New York Paid Family Leave Countdown

The Notice of Adoption for Paid Family Leave was published in the New York State Register in July, finalizing the New York Paid Family Leave (“NYPFL”) regulation. View USI’s overview of the law, which walks through the final regulations, including the employer requirements and coordination with other state and federal leave. Also view our outline of the public comments and their effect on the final regulation.

On August 25, 2017, the State of New York’s Department of Taxation and Finance (NYDTF) issued guidance related to the taxability of benefits received under the NYPFL program, which becomes effective on January 1, 2018.

Within the guidance, the NYDTF notes the following:

  • Benefits paid to employees will be taxable non-wage income that must be included in federal gross income;
  • Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding;
  • Premiums will be deducted from employees’ after-tax wages;
  • Employers should report employee contributions on Form W-2 using Box 14 – State disability insurance taxes withheld; and
  • Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC.

For additional information, visit: https://www.tax.ny.gov/pdf/notices/n17_12.pdf

Last year Governor Andrew Cuomo signed the NYPFL law as part of the 2017 State Budget. On February 22, 2017, the State of New York filed proposed regulations to implement  NYPFL. The proposed regulations were subject to a 45-day notice and comment period, which ended  April 8, 2017. On May 24, 2017, the State of New York filed revised proposed regulations, which are subject to a 30-day notice and comment period. On July 19, 2017, the Notice of Adoption for Paid Family Leave was published in the New York State Register, finalizing the regulation.

NYPFL is a wage-replacement program fully funded by employees to bond with a child, care for a close relative with a serious health condition, or ease family obligations when a family member is called into active military service. However, NYPFL is not available to care for the employee’s own condition; rather the employee may use leave available under the Family Medical Leave Act (“FMLA”). Both full-time and part-time employees are eligible for the benefits after meeting the eligibility requirements. View the NY state PFL webpage.

QUICK LINKS FOR INFORMATION:

Paid Family Leave Phases

Countdown to 1/1/18 Effective Date – What Should Employers Be Doing?

Frequently Asked Questions



NY Paid Family Leave Phases

Beginning in 2018, an employee will be able to receive benefits at 50% of the average statewide weekly wage. By 2021, an employee will receive 67% of his/her average weekly wages, capped at 67% of the average statewide weekly wage. For 2016, the New York State Average Weekly Wage (“NYSAWW”) was approximately $1,305.92 (the amount is determined each year by 3/31).

Paid Leave – Phases
January 1, 2018 8 weeks 50% of AWW
January 1, 2019 10 weeks 55% of AWW
January 1, 2020 10 weeks 60% of AWW
January 1, 2021 12 weeks 67% of AWW

The Superintendent of Financial Services has set the maximum employee contribution at 0.126% of an employee’s weekly wage, not to exceed 0.126% of the NYSAWW.  As a result, the employee contribution is capped at $1.65 per week for 2018.  The contribution rate is determined annually by 3/31.

NY Worker’s Compensation Board – http://www.wcb.ny.gov/PFL/pfl-regs.jsp


5 Months to go – August, 2017

NYPFL 5
Now that New York Paid Family Leave has been finalized, employers should focus on the following action items:

Action Item

Description

Determine Best Insurance Option

Employers may insure with a private carrier, the State Insurance Fund (“SIF”) or self-insure, similar to New York Disability (“NYDBL”).  Depending on the method elected, employers will have to take different action.

  • Private Carrier – employer must contact the private   carrier directly.  The carrier must be approved by the Workers Compensation Board – any carrier approved to offer NYDBL is approved to offer NYPFL.
  • SIF – employers insured under the SIF for DBL will automatically be covered by SIF for NYPFL.  Employers should have received information from SIF in April 2017.  Employers will also receive a census that must be completed to determine the premium for the PFL portion of the policy.  The premium is due later this year.
  • Self-Insurance – employers that want to self-insure must apply with the New York Workers Compensation Board.  The Board will approve or deny the application after reviewing financial statements, ensuring a proper deposit is made, and signing an agreement.  For the specific requirements, please contact your consultant.
    • 9/30/2017 – Employers currently self-insuring the NYDBL benefits may continue to self-insure the NYPFL benefits without a new application. Employers choosing this option must 1) make the election by 9/30/2017; 2) post additional security; 3) execute a liability agreement; and 4) submit an annual payroll report for itself and any subsidiaries as of 12/31/2016.
      • Employers that currently self-insure DBL may also choose an insured policy with a private carrier or SIF.

** Please Note ** Employers that choose to self-insure are liable for the full claim cost, which may exceed the aggregate employee contribution collected.  

Amend Employer Policies

Employers should amend policies identified under the six month action item to include NYPFL:

  • Determine if leave under NYPFL will be concurrent with leave under the Family Medical Leave Act (“FMLA”);
  • Outline employees’ rights, responsibilities, and notice requirements;
  • Define interaction with other leave benefits.

**Please Note** Employers that do not have an employee handbook or other similar document are required to provide a written document with the employees’ rights and obligations, including information on how to file a claim under NYPFL.

