Frequently Asked Questions: NY PFL

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1 NOTE: The information provided below is based on the STATUTE signed into law on April 4, 2016, the PROPOSED REGULATIONS issued May 24, 2017, and New York State s comments in response to the 30 day public comment period from May 24 through June 23, We expect ongoing updates following the close of the public comment period on June 23 and will provide pertinent new information as soon as is it available. 1. GENERAL QUESTIONS AND NEW YORK PAID FAMILY LEAVE INFORMATION 2. COVERED EMPLOYERS 3. EMPLOYEE ELIGIBILITY 4. ELIGIBLE LEAVE CAUSES AND PAID LEAVE USAGE 5. BENEFIT FUNDING AND EMPLOYEE CONTRIBUTIONS VIA PAYROLL DEDUCTION 6. BENEFIT ADMINISTRATION AND PAYMENT 7. LEAVE TRACKING 8. RELIANCE STANDARD AND MATRIX ADMINISTRATIVE SUPPORT

2 GENERAL QUESTIONS AND NEW YORK PAID FAMILY LEAVE INFORMATION 1. What is the New York Paid Family Leave Law? New York Paid Family Leave (PFL) is job-protected, paid time away from work mandated by New York State. Eligible employees may take NY PFL: to take care of a family member with a serious health condition; to bond with a newborn, adopted, or foster child (including preparation for adoption or foster care placement); or for military exigencies (as defined by the federal Family and Medical Leave Act (FMLA)). Following PFL leave, an employee is entitled to reinstatement to his/her same position or to a comparable position with comparable benefits, pay, and other terms and conditions of employment. New York s Disability Benefits Law (DBL) was amended to include paid family leave for New York workers beginning January 1, Reliance Standard will issue PFL coverage as a policy rider to our insured DBL contract. Matrix Absence Management, Inc., will offer full management of NY PFL for self-insured employers. 2. What is the NY PFL benefit in 2018? Beginning January 1, 2018, the NY PFL benefit is 50% of a covered employee s average weekly wage, subject to a cap of 50% of the New York State average weekly wage determined annually by the Workers Compensation Board. In 2018 the pay benefit and leave are limited to a maximum of 8 weeks in a 52-week period. 3. Will the NY PFL benefit and leave increase over time? Yes, as follows (per 52-week period): % of average weekly wage for a maximum of 10 weeks % of average weekly wage for a maximum of 10 weeks 2021 and subsequent years 67% of average weekly wage for a maximum of 12 weeks 4. How is the 52-week period measured? The 52-week period means 52 consecutive weeks or calendar weeks. PFL benefits used in a 52-week period are computed retroactively with respect to each day for benefits are claimed; in other words, using a rolling back computation similar to that permitted by the FMLA. This rolling back method is the only one allowed by the state.

3 5. How is the employee s average weekly wage calculated? The employee s average weekly wage is based on an average of the employee s wages for the 8 weeks immediately prior to taking PFL. For purposes of NY PFL, wages is defined to include every form of remuneration for employment paid by the employer, whether paid directly or indirectly, including salaries, commissions, bonuses, and the reasonable money value of board, rent, housing, lodging or similar benefit received. Tips are also included if the employee s position is one in which tips customarily constitute part of his/her compensation. Wages do not include the amount of any payment made to or on behalf of an employee by the employer for benefits such as health and medical insurance, disability insurance, or retirement plans. 6. How is NY PFL funded? Employees pay for the program through payroll deductions. The New York State Department of Financial Services announced on June 1, 2017 that the rate will equal 0.126% of an employee's weekly wage (not to exceed the NY Average Weekly Wage*). As of June 1, 2017, this would equate to a maximum weekly rate of $1.65. The DFS will announce updated Average Weekly Wage amounts by September 1 of each year for use in determining the maximum deduction in the following calendar year. 7. Can fully insured PFL be offered by a current self-insured DBL client? New York State does not prohibit this funding arrangement. However, Reliance Standard has chosen primarily to require uniform funding arrangements for NY DBL and NY PFL. (Note they are issued as one policy; the PFL is a rider to the DBL contract.) In some circumstances Reliance Standard will consider stand-alone PFL policies. Contact your Reliance Standard sales or account management team if this is of interest to you. 8. Are PFL and DBL impacted by each other s ratings since PFL is a rider on the DBL policy? Will NY PFL impact ratings for FMLA coverage? NY PFL is rated separately from NY DBL. Rates are issued by the state of New York. FMLA is not insurance and is not rated. PFL administration for self insured groups would be treated as a separate service with commensurate fees by Matrix Absence Management.

