ACA & Compliance Question of the Month New York Paid Family Leave Law Q: How do I prepare for 2018 and the New York Paid Family Leave Law? Effective January 1, 2018, the New York Paid Family Leave Law (NYPFL) will go into effect for residents of New York State. Funded by employee payroll contributions, the NYPFL will provide employed residents of New York State with the richest paid family leave program in the nation. Leading up to the January 1, 2018 implementation date, there were many outstanding questions as to the cost of the program, how it would be administered, etc. A: On July 19, 2017, the New York Workers Compensation Board published regulations on the NYPFL. Based on final regulations an employer should review their NY Statutory Disability billing schedule and identify if early employee payroll contributions are applicable for their company. Employers should also contact their payroll company to ensure payroll deduction tracking/administration is set up and ready prior to deductions beginning. Written guidance about NYPFL needs to be updated in all handbooks and handed out to employees. If there is no handbook available then written guidance must still be provided. Once provided by the NYPFL Insurance carrier, employers will need to display the notice on NYPFL in the same area that the NY Statutory Disability notice is posted. Employers also need to start reviewing potential staffing gaps which may occur when an employee takes a Paid Family Leave, and either look into temp agency or cross-training opportunities to fill those gaps. Finally, employers should review their company s current paid time off/leave policies along with any current income replacement insurance policies to see if adjustments need to be made in conjunction with the addition of Paid Family Leave. To review the regulations, follow the link to: http://www.wcb.ny.gov/pfl/pfl-regs.jsp
Overview of NYPFL Signed into law in April 2016, NYPFL provides eligible employees a paid benefit when taking a leave of employment to care for a new child (due to birth, adoption or foster care), a seriously ill family member or exigency arising from active duty family service member. The paid benefit does not apply to an employee who wishes to take a leave of employment to care for their own personal health issue. Also, an employee may not receive both disability benefits and NYPFL benefits for the same period of time. The length of the leave of employment and amount of the paid benefit will be phased in beginning January 1, 2018 until total implementation by 2021. The current schedule is: Effective Date Maximum Length of PFL Benefit % of employee s average weekly wage Benefit % of maximum of NY state average weekly wage 1/1/2018 8 weeks 50% 50% 1/1/2019 10 weeks 55% 55% 1/1/2020 10 weeks 60% 60% 1/1/2021 12 weeks 67% 67% Maternity Leave: It should be noted that an employee cannot receive both a disability benefits and NYPFL for the same period of time. In the case of maternity leave, however, an employee can take NYPFL during the first 12 months after the child s birth. It is very likely that an employee might receive a disability benefit during a maternity leave and then follow it up with a request for a paid leave of employment covered under NYPFL. The July 19, 2017 regulations did not change the eligible leave scenarios, leave duration, or paid benefit percentages. NYPFL & Federal FMLA In many respects, the NYPFL is very similar to the federal Family Medical Leave Act (FMLA) with some exceptions. The most notable difference, of course, is the paid benefit under NYPFL while any leave taken under the federal FMLA is unpaid. NY PFL POLICY Federal FMLA 1+ Employees / All Employees subject to DBL After 26 weeks of employment for Full Time Up to 8 weeks starting 1/1/2018 EMPLOYER SIZE ELIGIBILITY LENGTH OF LEAVE 50 + Employees After 12 months of employment (Worked 1,250 hours in the preceding 12 months) Up to 12 weeks in a 12 month period Paid MONETARY BENEFIT Unpaid Employers are required to maintain any existing health benefits for the duration of the leave Employee is entitled to position held prior to leave or a comparable position with comparable benefits, pay, and terms and conditions of employment HEALTH BENEFIT JOB PROTECTION Employers are required to maintain any existing health benefits for the duration of the leave Employee is entitled to position held prior to leave, or to an "equivalent" position, which means virtually identical to the original job in terms of pay, benefits, and other employment terms and conditions
Employers covered by NYPFL The NYPFL requirement is much more extensive for employers than the federal FMLA. Whereas the federal FMLA only applies to employers with 50+ employees, the new NYPFL applies to: All private sector employers with at least 1 employee (non-owner) Employers in the public-sector can opt-in through collective bargaining. Just like with New York Statutory Short-term Disability (NYDBL), even employers located outside of New York State but employing residents of New York State will need to be in compliance with the NYPFL effective January 1, 2018. Simply stated if an employer is required to cover an employee for NYDBL they are required to cover them for NYPFL. The July 19, 2017 regulations did not change the definition of covered employers subject to NYPFL. Eligible Employees under NYPFL In the initial proposed regulations in April 2016, employees were categorized as either full-time or part-time and the work week was split into two categories 5-days per week and <5 days per week. With the recent July 17, 2017 regulations, these categories have been eliminated and replaced with a much simpler definition of eligible employees. Eligible Employee Definition as of July 18, 2017 Regulations Hours worked per week NYPFL Benefit Eligibility <20 hrs. per week 175 th day of employment Equal to or > 20 hrs. per week 26 th consecutive work week of employment NYPFL Waivers: Since the NYPFL will be funded by employee payroll contributions, the recent regulations also note two scenarios in which the employee can apply for a waiver and waive participation (and the employee payroll contribution) in the NYPFL. The two scenarios are: 1. Employee working equal to or more than 20 hours per week, but will not work 26 consecutive weeks in a 52 week