Jeffrey W. Pagano and Donald L. Mabry of the firm’s Employment and Labor Counseling and Litigation team have prepared a comprehensive analysis of the New York Paid Family Leave Benefits Law (“PFLBL”).
The New York PFLBL becomes effective on January 1, 2018. New York joins California, New Jersey, and Rhode Island as the only states that provide a paid family leave (“PFL”) benefit. When fully implemented, New York’s PFLBL will be the most comprehensive program among the programs.
The PFLBL was enacted through a series of amendments to the New York State Workers’ Compensation Law and implementing regulations. Essentially, it is an extension of New York’s temporary disability benefits law, and thus operates similar to other legally required insurance employers must maintain for the benefit of their employees.
Under the PFLBL, employees will be eligible for up to 8 weeks of compensation, benefits, and job-protected leave in any 52-week period. The amount of compensation will be 50% of the employee’s average weekly wage. The maximum weekly benefit payable will be $652.96. The duration and compensation amounts of PFL will increase annually through 2021.
PFL may be used for three main purposes: (1) to bond with a newly born, adopted, or fostered child; (2) to care for a close family member with a serious health condition; or (3) to assist with obligations arising when a close family member is deployed abroad on active military duty.
PFL compensation will be funded through employee payroll deductions to cover the costs of premiums for an employer-purchased PLF insurance policy, or to establish a benefit fund (for self-insured employers).
Coverage under the PFLBL is broad. Employers, whether based in New York or out-of-state, which have employed as few as one individual for 30 consecutive days are covered by the PFLBL. The PFLBL thereby imposes family leave obligations upon employers not previously covered by the federal Family and Medical Leave Act (“FMLA”), although the employer does not employ 50 or more employees within a 75-mile radius. Like workers’ compensation benefits and state disability benefits, employers must provided PFL benefits regardless of the number of employees it has.
If an individual’s employment is subject to the terms of a collective bargaining agreement (“CBA”), his or her employer will be relieved of providing PFL benefits and protections if the CBA provides benefits and protections at least as favorable as those mandated under the PFLBL.
The PFLBL does not automatically apply to public employers, but an opt in process is provided.
PFL benefits will be available to New York employees who work for a covered employer for 20 hours or more per week for 26 consecutive weeks of employment, as well as to employees who are employed on a part-time basis (fewer than 20 hours per week) for 175 days in a consecutive 52-week period. These minimum time periods may be satisfied by an employee’s tenure leading up to the effective date of the PFLBL. In other words, an employee may be eligible to claim PFL benefits beginning on January 1, 2018 if he or she already has worked for these time periods.
Recent regulations have clarified that an employer’s regularly scheduled breaks (such as semester breaks for private school teachers or university professors) do not interrupt the 26-consecutive-weeks calculation. Instead, the calculation may be paused during periods of absence that are due to the nature of the particular employment.
Regulations specifically exempt certain categories of employees from coverage under the PFLBL, including: related spouses and minor children who work for the related employer; clergy; religious teachers; livery and “black car” drivers; and jockeys.
Citizenship and immigration status do not affect an employee’s eligibility under the PFLBL.
Qualifying Events for PFL Benefits
A parent is eligible for PFL benefits during the first 12 months following the birth, adoption, or fostering of a child, for purposes of bonding with the child. Spouses with different employers are both eligible to claim PFL benefits at the same time. If both spouses work for the same employer, the employer can deny PFL benefits to one of the spouses if they have asked for the same period of time off to bond with the same child.
If an employee’s close family member has a serious health condition, he or she is eligible for PFL to care for the family member. Under the PFLBL, close family members include spouses, domestic partners, children, parents, stepparents, parents-in-law, grandparents, and grandchildren.
A serious health condition is an illness, injury, impairment, or physical or mental condition that involves inpatient care in a hospital, hospice, or residential health care facility, or continuing treatment or supervision by a health care provider. Ordinarily, conditions such as the common cold, the flu, ear aches, upset stomach, minor ulcers, routine dental or orthodontia problems, periodontal disease, etc., do not meet the definition of a serious health condition.
Active Military Duty
An eligible employee may claim PFL benefits when a spouse, domestic partner, parent, or child of the employee is on active military duty abroad or has been notified of an impending order of active military duty abroad. An employee may take leave to help out with obligations arising from the call to duty, including making alternative child care arrangements for a child of the deployed military member, attending certain military ceremonies and briefings, and making financial or legal arrangements to address the military member’s absence.