4 9. Will or can insurance providers charge an administrative fee on top of the rates released by New York State? Reliance Standard will not charge an administrative fee in addition to the PFL premium dictated by the state of New York. If the group is self-insured, Matrix Absence Management would propose a fee structure to administer both DBL and NY PFL programs. 10. Is broker commission included in NY PFL? Reliance Standard is not paying broker commissions on NY PFL. 11. What is the status of the proposed regulations? The most recent proposed regulations were issued on May 24, The public comment period ended on June 23, Revisions and clarification to the proposed regulations are expected thereafter but there is no deadline. RSL and Matrix have submitted comments and questions on provisions of the proposed regulations that are unclear and on topics not addressed. Certain items are still being determined by the state (i.e., taxability, weekly average wage amount, etc.) and we expect clarification from the state on these and other inquiries in the near future. 12. What are the advantages of either fully insuring or self-insuring the NY PFL benefit? The advantages of selecting a fully insured program include: As the issuing carrier, Reliance Standard will manage the entire claims adjudication and payment process, as well as reporting requirements to the state. Offering a fully insured program reduces the employer s potential liability with the state regarding program compliance, and removes the funding reserve/bond requirement needed by self-insured plan sponsors. The advantages of selecting a self insured program include: As one of the most experienced PFL administrators in the US (based on servicing California, San Francisco, and other government plans, as well as employer-designed plans), Matrix can help design and administer a fully customized, employer specific plan that satisfies both statutory requirements and employer business objectives. For example, a self insured program allows the employer to offer PFL benefits at or above the New York State requirements to all employees regardless of work location and/or funding method. This can also be useful when there are one or more employee groups represented by collective bargaining. Matrix can administer PFL at the group level; offer intake via phone, web and mobile app; and provide access to sophisticated reporting tools for administrators.

5 COVERED EMPLOYERS 13. Which employers are included in NY PFL? All employers with one or more employees working in New York will be required to provide paid family leave coverage. Public employers are not required to provide this coverage but may opt in. "Public employer" means the state, any political subdivision of the state, a public authority, or any other governmental agency or instrumentality of the state. This may include, for example, municipalities, school districts, and public works departments. 14. How are union contracts affected by NY PFL? Employees subject to collective bargaining agreements that provide paid leave benefits can be exempted from PFL if they have benefits as favorable as NY PFL. 15. Our company offers a paid family leave benefit that exceeds the NY PFL benefit amount and benefit duration. Are we still required to participate in New York PFL? You must meet or exceed all requirements of the NY PFL for employees working in New York. You may satisfy these requirements through a fully-insured program or self-insured program, and may subsidize the plan for eligible New York employees in full or in part. An employer wishing to use its existing (or a newly-adopted) paid family leave policy must follow the law and regulations with respect to getting state approval of the plan. There is no exemption from complying with NY PFL. EMPLOYEE ELIGIBILITY 16. Which employees are eligible for NY PFL? Full-time employees are eligible for coverage after 26 weeks of consecutive employment in the state of New York. Full time is considered to be 20 or more hours per week. Part-time employees working fewer than 20 hours per week are eligible after 175 working days of employment. The 26 weeks of consecutive employment includes scheduled vacation time, the use of personal, sick or other time away from work that has been approved by the employer; or other periods where the employee is away from work but is still considered to be an employee by the employer as long as the employee has continued to make PFL contributions during the time away from work. The 26 weeks of consecutive employment does not include time away from work for which the employee received New York disability benefits. NOTE: There is some lack of clarity as to whether the 26 weeks or 175 days of employment must be with the same employer or can be combined with work for multiple New York employers to establish eligibility. The prevailing

