate is $1, ($67, annual salary)

10 NYPFL Employee Eligibility Employee Works 20+ Hours a Week Work at least 26 consecutive weeks preceding first full day leave begins Employee Works Less than 20 Hours a Week Eligible after 175 workdays preceding first full day leave begins Sole Proprietors Eligible for voluntary coverage for themselves Must obtain coverage effective January 1, 2018, or within 26 weeks of forming sole proprietorship, to avoid a two-year waiting period for NYPFL. 10

11 NYPFL Employee Eligibility (Cont d) Most full-time or part-time, private employees in New York State will be eligible for NYPFL Employee Participation is Not Optional Public employers may opt into the program; however, public employees represented by a union may be covered if NYPFL is collectively bargained. Waiver of Family Leave May be allowed if an employee will not meet eligibility in a 52-week period 11

12 NYPFL -- FMLA & Paid Time Off (PTO) NYPFL covers employees who may not be protected under FMLA Employers may require employees to choose between using NYPFL benefits or PTO Unlike FMLA, an employer cannot compel an employee to use PTO time toward the NYPFL benefit. Employers that pay full salary during NYPFL may request reimbursement from their insurance carrier for advance benefit payments. Employees are entitled to be reinstated to the same or similar position, regardless of which pay option they choose. 12

13 NYPFL & NYDBL Benefits Benefits are limited to a total of 26 weeks in a 52-week period for both NYDBL and NYPFL Entitlement to NYPFL and NYDBL benefits are dependent on each other; therefore, tracking of time taken for each is critical to minimize overpayment. Unlike NYDBL, intermittent NYPFL is allowed in full-day increments 13

14 Employee Reinstatement Rights Job Protection under NYPFL Following a NYPFL leave, a covered employee should be reinstated to his or her employment and need not take any action. Same or Similar Position Under NYPFL, employees have a right to return to the same or comparable position as when leave commenced and with comparable pay and benefits. 14

15 NYPFL & Group Health Insurance Continuation of Health Coverage If provided by the employer, group health insurance benefits continue under NYPFL as long as the employee continues making premium payments. Changes to Group Health Benefits While on Leave An employee on NYPFL is entitled to any new group health plans benefits that become available while he/she is on leave. Suspension of Health Benefits While on Leave An employee may choose to waive group health coverage while on NYPFL, but is entitled to be reinstated to the plan upon return to work. 15

16 FMLA & NYPFL Key Differences FMLA NYPFL Employer Size 50 or more employee 1 or more employees Work Requirements (at Same Employer) 12 months 1,250 hours in 12 months from date of leave Within 75 mils of site with 50+ employees Full-time: 6 consecutive months Part-time: 175 days Coverage for Employee s Own Serious Health Condition Covered (including maternity) Not covered (exceptions for maternity) Grandchildren, Grandparents, Domestic Partners Not covered Covered Intermittent Leave One hour increments Must be taken in full-day increments Pay/Job Protection Unpaid, protected Paid, protected Key Employee Coverage Limited job restoration No key employee provision Injured Military Service Member Next of kin provision No next of kin provision Spouses Working for Same Employer Use of Paid Time Off 16 Combined 12 weeks for child/parent care 26 weeks for military caregiver leave Employer may require employee to use PTO for paid leave vs. unpaid leave Leave must be taken at different times for same care recipient Employer cannot require employee to use PTO; the employee has the option

17 What Should Employers Do to Prepare? Determine how NYPFL will interact with current leave policies, including adding language regarding NYPFL. If current company leaves are considered paid, review durations and potential impact of NYPFL. Review your FMLA policy to determine method for calculating available leave. Prepare to comply with NYPFL posting requirements (pending DFS instructions). 17 This guidance is not intended as legal advice to plan sponsors. They should be advised to seek their own legal opinion/tax advice.

18 What Should Employers Do to Prepare? Determine when your company should begin deductions. Prepare your payroll department for NYPFL employee deduction. Determine if your NY state disability insurance carrier plans to add NYPFL. Train managers and HR representatives on employer obligations under NYPFL. Review collective bargaining agreements to determine any impact from NYPFL. 18 This guidance is not intended as legal advice to plan sponsors. They should be advised to seek their own legal opinion/tax advice.

19 Maternity Claim Scenarios (PFL vs DBL vs STD) Example 1: Employer that offers a 60% Employer Sponsored STD Plan and DBL/PFL 1 2 weeks DBL Pre-Partum 6 weeks DBL Maternity Claim 6 week Core STD (offset for DBL) Maternity Claim 2 2 weeks DBL Pre-Partum 6 weeks DBL Maternity Claim 6 week Core STD (offset for DBL) Maternity Claim 8 weeks PFL Baby Bonding Example 2: Employer that only offers DBL/PFL 3 2 weeks DBL Pre-Partum 8 weeks PFL Baby Bonding 4 2 weeks DBL Pre-Partum 6 weeks DBL Maternity Claim 8 weeks PFL Baby Bonding Employee 1: $45,000 Avg. Weekly Wages: $865/week Core STD Benefit: $519/week (60%) DBL Benefit: $170/week (20%) PFL Benefit: $433/week (50%) Employee 2: $100,000 Avg. Weekly Wages: $1,923/week Core STD Benefit: $1,154/week (60%) DBL Benefit: $170/week (9%) PFL Benefit: $653/week (34% due to cap) 19