Timing of Qualifying Events and Documentation Related to PFL
PFL benefits may be claimed for qualifying events that pre-date January 1, 2018, when the PFLBL goes into effect. January 1, 2018 is simply the first date on which PFL benefits can be claimed. For example, an eligible employee (parent) may claim PFL benefits on or after January 1, 2018 to bond with a child born, adopted, or fostered in 2017, so long as the PFL benefits are claimed during the first 12 months after the child’s birth, adoption, or fostering. Similarly, an eligible employee may claim PFL benefits as of January 1, 2018 to address a family member’s serious health condition or active military duty that was pre-existing on that date.
Regulations specify the documentation required to establish familial relations, the presence of a serious medical condition, and the occurrence of active military duty for purposes of claiming PFL benefits. For example, establishing a family member’s serious medical condition requires a medical certification completed by the care recipient’s health care provider.
PFL Compensation Amount
The first step in computing an employee’s PFL compensation amount is to calculate the employee’s average weekly wage (“AWW”), which is measured by the employee’s previous 8 weeks of wages. For 2018, employees are entitled to receive 50% of their AWW up to a cap of 50% of the New York State Average Weekly Wage (“SAWW”), for up to 8 weeks. Currently, the SAWW is $1,305.92, which effectively caps the PFL weekly benefit at $652.96.
Scheduled Annual Increases in PFL Benefits
Increases in PFL benefits will be phased in annually according to the following schedule:
|Starting||Weeks Available||Maximum % of Employee Average Weekly Wage (“AWW”)||Capped at % of New York State Average Weekly Wage (“SAWW”)|
The PFLBL anticipates that economic conditions could affect the feasibility of implementing the law, and therefore allows the Superintendent of Financial Services to delay the scheduled increases in PFL benefits based upon several factors, including the current cost to employees of the paid leave benefits (because the benefits are financed by deductions from their pay), the availability of insurance policies providing PFL benefits, and the impact of the benefit increase on employers’ businesses.
Partial and Intermittent PFL Benefits Allowed
PFL benefits may be payable to employees for leave taken intermittently or for less than a full work week in increments of one full day or one-fifth of the weekly benefit. Recent regulations have clarified that weeks during which an employee claimed partial or intermittent PFL benefits will not be included in the employee’s AWW calculation, which means that an employee’s PFL compensation amount will not be diminished due to claiming prior partial or intermittent PFL benefits.
When PFL Benefits Are Not Payable
To prevent duplicative payment of benefits, the PFLBL identifies several circumstances when PFL benefits are not payable, including:
- to an employee receiving total disability benefits under a claim for workers’ compensation, volunteer firefighters’ benefits, or volunteer ambulance workers’ benefits;
- to an employee not employed or who is on administrative leave from his or her employment;
- to an employee currently receiving sick pay or paid time off from the employer; and
- for any day in which the employee works at least part of the day during the same working hours as those for which PFL benefits are claimed.
Employee Job Protection
PFL is job-protected, meaning that upon returning from PFL an employee is entitled to reinstatement to his or her prior position, or to a comparable position with comparable pay, benefits, and other terms and conditions of employment. The PFLBL does not currently define what a “comparable position” is, and it is anticipated that future guidance will be provided through regulations.
Employee Benefits (Health Insurance) Protection
Under the PFLBL, employees may not lose employment benefits because they take PFL. Accordingly, employers must maintain an employee’s existing group health insurance benefits for the duration of the employee’s PFL, as if the employee had continued to work. However, employees taking PFL are not entitled to accrue seniority or other benefits during their leave period.
The PFLBL prohibits retaliation against any employee for seeking or receiving PFL benefits, similar to the existing prohibition in the Worker’s Compensation Law against retaliation because an employee seeks or receives workers’ compensation benefits.
Calculation of Payroll Deductions to Fund PFL Benefits
The Department of Financial Services has set the maximum rate for PFL payroll deductions at 0.126% of the employee’s weekly wage, not to exceed 0.126% of the current New York State Average Weekly Wage, which is currently $1,305.92. This means that the current maximum weekly payroll deduction per employee is $1.65, equating to approximately $86 per year.
Though the PFLBL does not take effect until January 1, 2018, employers became eligible as of July 1, 2017 to initiate payroll deductions as a “ramp up” to pay for PFL insurance (or for self insurance) that will fund the PFL benefits.
An employer may choose to cover all or part of the costs of PFL insurance and not make any payroll deductions (or may make less than the maximum deductions allowed), as an additional benefit for its employees. If payroll deductions will be made, they must start no later than January 1, 2018.
Employer Liability and Fines for Non-Compliance with PFLBL
An employer that fails to provide PFL coverage or maintain an employee’s group health insurance during PFL exposes the employer to liability and fines for non-compliance, including but not limited to liability for an employee’s direct medical costs if health insurance was not maintained during PFL. Employers may be audited for compliance with the PFLBL.
