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Regarding Non-Union
Employees: New York Department of Financial Services Sets Maximum
Weekly Employee Contribution for Paid Family Leave Benefits
Law
As we reported several times over the last year, on April 4, 2016,
New York State enacted the Paid Family Leave Benefits Law
(“PFL”), which goes into effect on January 1, 2018. The
PFL will be phased in over four years, ultimately providing workers
with up to twelve (12) weeks of paid family leave per year, which
will be funded solely through employee payroll contributions. The
PFL amends the Worker’s Compensation Law and the
Worker’s Compensation Board (the “Board”) is
currently proposing regulations that clarify the PFL. Those
regulations are subject to a 30-day comment period.
While the PFL provides
that paid family leave benefits will be funded solely through
employee payroll contributions and that employers may begin to make
such wage deductions beginning on July 1, 2017, the outstanding
question has been what amount employers are required to deduct from
employee wages. On June 1, 2017, the New York State Department of
Financial Services (“DFS”) issued a statement setting
the maximum employee contribution at 0.126% of an employee’s
wage, capped at the statewide average weekly wage, which currently
is set at $1,305.92. Therefore, the current maximum wage deduction
is $1.65 per week.
Next
Steps
Under both the DFS regulations and the Board’s
proposed regulations, there are concurrent obligations on employers
and disability insurance carriers to comply with the PFL. The
obligation is on the employer to work with its payroll vendors to
begin deducting employee contributions from their wages at the rate
set by DFS. Employers are permitted, but not required, to begin
deducting from wages on July 1, 2017 to offset the cost of
acquiring paid family leave insurance policies.
Disability insurance carriers are responsible for
amending existing disability benefits policies by adding family
leave benefits coverage as a rider to such policies. The
Board’s proposed regulations specifically require that each
employee covered by the employer’s statutory disability
benefits policy be covered by the same carrier for family leave
benefits. Indeed, DFS has urged insurers to “continue in the
market and add the Family Leave Benefits rider to their current
offerings.”
Employers should work
with their payroll vendors and disability insurance carriers now to
prepare for wage deductions for non-union
employees under the PFL. Because the Board’s
regulations are still subject to a comment period, it is
conceivable that the current proposed regulations will be amended.
For that reason, it may make sense to withhold from
non-union employee wage deductions until
the regulations are final. Additionally, with respect to
union employees, which the PFL also applies to, we will advise
employers separately in the near future on next steps.
Finally, once the Board’s regulations are final, employers
will have to revise their handbooks, policies and practices by
January 1, 2018 to comply with the PFL. We will keep you apprised
of when the regulations go into effect as well as any changes as a
result of the comment period. Employers can also visit the
following state website for more information: https://www.ny.gov/programs/new-york-state-paid-family-leave.
If you have any questions, please do not hesitate to
contact David R. Rothfeld, Lois M. Traub, Alexander Soric, Robert
L. Sacks, Michael Lydakis, Jennifer Schmalz or Jaclyn Ruocco.
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