6 interpretation at this point is that an employee must establish eligibility with each employee for whom he or she works in order to take PFL with that employer. A request for clarification has been submitted to the state. 17. Are all employees eligible, regardless of health status? Yes. The right to NY PFL is not based on an employee s own health condition, so there is no medical underwriting component or other limitation based on employee health. The benefit is available to all employees working in New York State who meet the eligibility requirement. 18. Can an employee opt out of the coverage? An employee can opt out of NY PFL benefits with a given employer only if the expected duration of his or her work engagement is less than the qualifying period to become eligible for PFL benefits (26 weeks of 20+ hours worked per week, or 175 work days). If that employee ends up working long enough to satisfy the eligibility period for the employer, the employee is responsible to make up past contributions owed. The proposed regulations do not address how the past payments can be enforced and employers should be mindful of New York wage laws regarding deductions from employee paychecks. 19. What happens if an employee leaves one covered employer and becomes employed at another New York State based employer? Will the employee s work for the first employer count towards satisfying eligibility under the new employer? We are awaiting verification from the state, but the proposed regulations seem to provide that if an employee leaves his/her place of employment, the employee is required to re-satisfy the eligibility requirements (26 weeks or 175 work days) when the employee begins work with a new employer, even if both employers were located in New York State. 20. How does the benefit apply to employees with multiple jobs based in New York State? As noted previously, the statute and proposed regulation are less than clear but prevailing industry opinion is that an employee must satisfy the eligibility requirement for each employer separately. According to the NY Workers Compensation law, an employee with multiple covered employers may not take paid family leave for a single qualifying event from different covered employers at separate intervals, but must take family leave from all covered employers during the same family leave period.

7 ELIGIBLE LEAVE CAUSES AND PAID LEAVE USAGE 21. How is the need to take leave verified? The proposed regulations have detailed requirements for documentation of an employee s need for leave. Reliance Standard and Matrix will develop appropriate certification forms for use with NY PFL or adopt approved forms issued by the state, if available. Initially, the employee will have to complete and submit a form requesting PFL leave. In addition, for bonding leave, an employee will need to provide verification of the child s birth, adoption, or foster placement. For leave to care for a family member with a serious health condition, the employer may require a medical certification from the employee s provider. For military exigency leave, the employer can require a copy of the family member s military orders plus other documentation regarding the specific reasons for leave (e.g., a copy of a military meeting announcement, proof of a legal or financial appointment, etc.) 22. Can DBL and NY PFL benefits be received simultaneously? No, DBL and PFL benefits cannot be received at the same time for the same absence. DBL is staterequired coverage for the employee s non-occupational disability (illness or injury) and PFL is specifically to bond with a new child, care for a family member, or tend to family military exigencies. The law specifically states that the two may not be paid out simultaneously. 23. Is there any relationship between NY PFL and DBL regarding the amount of time an employee can take leave and receive benefits? Yes. NY DBL and PFL are two separate entitlements based on separate employee contributions. Although an eligible employee can receive up to 26 weeks of NY DBL benefits and, separately, up to 8 weeks (increasing to 10 then 12 weeks by 2021) of NY PFL benefits and leave in a 52-week period, there is some interrelationship. An employee cannot receive more than a combined total of 26 weeks of DBL and PFL within a 52-week period. For example, if an employee receives 20 weeks of DBL benefits, he or she can only receive another 6 weeks of PFL leave and benefits in the applicable 52-week period. 24. Can NY PFL and FMLA be taken simultaneously? In many circumstances, yes. Federal FMLA provides job-protected leave for many of the same reasons as NY PFL, and vice versa. Several things are important to note: 1. FMLA is NON-PAID job protection for an approved leave; PFL is paid, job-protected leave.