20 FAQ - Eligibility in state/out of state? If an employer has employee that is out of state, then transfers to NYS facility of same employer, does the employee have to wait the 26 weeks before PFL benefits take effect? YES, EMPLOYEE WOULD NEED TO BE AN ACTIVE NY EMPLOYEE AND WORK IN NY 26 WEEKS (AND PAY THE EE DEDUCTION) BEFORE ELIGIBLE. 20

21 FAQ Employees work at home? How do you determine eligibility for employees who work at home? If the Employee is working at home in NYS, and reporting into a NYS office, then there is no issue, they are eligible If they are working at home and reporting into an out of state office, or working at home out of state and reporting into a NYS office, the employer will need to be careful, check with legal and tax advisors >Where is Unemployment Insurance being paid, if it is no NYS then the EE is probably not eligible for NYS DBL or PFL. >If the EE only comes to the NYS office very randomly, they also may not be eligible for NYS DBL or PFL. 21

22 FAQ-Can Time be taken intermittently? If an employee knows that they need to be out of work every Monday for let s say 3 months straight to take care of a family member, would they qualify to use the Paid Family Leave Benefit? How would the benefit work if they can use it? YES INTERMITTENT LEAVE IS ALLOWED IN 1 DAY INCREMENTS. EMPLOYEE WOULD BE PAID BASED ON 1/5 OF AVERAGE WEEKLY EARNINGS TO DETERMINE THE 1 DAY EACH WEEK OF PFL. 22

23 FAQ Taxability, pre or post tax? Are the deductions for premium done pre or post tax? NYS has indicated that PFL is NOT 3 rd party sick pay Taxability rules will follow the same rules as Unemployment tax No FICA will be taken Benefit is 100% taxable for Federal and State tax Employee needs to be allowed to choose number of deductions at point of claim 23

24 FAQ Is Self Insurance Allowed? Can a group Self-Insure, and if so, what is the surety bond? YES, HOWEVER APPLICATION IS NOT RELEASED YET, AND STATE WOULD DETERMINE THE AMOUNT OF SURETY BOND NEEDED ON EMPLOYER BY EMPLOYER BASIS. 24

25 FAQ - What Calendar method are we using? How is 52 weeks defines, calendar year, effective date of coverage or rolling with date of PFL use? ROLLING CALENDAR WEEKS FROM 1 ST DAY OF PFL LEAVE 25

26 FAQ Is employer reimbursement allowed? If their company adopts the Project plan of offering 4 weeks of fully paid leave to employees, how would this affect PFL? Would it offset it at all? IF THIS IS 100 PERCENT SALARY CONTINUATION PERIOD, THEN PFL WOULD NOT BE PAID DURING THIS TIME (ALTHOUGH EE SHOULD STILL FILE THE CLAIM), AND EMPLOYER CAN REQUEST REIMBURSEMENT AS WELL DURING THIS TIME PERIOD. 26

27 FAQ What goes into the definition of Earnings Are commissions, overtime, extra compensation included in the definition of earnings? NYS recognized total earnings, which will include all earnings the employee receives in the prior 8 weeks 27

28 FAQ-Use of sick and vacation time Are benefits payable if the employee is using sick, PTO or vacation time? NO, IF THE EMPLOYEE IS USING ANY OF THESE PROGRAMS, PFL BENEFITS WOULD NOT BE PAYABLE 28

29 Additional Resources Your state s insurance page

30 Comparison of Legislated Paid Family Leave Programs Who is covered? CA NJ RI NY Workers covered by UI-Opt In options for public EE s Workers covered by UI. Opt In options for public EE s Workers covered by UI. Opt In options for public EE s Most private-sector workers. Opt In options for public EE s What is Covered? PFL can be used either (1) to bond with a child within one year of the child s birth or placement for foster care or adoption; or (2) to care for a family member with a serious health condition. PFL can be used either (1) to bond with a child within one year of the child s birth or placement for foster care or adoption; or (2) to care for a family member with a serious health condition PFL can be used either (1) to bond with a child within one year of the child s birth or placement for foster care or adoption; or (2) to care for a family member with a serious health condition PFL can be used either (1) to bond with a child within one year of the child s birth or placement for foster care or adoption; or (2) to care for a family member with a serious health condition. (3) some military What family members are covered? worker s child, parent, parent-in-law, spouse, domestic partner, grandchild, or grandparent. worker s child, parent, parent-in-law, spouse, domestic partner, grandchild, or grandparent. worker s child, parent, parent-in-law, spouse, domestic partner, grandchild, or grandparent worker s child, parent, parent-in-law, spouse, domestic partner, grandchild, or grandparent.

31 Comparison of Legislated Paid Family Leaves, Cont d CA NJ RI NY Duration Up to 6 weeks in a 12-month period. Up to 6 weeks in a 12-month period. Up to 4 weeks in a 52-week period. Up to 12 weeks in a 52-week period. Amount Paid For most workers, approximately 55% of their weekly wage up to a cap, currently set at $1,120/week. For all covered workers, 2/3 of average weekly wage up to a cap, currently set at $615/week.14 For all covered workers, 4.62% of wages in the highest earning quarter of the base year (or approximately 60% of a worker s average weekly wage during that quarter), up to a cap, currently set at $795/week.15 For all covered workers, benefits will start at 50% of the worker s average weekly wage, up to cap of 50% of the statewide average weekly wage. When the program is fully phased in in 2021, workers will receive 67% of their average weekly wage up to a cap of 67% of the statewide average weekly wage.

32 Comparison of Legislated Paid Family Leaves, Cont d CA NJ RI NY Job Protection No No Yes Yes Health Benefits No No Yes Yes Who Provides State or Private State or Private State State or Private

33 Questions & Answers 33

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