period, and 2. Employee working less than 20 hours per week but will not work 175 days in a 52 week period. Note: an employee who waives coverage may face deductions back to date of hire, if their employment status changes. Obviously, these NYPFL waiver scenarios assist employers who may have seasonal employees, interns, short-term employees, etc., who they know will never work the required number of days or consecutive weeks in order to be eligible for the NYPFL benefit. Also, it allows the employee to avoid paying for a benefit that he or she is never going to be eligible to receive. Employees Excluded from NYPFL In the July 19, 2017 regulations, the New York Workers Compensation Board listed several categories of employees who are excluded from the NYPFL, including: Independent contractors Clergy and ministers Persons engaged in a professional or teaching capacity in or for a religious, charitable or educational institution Volunteers in or for a religious, charitable or educational institution Certain livery drivers, black car operators, and individuals covered under the New York Jockey Injury Fund. For a full list of the excluded employees, follow the link to: http://www.wcb.ny.gov/pfl/pfl-regstext.jsp#380-8
When do Employee NYPFL Payroll Contributions start? January 1, 2018 with the start of the NYPFL benefit. However, employers are allowed to voluntarily choose to begin withholding Employee NYPFL Payroll Contributions beginning on July 1, 2017. Why would an employer voluntarily choose to begin withholding Employee NYPFL Payroll Contributions beginning on July 1, 2017? Primarily, this is for employers who pay their annual NYDBL insured premium in advance. If the employer pays annual NYDBL insured premium in advance, then the employer will also need to pay the annual NYPFL insured premium in advance. Withholding NYPFL contributions beginning July 1, 2017 would allow the employer to pre-fund their NYPFL insured premium (or NYPFL claims cost, if self-insured). However, there are rules and limitations under the NYPFL regulations regarding collecting too much in employee contributions, retroactive collection of employee contributions, refunding employee contributions, etc. For any questions on the process of withholding Employee NYPFL Payroll Contributions and/or whether you should voluntarily choose to begin withholding prior to January 1, 2018, please consult with your tax and/or legal advisor. Employee NYPFL Payroll Contributions In the initial regulations of April 2016, the amount of the weekly employee NYPFL payroll contribution was never disclosed. Many thought it would be a flat weekly amount such as $0.70 per pay. Instead, on June 1, 2017, the New York Department of Financial Services announced that the 2018 NYPFL payroll contribution amount would be a flat percentage of 0.126% of the employee s total annual wage. For individuals whose income is consistent and received on regular intervals will receive the $1.65 weekly maximum contribution. Those whose wage fluctuate or vary due to increase in base, overtime, commission, etc. may have a weekly contribution greater than $1.65 and can potentially meet the annual contribution max mid-year. Example, John Doe begins the calendar/tax year 2018 with an expected annual income of $75,000 (average weekly wages of $1,442.31). His employer, ABC Company, chooses to deducts 0.126% from his average weekly wages ($1,442.31) using the $85.56 annual cap as the guide instead of the $1.65 weekly cap. John s weekly NY PFL contributions for 2018 would look like this: 2018 Weeks AWW NYPFL Weekly Contribution Total NYPFL Contribution over date span 1-47 $1,442.31 $1.82 $85.41 48 $1,442.31 $0.15 $0.15 49-52 $1,422.31 $0.00 $0.00 Employer Group Health Insurance during NYPFL Like Federal FMLA rules, if the employee taking NYPFL From the July 19th regulations: An employee's group health insurance benefits provided to him or her prior to taking paid family leave must be maintained during paid family leave. If an employee is provided family member health insurance coverage by his or her employer, the family member health insurance coverage must be maintained by the employer during paid family leave. The employee must continue to make any normal contributions to the cost of the health insurance premiums. In addition, if an employer provides a new health plan or changes a current health plan while the employee is on NYPFL, the employer must treat the employee on NYPFL the same as any other actively-at-work employee and allow that employee the opportunity to make benefit election changes. Chooses not to continue in the employer group health insurance plan during the leave of employment Chooses to continue in the employer group health insurance plan but fails to make the required contribution towards the cost of the health insurance premium Upon his return from NYPFL, he must be reinstated into the health plan on the same terms the employee had prior to taking NYPFL. Then the employer may terminate the employee s participation in the health plan. Conditions Apply: Payment is more than 30 days late and the employer provided written notice to the employee of the delinquent payment at least 15 days before coverage is to cease. Upon his return from NYPFL, he must be reinstated into the health plan on the same terms the employee had prior to taking NYPFL.
How should an employer prepare for 2018 and NYPFL? If you have any questions regarding New York Paid Family Leave, please contact a member of your Key Insurance & Benefits Services (KIB) team. Insurance Products offered are: Not FDIC-insured; not a deposit in, obligation of, nor insured by any federal government agency; not guaranteed or underwritten by the bank; not a condition to the provisions or terms of any banking service or activity. Insurance services, benefits consulting services and insurance products are offered through Key Insurance & Benefits Services, Inc. ( KIB ), which is a licensed insurance broker and agent. Insurance policies are obligations of the insurers that issue the policies. Insurance products may not be available in all states. KIB and KeyBank are separate entities, and when you purchase risk management services, business consulting services or insurance products, you are doing business with KIB, and not KeyBank. 2017 KeyCorp. 170815-275068