8 2. The employee eligibility rules are different for FMLA (1250 hours of work plus 12 months of service) and NY PFL (26 consecutive weeks of work for employees who work 20 hours per week or more; 175 work days for employees who work fewer than 20 hours per week). 3. FMLA is not applicable to employers with fewer than 50 employees; NY PFL is applicable to all employers with one or more employees. 4. FMLA must be tracked in increments no larger than the employer uses for tracking other similar types of leave, and in no event in increments larger than one hour. An employer may choose to track FMLA in increments as small as a minute. NY PFL is tracked and paid in whole-day increments only. However, if an employee takes and is paid for FMLA time in increments of less than one day, an employer can choose to add together these smaller increments of paid FMLA and for each full-day equivalent, deduct a full day from the employee s NY PFL entitlement. 5. PFL is available for leave to care for family members not covered by FMLA, including parent-in-law, grandparent, grandchild, and domestic partner. As a result, it is possible for an employee to receive more than 12 weeks of combined NY and FMLA family leave during a 52-week period. For example, if an employee takes 8 weeks of PFL leave to care for her grandfather, she will still have a full 12 weeks of FMLA entitlement because the 8 weeks of PFL to care for her grandfather is not covered by FMLA and does not count against her FMLA entitlement. 25. If NY PFL runs simultaneous to the FMLA, and the employer s FMLA policy requires the exhaustion of personal time and vacation time at the beginning of the leave, how would that interact with NY PFL, which disallows that requirement? This is not specifically addressed by the NY PFL law or proposed regulations. However, the FMLA provides that nothing in the FMLA supersedes any provision of state or local law that provides greater family or medical leave rights than those provided by FMLA. The federal Family Medical Leave Act (FMLA) allows employers to require employees to use accrued PTO during FMLA leave. New York PFL specifies the employee cannot be required to use PTO during PFL leave but can be given that option. The New York provision gives the employee greater rights the right to choose whether to use PTO during PFL and so that provision will control.

9 26. For what reasons and in what amounts can PFL be taken for family military exigencies? The reasons for PFL leave due to family military exigencies are incorporated from the federal FMLA. An eligible employee may take FMLA leave for one or more of the following qualifying exigencies which arise out of the military member's covered active duty or call to covered active duty status: 1. Issues arising due to short-notice deployment (7 or fewer days notice). 2. Military events and related activities. 3. Childcare and school activities. 4. Financial and legal arrangements. 5. Counseling provided by someone other than a health care provider. 6. Rest and recuperation leave with the military member. 7. Post-deployment ceremonies, briefings, and other activities during the 90 days following the termination of the military member's covered active duty status. 8. Parental care. 9. Additional activities agreed to by the employer and employee. More details regarding each of these exigency leave reasons are available in the FMLA regulations at 29 C.F.R (b). The duration of PFL available for these reasons is as justified by the specific circumstances, but must be taken in full-day increments and cannot exceed the number of weeks of leave authorized by NY PFL (8, then 10, then 12). Under the FMLA the rest and recuperation leave can be limited to 15 calendar days per R&R leave. The proposed NY PFL regulations do not state whether this limitation applies. 27. NY PFL offers employees paid leave time to assist with a family member s serious health condition. Which family members does this apply to? New York Paid Family Leave applies to the same family members covered by FMLA: spouses, parents, and children. NY PFL also expands the coverage to include family members not covered by FMLA, including parent-in-law, grandparent, grandchild, and domestic partners. Definitions of these family members are as follows: "Child" means a biological, adopted, or foster son or daughter, a stepson or stepdaughter, a legal ward, a son or daughter of a domestic partner, or the person to whom the employee stands in loco parentis.

10 The definition of domestic partner for purposes of NY PFL is incorporated from section 4 of the New York workers compensation law, as follows. This is a summary of a much lengthier definition. Persons living together in a marriage-like relationship; OR Persons who have formalized their domestic partnership under any governmental law or ordinance (New York does not have a domestic partnership law). Domestic partner is to be construed broadly to confer the benefits of the law. Domestic partner does not including any person related to the employee that the employee could not marry. "Family member" means a child, parent, grandparent, grandchild, spouse, or domestic partner as defined in this section. "Grandchild" means a child of the employee's child. "Grandparent" means a parent of the employee's parent. "Parent means a biological, foster, or adoptive parent, a parent-in-law, a stepparent, a legal guardian, or other person who stood in loco parentis to the employee when the employee was a child. There is no explanation or definition of parent-in-law so at present we interpret this to be only the parent of a spouse, not the parent of a domestic partner. 28. Can NY PFL be taken as an intermittent leave? New York PFL leave can be taken using intermittent (non-consecutive) intervals, such as one scheduled day per week to care for a family member; however, NY PFL must be taken and paid in full day increments. "Intermittent" leaves of increments smaller than a full day may be combined and counted against the employee s NY PFL entitlement in full day increments, provided the leave is covered under federal FMLA and the employee receives pay for the FMLA time off. 29. Are employees required to exhaust PTO before taking NY PFL? No, employees are not required to exhaust paid time off prior to taking PFL. However, employers can allow an employee to use accrued employer-provided paid time off in lieu of PFL in order to receive full pay if the employee chooses. The employee can designate how much of his or her paid time off to use in lieu of PFL and does not need to exhaust accrued time off. The employer-provided paid time off used by the employee will count toward usage of the employee s PFL entitlement within the 52-week period.

