Coping with NY s New Paid Family Leave Benefits Addressing Your Implementation Questions April 2018 Presented to COPA: Human Resources Professionals Conference for the Disability Provider Community Jill Bergman, CEBS, CPE-Compliant VP Compliance Health & Benefits Information provided in this presentation is based on our understanding of the New York Paid Family Leave Law and implementing regulations to date and is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance in respect of matters of law, tax and related regulation.
Agenda: Answering Your Questions About NY Paid Family Leave ( PFL ) Job protected Maintain health insurance No retaliation Eligibility Contributions/Premiums Benefits Managing/Coordinating Time-Off PFL Checklist 2
Taking Paid Family Leave Family member s serious health condition Child, parent, grandparent, grandchild, spouse, domestic partner Child NOT limited to minor child/needing help with self-care Child bonding 1 st 12 months Birth, adoption, foster care Qualifying FMLA military exigency Limited to child, spouse, parent or domestic partner 3
Date Family Leave Occurs/Begins Weekly Benefit as a Percentage of Average Weekly Wages (AWW) Length of Benefit During Any 52-Consecutive Week Period January 1, 2018* 50% 8 weeks * Child bonding available for events in 2017 January 1, 2019 55% 10 weeks January 1, 2020 60% 10 weeks January 1, 2021 and later 67% 12 weeks Maximum PFL Weekly/Annual Benefit 2018 (and 2019) NY State Average Weekly Wage (in effect January 1, 2018): $1,305.92 Maximum 2018 Benefit: Weekly: $652.96 [50% x $1,305.92]; Annual: $5,223.68 [$652.96 x 8 weeks] NYS AWW for 2019 (announced March 2018): $1,357.11 Maximum Benefit: Weekly: $746.41 [55% x $1,357.11]; Annual: $7,464.10 [$746.41 x 10 weeks] 4
PFL Increases 2019 2018 2018 and 2019 weekly and annual benefit amounts Percentage increase from 2018 to 2019 Contribution rate announced later in the year Superintendent has authority to delay scheduled increases NYS AWW Benefit Percentage Maximum Weeks Maximum Weekly Bft Maximum Annual Bft $1,357.11 (3.9%) 55% (10%) 10 weeks (25%) $746.41 (14.3%) $7,464.10 (42.9%) $1,305.92 50% 8 weeks $652.96 $5,223.68 5
Excluded from PFL Public employers (and public unions) Optional Private sector unions subject to PFL CBA benefits at least as favorable Executive officers of 501(c)(3) engaged in professional or teaching capacity Persons receiving rehabilitation services in a sheltered workshop operated by such institutions under a certificate issued by the U.S. Department of Labor 6
Eligibility 20-hour Threshold Do temporary & seasonal EEs qualify for PFL? What about summer interns? When do EEs with fluctuating hours become eligible for PFL? How are breaks-in-service counted? PFL Rules 20-hour per week threshold +20:26-consecutive work weeks <20: after working 175 days in employment Include: vacation, personal, sick PFL contributions Exclude: On NY DBL Waivers: ER obligation to notify Toll breaks-in-service Part of regular employment Still considered in employment 7
Eligibility Out-of-State Employees Does PFL cover EEs who don t work in our NY location? Can we elect to cover out-of-state EEs on our PFL policy rider? NO How do we treat an out-of-state EE who transfers into NY? PFL Rules No PFL: NY work is incidental PFL applies: Out-of-state work is incidental Work not performed in any other single state; some NY work and: Based in NY, or Controlled from NY, or Lives in NY 8
Contributions/Premiums Employee Contributions Can an ER subsidize PFL? YES; may need to impute income Post-tax contributions How is EE PFL contribution determined? Confusion? YES: NY Website calculator original maximum ($1.65); now shows correct FICA method What if EE maxed out PFL contributions at prior job? PFL Rules 2018 maximum EE contribution: 0.126% of EE s weekly wage up to the annualized NYS Average Weekly Wage ( AWW ) AWW: $67,908 Max annual contribution: $85.56 Reported on Form W-2 Box 14 Public employers must notify WCB and EEs 90 days in advance 9
Contributions/Premiums Pay Period Weekly Wage PFL Weekly Contributions Cumulative Contributions 1 $2,000 $2.52 $2.52 2 $5,000 $6.30 $8.82 3 $1,600 $2.02 $10.84 4-20 17 weeks $3,400 $4.28 x 17 $72.76 $83.60 21 $2,000 $1.96 $85.56 Deduct based on total wages each pay period to annual maximum Limited weeks; similar to FICA Shortfall: Collect $1.65/week for high wage earner ($2,000/week); terminates April 2018 (15 weeks) $1.65 x 15 = $24.75 0.126% x $30,000 = $37.80 Is your payroll provider correcting? *Rounding differences 10
Average Weekly Wages Greater of: Total wages for eight weeks or portion thereof that the employee was in such employment immediately preceding and including his last day worked prior to the first day of paid family leave, or Total wages of the last eight weeks or portion thereof immediately preceding and excluding the week in which the paid family leave began, whichever is the higher amount Include pro-rated weekly amount of bonus and/or irregular commissions over 52-weeks prior to PFL See instructions Form PFL-1 11
Benefits Amount & Duration Who calculates the PFL benefit? Employer certifies eligibility How is the benefit taxed? NYS and Federal PFL Rules 2018: 50% x AWW (8 weeks) $652.96 weekly maximum Form 1099-MISC Form 1099-G (State Ins Fund) DBL & PFL cannot run concurrent Maximum: 26 weeks in a 52-week period DBL in 2017 counts Single qualifying event 3 months 12
Benefits Amount & Duration What if PFL overlaps into 2019? Can 2 family members take PFL at the same time? How is the daily/intermittent PFL benefit determined? PFL Rules Amount/duration: onset of PFL Employer option to allow family members to use PFL for same qualifying event Weekly or daily intermittent May coordinate with reduced schedule FMLA 13