Employee Notice Requirements
When the need for PFL is foreseeable (e.g., an expected birth of a child) an employee must provide his or her employer with no less than 30 days’ notice in advance of the date on which the leave is to begin. If less than 30 days’ notice is provided, the self-insured employer or insurance carrier may file a partial denial of the PFL claim for a period of up to 30 days from the date notice was provided. If the need for leave is not foreseeable (e.g., unexpected serious medical condition of a close family member), the employee must provide notice as soon as practicable.
Process For Claiming PFL Benefits
The State will create and publish a “Request for Paid Family Leave and Certification” form to be completed and submitted by the employee. Insurance carriers and self-insured employers may opt to accept notice of claims in another format if they prefer not to use the State’s form. The employee will also have to submit certain documentation (e.g., birth certificate, medical certification, order to active military duty) in support of the claim. An employee requesting intermittent leave must also submit a schedule for the planned leave. Generally, PFL benefits must be paid (or denied) within 18 days from the date the request form is submitted.
Employee Health Insurance Contributions
During any period an employee receives PFL, he or she is required to continue making the same group health insurance contributions made while he or she was working.
Waiver of PFL Benefits
Recent regulations have clarified that an employer must provide leave-ineligible employees the option of waiving PFL benefits, thereby allowing them to avoid payroll deductions. Ineligible employees who may claim waiver include those whose regular schedule is 20 or more hours per week and they will not work 26 consecutive weeks and those whose regular schedule is less than 20 hours per week and they will not work 175 days in a consecutive 52-week period.
COORDINATION OF PFL BENEFITS WITH FMLA BENEFITS
The PFLBL will also apply to New York employers who are covered by the federal Family and Medical Leave Act (“FMLA”), which will require coordination of benefits. This may be complicated for employers because although the programs have many similarities, there are some major differences that can affect coordination.
Similarities Between PFLBL and FMLA
- Both statutes provide a leave of absence (initially 8 weeks under PFLBL and 12 weeks under FMLA) for family obligations for covered employees for the birth, placement, or adoption of a child, the serious health condition of a close family member, or because of obligations arising from a close family member being called into active military duty.
- Both statutes require that employees taking leave be restored to the same or a similar position they held prior to leave.
- Both statutes require employers to maintain an employee’s group health insurance benefits during the period of leave, but do not require the accrual of seniority or other benefits during their leave period.
- Both statutes require 30 days’ notice of foreseeable leave, or as much notice as is practicable.
- Both statutes prohibit retaliation against an employee for seeking or receiving leave benefits.
Differences Between PFLBL and FMLA
- Many more employees are covered by the PFLBL than by the FMLA, for two reasons. First, the PFLBL applies to any employees of employers covered by the New York State Workers’ Compensation Law, regardless of the size of the employer. In contrast, FMLA only covers employees working for employers with 50 or more employees in a 75-mile radius. Second, employees are covered by the PFLBL in as few as 26 weeks of employment, whereas they are not covered under the FMLA until reaching 12 months of employment and have worked for at least 1,250 hours in the 12-month period preceding the leave.
- The PFLBL does not provide a leave of absence (paid or otherwise) for the employee’s own serious health condition. In contrast, the FMLA provides an unpaid leave of absence for the employee’s own serious health condition.
- The PFLBL allows an employer to require an employee to choosebetween using accrued paid time off (“PTO”) under the employer’s leave policy and PFL benefits. In contrast, under the FMLA an employer may compel an employee to substitute PTO for unpaid leave under the FMLA.
- The FMLA provides several additional provisions regarding service member leave beyond exigent circumstances arising because a family member is called into active military service, including circumstances when two spouses employed by the same employer are called into active military service at the same time. The PFLBL does not yet address these additional scenarios.
Limitations on Claiming Benefits under PFLBL and FMLA
Employees must use PFLBL and FMLA leave concurrently if the employer designates the PFL benefits period as FMLA-qualifying and gives the employee required notice. The employer’s failure to provide notice will allow the employee to receive PFL benefits without concurrently using available FMLA benefits.
Employees may not accumulate leave time to take over 12 weeks per year. However, between 2018-2020 (when the PFL weeks available are 8, 10, and 10, respectively), employees may be eligible for FMLA leave in addition to PFL. For example, in 2018, an eligible employee (parent) may use up to 8 weeks of paid leave for child bonding under the PFLBL, and, if also covered by the FMLA, he or she may take up to an additional 4 weeks of unpaid leave for child bonding.
