Effective January 1st, 2018 New York implemented the most comprehensive Paid Family Leave law in the country. To help employers better understand how this affects them and their employees E.B. Cohen has put together a list of 5 things every business should know.
Before we jump into the specifics, let’s get a few definitions straight. “Covered Employers” is the term used in the DBL/PFL law to describe companies that must provide PFL to their employees if your business:
Has at least one employee;
Is either located in New York, or you have employees who work for you in New York for at least 30 days per calendar year; and;
Is a private sector business
And it’s important to know that Paid Family Leave is required by NY State for all private businesses with at least 1 employee. So even if you own your business and you only have 1 part-time employee, you have to provide Paid Family Leave. We’ll get into your employees in a moment. Now that we’ve got that settled, let’s dive into the important things your business needs to know about Paid Family Leave.
#1. When does PFL start, and what does it cover?
Paid Family Leave officially began on January 1st, 2018, though you could have started taking contributions from your employees as early as July 1st, 2017. Paid Family Leave rolls out in a series of stages between 2018 and 2021, as you can see from the chart below:
So the important thing to remember right now is that on January 1st, 2018, your eligible employees can take up to 8 weeks of leave time at 50% of their current salary capped at the New York State Average Weekly Wage (NYSAWW).
PFL is designed to help employees take the time they need for certain life events, including bonding with a new child (newborn, adoption, and fostering are covered), caring for a seriously ill family members, and for dealing with qualifying events related to having an active military family member.
On top of giving employees time off for specific reasons and partial-pay, it also protects their jobs. If an employee takes PFL and is out for an extended period of time, their job or one equal to it in pay and benefits must be waiting for them when they return. They are also entitled to receive health insurance at the same level, and same contribution level, they would if they were still working regularly. To sum up, Paid Family Leave rolled out on 1/1/18, and benefits will be expanded each year through 1/1/21. In 2018, your employees will receive:
Up to 8 weeks of leave
Up to 50% of their salary, capped at the NYSAWW
Regular health insurance (you still pay your contribution as if you were normally employed)
#2. Who do you need to cover?
Paid Family Leave isn’t just for full-time employees. Part-time employees are eligible for PFL benefits as well. There’s certain criteria that all employees must meet before they can take PFL:
Employees who work less than 20 hours per week are eligible after 175 days of work for the same company.
Employees who work 20+ hours per week are eligible after they have been employed at least 26 consecutive weeks at the same company.
When you hire a new employee, they will become eligible to take leave once they meet the above requirements, but you can start taking out pay contributions from their first paycheck.
Freelancers and contract workers may be eligible for PFL coverage with your company. Give E.B. Cohen a call today to learn more about who may be exempt.
#3. How do you implement payroll deductions, and when?
Your payroll provider should already be deducting for this benefit. Since the pay contribution is based on each individual employee’s salary, it could become complex. Talk to your accountant, HR manager, payroll provider, or anyone else who works with your payroll and see if they have something in place already for Paid Family Leave.
When should you start taking payroll deductions for PFL? If you choose to deduct from employees, you have to start taking them on 1/1/18, but you can start earlier. If you decide to wait until the official start date, that’s fine, but you can’t retroactively collect payments for Paid Family Leave. Plus, it’s important to make sure you deduct the correct amount from your employees. PFL regulations state that any over collected premium must be returned to the employee.
#4. What do your employees need to know?
In a word, everything. Not only will your employees need to know who is covered and when, you should also make them aware of everything related to PFL, such as:
Payroll deductions amounts and reasoning
Benefits and protections of PFL
Uses of PFL (bonding, caregiving, military exigencies)
The responsibility for requesting and taking Paid Family Leave falls on the shoulders of your employees. That means that they are responsible for filling out forms, acquiring and providing the appropriate documentation, submitting their paperwork, and requesting time off in a reasonable manner.
#5. How do you staff while employees are out on PFL?
Eligible employees can take their Paid Family Leave time in increments as small as 1 day or as large as the full eight weeks in 2018. If you have an employee who is taking an extended amount of time off — say to bond with a newborn child, or to support a seriously ill family member — you’ll need to find someone to take their place at work until they are able to return.
Remember, PFL includes job protection, so you can’t necessarily replace your PFL employee unless you have a comparable job available for them when they return. If you have enough time to plan for the absence, like with maternity or paternity leave, then you could consider cross-training another employee to cover while an employee is out on Paid Family Leave.
In the event that an employee needs to take Paid Family Leave immediately, you might not have time to cross-train with a current employee. Consider reaching out to temp agencies now to have one on standby so that you can quickly fill the space, especially if it’s a mission-critical position.
This new benefit is very complex and difficult for businesses of any size to understand. Don’t hesitate to contact E.B. Cohen today to help you navigate this and many other insurance related essentials such as Business Insurance, Workers Compensation, Employment Practices Liability Insurance, Cyber & Data Breach and much more.