11 If an employee elects to use employer-provided paid time off for pay during PFL leave, the employer can submit a claim for reimbursement to the carrier in an amount to be computed after the leave is completed. An employer can also allow but not require an employee to use accrued paid time off together with PFL benefits in order to receive full pay. 30. If an eligible event occurs in 2018, but a claim is filed in 2019, which benefit level is used that of the occurred date or the submission date? Benefit percentage is based on the first day of the leave, so for this example, benefit would be paid at the 2019 level throughout the duration of the leave for a single qualifying event. BENEFIT FUNDING AND EMPLOYEE CONTRIBUTIONS VIA PAYROLL DEDUCTIONS 31. When can employers begin to deduct premiums? The PFL law allows employers to deduct employee contributions beginning July 1, There is no mandate to do so this would be to accommodate an existing or proposed insurance billing arrangement, or for a self-insured employer to build up a reserve of funds from employees before the employer has to start paying benefits on January 1, For example, if an employer pays premiums quarterly in advance, it would be reasonable to establish a contribution pool from which to pay. Reliance Standard is recommending a monthly-in-advance billing mode, which would be appropriately supported by beginning payroll deduction on or around December 1, Should payroll deduction start at date of employment or once eligibility has been satisfied? Payroll deduction begins with employment/date of hire, provided it is expected the employee will satisfy the eligibility requirement (26 weeks for full time employees). 33. Who is responsible for calculating the payroll deduction amounts? The employer is responsible for these calculations and deducting the correct contribution, as with any contributory benefit coverage. Reliance Standard and Matrix can provide information and a worksheet to help facilitate these calculations. We have opened conversations about NY PFL with many DBL customers, even while New York continues to refine the requirements and process. These conversations include developing strategies and timelines for payroll deductions for our clients. Our sales and account management leaders can assist in answering

12 questions and preparing for the launch. We will begin updating policies for January 1, 2018 in October, What happens to paid contributions if an employee starts contributing on 7/1/2017 but leaves the company before 1/1/2018? What if the employee leaves after 1/1/2018 but does not use the benefit? New York State has yet to provide clarification on the status of funds collected from employees in 2017 who leave the company prior to 1/1/2018. In the second scenario, if the employer makes deductions from an employee s paycheck but the employee does not use the benefit prior to leaving the company, no reimbursement of the premiums collected is required. 34. Where do insured employers send payroll deductions to the insurance provider or to New York State? Deductions are sent to the insurance company providing the coverage, as with any other contributory insurance policy. 35. Are employers able to contribute to the cost, and is there a cap on employer contribution levels? Employers can contribute to the cost, but this is not a state requirement. There is no cap on employer contribution levels. 36. If an employee is off payroll but still employed, how will the deduction process work? There is no waiver of contribution for the New York PFL, even during a PFL leave. After the employee returns to work retroactive deductions may be taken to fulfill the employee s payment obligations. Matrix and Reliance Standard have submitted questions to New York regarding whether PFL contributions (and other authorized payroll deductions such as health care premiums) can be deducted from an employee s PFL benefits payments. 37. What is the taxability of the employee contribution and actual PFL benefit for employees pre-tax or post-tax? New York State has not yet announced its opinion on the taxability of the employee contributions and benefits. Current industry opinion is that if the employer pays the contribution for the employee, then the PFL pay benefit will be taxable to the employee. This issue has been submitted to the state for clarification.