Coordination of PFL Benefits with New York Disability Laws
The PFLBL does not provide benefits to employees who wish to take leave for their own serious health condition, but for this purpose they may be eligible for paid leave under New York’s short-term disability (STD) leave program. Currently, an employee may be eligible for up to 26 weeks of paid leave during a 52-week period for off-the-jobs injuries and illnesses, including complications from pregnancy and childbirth. Under the PFLBL, there are limits on what PFL benefits employees may claim in combination with STD benefits:
- Employees may not concurrently receive PFL benefits and New York STD benefits.
- Employees may not receive combined PFL and STD leave exceeding 26 weeks during the same 52-week period. For example, if an employee (mother) takes the full 26 weeks of STD leave due to complications of pregnancy or childbirth, she will be ineligible for any PFL for child bonding during the same 52-week period.
- Employees may not concurrently receive PFL benefits while they are collecting workers’ compensation benefits and are not working.
Coordination of PFL Benefits with Employer’s Existing Leave Policies
An employer may adopt policies allowing (but not compelling) an employee to take PTO (e.g., sick leave, personal leave, vacation) at 100% of salary in lieu of the reduced compensation to which the employee is entitled under the PFLBL. If the employee makes this election, the employer may request reimbursement from its insurance carrier of any benefits that would be due the employee. For example, if an employee earning $100 a day chooses to use his or her employer’s vacation policy to collect vacation pay (at $100 a day) for each day he takes PFL, the employer would be entitled to the benefits due the employee under the PFLBL ($50 per day in 2018).
Employers may also allow employees to supplement PFL benefits with PTO under the employer’s leave policies. Employers already offering paid family leave exceeding that which is required by the PFLBL will be deemed as satisfying the law’s requirements. In other words, an employee is not entitled to “add on” benefits under the PFLBL to an existing, more generous paid family leave policy.
Disputes to be Settled by Arbitration
Under the PFLBL, claim-related disputes concerning eligibility, benefit rate, and duration of PFL will be settled by arbitration. Under applicable regulations, the Chair of the Workers’ Compensation Board will appoint a panel of neutral arbitrators who have knowledge of the PFLBL to hear disputes. The regulations do not set up a State-run arbitration forum, nor do they require any particular arbitration forum (e.g., AAA) to administer the arbitration. Rather, any private “dispute resolution forum” may handle the arbitration, so long as an approved panel arbitrator is used and administration of the proceeding conforms to applicable regulations. The arbitrator will conduct a “desk” arbitration, in which the dispute is resolved without a hearing and based solely on written submissions from the parties. The arbitrator, however, has the authority to order a hearing if deemed necessary. An arbitrator’s decision may be appealed to a court only upon limited grounds as set forth in Article 75 of the New York Civil Practice Law and Rules.
A FEW PRACTICAL ISSUES FACING EMPLOYERS UNDER THE PFLBL
Though the implementing regulations for the PFLBL have clarified many issues as to how the law will operate, practical issues remain for employers to deal with. In time, it is anticipated that guidance will be provided through additional regulations. Below are just a few practical issues an employer will face in complying with the PFLBL.
One issue involves how an employee’s contribution to the cost of his or her group health insurance is to be collected while the employee is out on leave under the PFLBL? Ordinarily, the employee’s contribution is collected through a paycheck deduction, but it is unclear how an employer will collect it when the employee is out on leave and not being issued a paycheck.
Another issue involves how payroll deductions under the PFLBL are to be kept pending their use to pay PFL insurance policy premiums? It is unclear whether a special holding account is required for this purpose (as with 401k deductions).
Steps Employers Must Take Before PFLBL Goes Into Effect
Employers must ensure that their payroll departments or outside payroll vendors are ready to make appropriate deductions from employees’ paychecks starting on or before January 1, 2018.
Employers must purchase a PFL insurance policy (or rider) from their preferred New York disability benefits carrier, or arrange for self-insurance, that will take effect beginning January 1, 2018.
Employers must provide employees with a notice of PFLBL rights and obligations, including how to file a claim, either through updates to employee handbooks or in a special notice.
Employers must display a State-supplied notice poster on its premises by January 1, 2018 advising employees of their rights and obligations under the PFLBL.
Steps Employers Should Take Before PFLBL Goes Into Effect
Employers should train HR personnel and others to precisely track employees’ time off and develop procedures to properly classify and document all leaves of absence under the PFLBL, the FMLA, and disability laws.
Employers should develop staffing plans to cover workloads for employees out on PFL, including splitting responsibilities among other employees and establishing a relationship with a staffing agency to supply temporary workers.
Employers should review, revise, and implement policies (including updating employee handbooks) as necessary to coordinate them with the PFLBL and other statutes, such as the FMLA and state disability laws.
Employers should consult experienced labor and employment counsel.
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