Public Employers Must Determine Opt-In

Public employers are not required to comply with NYPFL, but may opt-into the law.  If a public employer determines it will opt-in, the following steps must be taken:

  • Submit the NYPFL plan to the Board;
  • Provide written notice to its public employees and the Workers Compensation Board Chair (“Chair”) 90 days prior to collecting employee contributions.
    • **10/01/2017** for public employers implementing NYPFL on 1/1/2018

Public Employers Subject to Collective Bargaining

  • Submit the NYPFL plan to the Board;
  • Provide written notice to the Chair of agreement and 1) list of employees; 2) effective dates of coverage; 3) and any other necessary coverage information.

Employers Offering Voluntary NYDBL Benefits

Employers providing NYDBL voluntarily are approved to provide NYPFL automatically, but both NYDBL and NYPFL must be provided under the same policy.

  • If the employer wants to obtain a separate policy, it must notify the Chair once the policy has been obtained;
  • If the employer chooses not to provide NYPFL, it must notify the Chair and its employees prior to 12/31/2017.

**Please Note** Employers may apply for voluntary coverage when coverage is not required for the individual.  For example:

  • A minor child of the employer;
  • Domestic or personal worker;
  • A member of a religious order;
  • Executives of a corporation with no other employees;
  • Volunteers of a religious, charitable, or educational institution.

Additional resources:

The following Notices were created by the Workers Compensation Board:


6 Months to go – July, 2017

NYPFL 6

 

 

Action Item

Description

Determine Employee Population

The NY Paid Family Leave (“NYPFL”) requirement applies to New York State employers regardless of size.  However, employers that are domiciled outside of New York, must determine the applicability of the NYPFL requirements.

Any employee working in New York would be subject to the NYPFL requirements; employers must be registered with the State of New York to do business in New York.

Remote Workers – Employers outside of New York with employees working remotely from their home located in New York will also be subject to the NYPFL requirements.  Verify the employee’s working status and speak to counsel for treatment and other considerations.

Locate Employer Policies 

Employers should review internal policies related to sick leave, paid time off, family leave, paternity and maternity leave, and any other leave available to employees.  These policies will need to be reviewed and updated to comply with the NYPFL requirements.

Documents to locate:

  • Employee Handbook;
  • Human Resource Policy and Procedures;
  • Benefits Booklet or New Hire Package;
  • FMLA Policy and Procedure, if separate from Employee Handbook or if administered by third-party  vendor;
  • Any third-party vendor policies, procedures, or contracts that define leave administration;
  • Collective Bargaining Agreement(s).

Employers should not:

  • Do nothing –  Preparation is an important and extensive process. Begin gathering information as soon as possible.
  • Begin NYPFL withholding – While the annual rate is available, the final regulations were just released and carriers are not yet ready to issue policies.  Employers should wait to withhold contributions until policies are in place.
  • Begin employee or staff education – The final regulations were just issued on July 19, 2017 and employers will need to begin assessment and changes to policies.  At this point, employers should update staff on changes that may be coming and education that may be required.

Frequently Asked Questions

CONTRIBUTIONS
Q1. Is the deduction pre-tax or post-tax?
Per the August 25th State of New York Tax Notice, the contributions will be deducted after tax.
Q2. Is the employer required to collect employee contributions or can the employer pay for the contribution on behalf of the employee?
The employer is allowed to take a deduction to cover for this expense, up to the max of $1.65; but the employer can choose to pay on behalf of its employees.  If the employer chooses to pay on behalf of its employees, the employer should notify the employees.
Q3. Can an employee ever waive to contribute to NYPFL?
If the employee is a public employee not subject to a collective bargaining agreement or an employee that will not meet the eligibility requirements, the employee may sign a waiver to prevent NYPFL contributions.  If the employee fails to sign the waiver, the employer is permitted to deduct the NYPFL contributions.

  • All other employees cannot waive and the employer is prohibited from providing a waiver notice.
Q4. In 2018 once we begin deductions for the NYPFL, for any new hires, do we start the deduction right away as of their first check?  Or should we wait until six months after they are eligible?  If we begin deductions right away and they resign before they are eligible, are we required to refund them the deductions? 
Employers must begin deductions right away on 1/1/2018. Employers are not required to refund contributions to the employee if terminated during 2018 because the employer is required to withhold and the employee is required to contribute to NYPFL.

  • The distinction is that if the employee is terminated in 2017, the employer is required to refund contributions since no employee is eligible and contributions are not required for 2017.
NYPFL PAYMENT / CALCULATIONS
Q5. Does an employee’s Average Weekly Wage (“AWW”) include bonus and overtime?
Yes, any income the employee receives is included in the AWW calculation. Employers should take the average for the past 26 week period or 175 days worked to determine the Average Weekly Wage (“AWW”).  The AWW is capped at the state’s AWW.
Q6. Can employee get paid under NYSFL and PTO and get more than a day’s pay?
No, the employee is limited to receive 100% of pay.  So the aggregate payment of NYPFL and PTO cannot exceed the employee’s regular wage.
Q7. While under the 12 wks. of NYPFL, can the employee take PTO the first 6 wks.? Assuming this is the Parental PTO offered by the company and once this is over, can the employee be paid the remaining 6 weeks using the NYPFL thru the carrier?
Yes, the employee may choose to take PTO the first 6 weeks and thereafter, choose to only take NYPFL.