13 BENEFIT ADMINISTRATION AND PAYMENT 38. What payment methods are available? Payment on an approved claim is issued weekly in arrears. Mailed paper check is the default payment method; however, claimants may also elect a direct deposit payment option, expediting the claims paying process. Claimants can opt out and receive mailed paper checks at any time. 39. Is a lump sum benefit payment option available? The New York statute and proposed regulations do not address lump sum payments. Reliance Standard s best practice is to issue benefit payment weekly in arrears, based on the date of leave. 40. Will PFL W-2 practices follow DBL W-2 practices? We have requested clarification from the state and will provide an update in as soon as we receive further information. 41. In 2018, PFL will pay 50% of the employee s average weekly salary. Can the employer pay the remaining 50% to compensate full salary as part of a maternity policy? There is nothing in the law that restricts an employer from offering a plan design richer than that mandated by NY PFL. The additional pay benefit could be offered as part of the plan approved by the state, or as a voluntary benefit offered by the employer but not subject to state control (and so could be discontinued at the option of the employer at any time). 42. Are 2017 events eligible for 2018 PFL benefits? Are benefits full or partial based on date of event? Yes. According to the proposed regulations, an employee may receive PFL benefits and leave on and after January 1, 2018 for the purpose of bonding with a child born before January 1, The leave must be taken during the first 12 months after the child's birth, or during the first 12 months after the placement of the child for adoption or foster care with the employee. The proposed regulations do not address other types of PFL leave and benefits when the need for leave arose prior to January 1, However, there is nothing n the regulations that prohibits an employee from taking leave in 2018 to care for a family member with a serious health condition that arose prior to January 1, or to take military family leave in 2018 due to a deployment that occurred in 2017, as long as the reason for the time off satisfies the NY PFL rules.

14 For example, an employee whose child was adopted on August 1, 2017, will have until July 31, 2018, to take up to 8 weeks of PFL. Note that this may result in more than 8 weeks of bonding leave, as the employee can take the full 8 weeks of PFL available in 2018 even if the employee already took FMLA time in 2017 for bonding with the same child. 43. Does an employer have to continue health insurance coverage for an employee during NY PFL? If so, who pays? If an employee receives group health insurance benefits for himself and/or his family during employment, the employer must continue to make such coverage available during the PFL leave on the same terms as during employment. The employee must continue during leave to make his/her normal contributions to the cost of the health insurance premiums. This requirement mirrors that of federal FMLA. LEAVE TRACKING 44. What administrative support is available to employers? Can Reliance Standard or Matrix coordinate multiple leaves (FMLA, employer paid leave policies, etc.) and tracking of employee leave time? Matrix can provide customized leave management services for self-funded plans, offering customized intake including 24/7 via web, mobile app and telephone as well as employee communications and administrative reporting. Further, Matrix will be able to coordinate administration and tracking of NY PFL with FMLA and an employer s own paid leave policies. 45. Employees can supplement or replace NY PFL with PTO time such as vacation or sick leave. Who will be responsible to collect track, and coordinate PTO requests? Employees are not required to exhaust paid time off prior to taking PFL but the employer may offer the opportunity to use some or all of an employee s PTO for full pay in lieu of partial PFL benefits. Reliance Standard will not manage PTO requests; PFL claims will be paid through the normal process, aligned with the existing DBL claim process. If an employer is self-insured, Matrix Absence Management can administer PFL at the group level; offer intake via phone, web and mobile app; and provide access to sophisticated reporting for administrators. Matrix will discuss arrangements with an employer to determine who should be notified of PTO requests.

15 46. Can the employer decide which tracking method to use? Does the benefit refresh every calendar year? No. The proposed regulations require employers to track New York PFL using a 52-week rolling backward or look backward method. Any PFL time used during the previous 52-week period would be subtracted from the employee s current leave allotment. RELIANCE STANDARD AND MATRIX ADMINISTRATIVE SUPPORT 47. Do Reliance Standard and Matrix have employee facing communications to help introduce the new benefit? Yes, we can provide sample communications to help educate employees about the new law. When stateapproved (or state-mandated) posters and other materials are finalized we will assist clients with obtaining the correct materials.