Intermittent Leave: 2018 Example AWW/average days worked per week (last 8 weeks) 2018: 50% x AWW for 8 weeks; 40 days Employee s AWW = $800 Weekly benefit: $800 x 50% = $400 Total benefit: 8 x $400 = $3,200 Daily benefit: 5 days per week: $400/5 = $80 per day; 40 days = $3,200 Daily benefit: 4 days per week: $400/4 = $100 per day; 32 days = $3,200 Maximum daily leave: 60 days (is this for 2021?) Additional information: employees who regularly work >5 days/week 14
Benefits Filing a Claim What information does the ER have to provide? Forms lack enough detail for payment of full pay Double-dipping? PFL Rules Employee: Responsible to file claim Employer: 3 business days to complete Part B Form PFL-1 Carrier: 18 days approve/deny 15
When PFL Is Not Payable Collecting sick pay or paid time off Work part of day for pay NY DBL Total disability under workers comp Partial disability or reduced earnings; may collect under PFL No longer employee Administrative leave 16
Managing Time Off PFL, FMLA, PTO & DBL Coordinating with FMLA? Coordinating with PTO? How to coordinate with FMLA taken in less than full days? How to manage maternity leave? PFL Rules PFL & FMLA may run concurrently Concurrent FMLA & PFL; follow FMLA rules for use of PTO Can t require use of PTO if leave not also covered by FMLA How is your company coordinating FMLA, PTO, PFL and other benefits (i.e. maternity/paternity benefit)? Require use of PTO? FMLA < full days Track FMLA hours; deduct PFL 17
FMLA and Paid Substitution (A Tale of Two Interpretations) 825.207 Substitution of paid leave. (a) Generally, FMLA leave is unpaid leave. However, under the circumstances described in this section, FMLA permits an eligible employee to choose to substitute accrued paid leave for FMLA leave. If an employee does not choose to substitute accrued paid leave, the employer may require the employee to substitute accrued paid leave for unpaid FMLA leave. (d) Leave taken pursuant to a disability leave plan would be considered FMLA leave for a serious health condition and counted in the leave entitlement permitted under FMLA if it meets the criteria set forth above in 825.112 through 825.115. In such cases, the employer may designate the leave as FMLA leave and count the leave against the employee's FMLA leave entitlement. Because leave pursuant to a disability benefit plan is not unpaid, the provision for substitution of the employee's accrued paid leave is inapplicable, and neither the employee nor the employer may require the substitution of paid leave. However, employers and employees may agree, where state law permits, to have paid leave supplement the disability plan benefits, such as in the case where a plan only provides replacement income for two-thirds of an employee's salary. 18
PFL, FMLA and PTO ERs can compel use of PTO for PFL/FMLA concurrent leave A literal reading of paragraph (d) suggests that you cannot compel the use of PTO for a leave pursuant to a disability leave (paid). Therefore, because PFL is not and cannot be taken for disability paragraph (a) could apply as FMLA is indeed an unpaid leave. ERs cannot compel use of PTO for PFL/FMLA concurrent leave Even though paragraph (d) relates to a disability leave, some conclude that PFL is also a PAID leave, and therefore you cannot compel the use of PTO. Paragraph (a) says the employer may require the employee to substitute accrued paid leave for UNPAID FMLA which PFL concurrent with FMLA is NOT UNPAID and therefore, should be treated similar to a disability leave. 19
Bright Business 200 Employees Subject to FMLA 25 PTO days; voluntary STD Amanda s child due November 2018 Expected Benefits 8 weeks NY DBL (2 weeks prior to birth) Voluntary STD (60%) 10 weeks PFL to bond w/ child Company leave policy Requires use of accrued PTO Leave qualifies under FMLA DBL & PFL CANNOT RUN CONCURRENTLY Amanda s baby born in 2018 Amanda files for PFL in Jnauary 2019 PFL: 55% x AWW for 10 weeks How much time-off might Amanda take? 8 weeks: NY DBL & STD 5 PTO days: DBL waiting period 4 weeks PTO: full pay charged against FMLA & PFL 6 PFL weeks: consecutive or daily Total time off 18 weeks DBL & PFL in 52-week period 20
Amanda s Maternity Leave (one version) NUMBER OF WEEKS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 STD & DBL PTO Bright Business Cannot Require Amanda To Use Accrued Vacation & Personal Leave When FMLA No Longer Applies PFL FMLA 21 Employee wishing to maximize time off; may elect to use all DBL followed by PFL Employee wishing to maximize pay; may elect bonding at baby s birth (i.e. there is no STD benefit; only $170/week DBL)
PFL Checklist Follow PFL & regulations Review each claim independently Statement of Rights Monitor payroll Prepare to reconcile Billed in advance Don t want to refund if collect more than the maximum allowable amount per employee Maintain DBL/PFL policy for ALL eligible employees Must issue opt-out waiver to temporary employees 22
PFL Checklist (cont d) Carefully track eligibility and leave time taken Coordinate w/ carrier Ensure no double-dipping Receive PTO/PFL at same time Outsource leave management? Update handbooks, leave policies, and notices Prominently post required notice Communicate to employees Consult w/ counsel 23
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www.chernoffdiamond.com Jill Bergman, CEBS, CPE-Compliant Vice President, Compliance Health & Benefits Direct: 516-247-3386 jbergman@chernoffdiamond.com 25