  • But the first 6 weeks are eligible for reimbursement from the carrier because the employee qualifies for NYPFL and the employer is paying 100% of pay.  The employer will have to give the employee notice that the leave qualifies for NYPFL, even if the employee chooses to be paid 100% from PTO or other leave.
Q8. If the employee is on PFL when the AWW increases, their payout will increase for them correct?
No, the AWW is calculated before the employee goes on leave.  Once the AWW is calculated and the employee takes leave, the AWW will not increase or decrease.

  • If the employee takes NYPFL later and his/her salary increased or decreased, this may affect a future benefit, but not the current benefit.
Q9. We have an unlimited time off policy. How would such a policy coordinate with New York Paid Family leave and other statutory leaves? 
NYPFL – the employer is required to asses whether or not the employee qualifies for NYPFL.  Thereafter, the employee can take NYPFL and use PTO to supplement NYPFL or the employee may take PTO only and the employer would have to notify the carrier that the leave qualifies for NYPFL.  The employer would then be eligible for a reimbursement from the carrier.
SELF-INSURANCE
Q10. If we fund at a greater amount and greater time through another policy are we covered?
Yes, but only if you have the plan approved by the State of New York.  Otherwise, the employer will have to comply with NYPFL separately.

  • Employers should determine if they want to have its plan approved by the state, making the plan self-insured (and required to meet self-insurance requirements), or have a separate NYPFL policy for New York employees.
2018 ELIGIBILITY
Q11. Do employees have to work 26 weeks first (in 2018) before being eligible?
No, employees must meet the eligibility requirements when requesting New York Paid Family Leave (“NYPFL”).  This means that the first date the employee claims NYPFL, then the employer must ensure the employee worked 26 weeks prior to the first day of NYPFL leave.  If the employee meets this requirement, then the employee is eligible for leave.

  • Example – Employee requests leave under NYPFL to begin 1/1/2018.  If the employee works 20+ hours per week, the employee must have worked for the employer for 26 weeks, so the employee should have been employed from 7/3/2017 forward.
Q12. If an employee had a child in 2017, and was covered by an internal paid parental leave policy that is more generous than NYPFL, do we have to honor the request for additional leave?
Yes, if the employee is eligible the employer cannot deny the employee’s right to NYPFL.
Q13. Baby is born in September 2017.  An employee uses all 12 weeks of their FMLA in 2017.  As of 1/1/2018 my understanding is they are eligible for eight weeks of NYPFL.  Is this correct? 
Yes, the employee is eligible to bond with a child under NYPFL so long as the child was born within 52 weeks of the first day of leave requested.

  • If the employee requests leave to begin 1/1/2018, the leave is within 52 weeks of the child’s birth.  The employee is eligible for the max leave since as of the last day of NYPFL (2/23/2018), the employee is still within 52 weeks of the child’s birth.
ADMINISTRATION
Q14. When can an employer receive a reimbursement from the carrier under NYPFL?
An employer can receive a reimbursement from the carrier if the employee qualifies for NYPFL, the employer notifies the employee of his/her eligibility and the employee chooses to take 100% of PTO instead.  – The employer can submit a reimbursement to the carrier because the employer paid the NYPFL amount.  The carrier will pay the employer the NYPFL max based on the employee’s payroll, but capped at the state’s Average Weekly Wage (AWW).

  • If the employee takes NYPFL and supplements the NYPFL with PTO to receive 100% of pay – no reimbursement from the carrier is allowed, the employee is taking the PTO to supplement leave.
  • Employers will have to notify the carriers as soon as possible.  Since final regulations were just issued, the carrier will have a procedure for the employer to request the reimbursement.  If the employer is self-insured, the administrator of the NYPFL will also have a procedure in place.
Q15. We have an unlimited time off policy. How would such a policy coordinate with New York Paid Family leave and other statutory leaves? 
NYPFL – the employer is required to asses whether or not the employee qualifies for NYPFL.  Thereafter, the employee can take NYPFL and use PTO to supplement NYPFL or the employee may take PTO only and the employer would have to notify the carrier that the leave qualifies for NYPFL.  The employer would then be eligible for a reimbursement from the carrier.
Q16. Will there be a standard PFL form along the lines of the WH-380 for FMLA?
Yes, NYPFL Forms are labeled PFL – 1, 2, 3, 4, 5.  These have not yet been issued.
Q17. Are there approved carriers that will provide PFL coverage?
Yes, similar to NY disability, the state will approve certain carriers to offer PFL.  These carriers must comply with state insurance requirements.  For now, the same carriers that offer DBL will be allowed to offer PFL coverage.
Q18. I’ve read employers are not required to contribute, is this really the case?
Yes, employers are not required to make any contributions to PFL if the employer is fully insured.  BUT, the employer may have to pay for claims under PFL if it self-insures and fails to collect sufficient premium and too many employees take PFL.