by: Teresa Loheide, Manager
Linda Rubenau, Paraprofessional
Are part-time employees entitled to paid family leave in New York State?
If you’re a New York State-based business – or even if you’re an out-of-state business with part-time employees who work at least 30 or more days in a year in New York – a new law has now radically changed how you must treat these workers. What began as an opt-in program last July has since shifted to a mandatory state law that went into effect in January.
Now nearly all private employees in New York State qualify for paid family leave benefits through their employers, and are guaranteed they can return to the same or “at least as favorable” a position once they’re ready to resume work. Employers that fail to comply on either front face steep penalties for noncompliance.
In case you’re wondering how the Paid Family Leave Act differs from its federal counterpart, the Family Medical Leave Act, there’s one critical and – more far-reaching – difference: Where the FMLA only applies to businesses with 50 or more employees, the PFL applies to any business with as few as one employee. That means even if you’re involved in such seemingly informal domestic help situations – such as hiring a nanny or home health aide – you have to comply with the new PFL mandates if the individual is treated as a W-2 employee, with payroll taxes automatically deducted from his or her paycheck. (Independent contractors are not considered employees when considering the Paid Family Leave law.)
That reality opens the door to a whole host of questions.
Just how prepared is your business to cover for an employee while they’re out on paid leave? In 2018, paid time off amounts to 8 weeks, increasing, in steady increments, to 12 weeks by 2021. Your business must not only secure backup help while your employee is out on leave but then reinstate that employee, as the new law mandates, once they’ve concluded their paid family leave. Consequences of noncompliance are not insignificant, either. Failure to reinstate an employee could result in a formal complaint against you with New York State.
And while the premium for paid leave benefits is funded as post-tax dollars by the employee through payroll deductions, the onus falls on the employer to ensure timely collection via payroll deductions. There is no catch-up contribution, either, meaning any shortfall comes out of your company’s disability insurance, potentially raising your premiums.
There are additional financial consequences to consider. In cases where an employer fails to provide paid family coverage at all, they could incur a fine of up to 0.5 percent of the total weekly payroll wages during the lapse period, on top of additional penalties up to $500. In addition, if an employer fails to continue an employee’s health insurance during the leave period, the employer will be responsible for the employee’s medical costs incurred during the leave period.
Because of such steep consequences, it’s essential for any employer with an employee (or employees) working in New York State to stay abreast of the Paid Family Leave Act and its potential impact on their business. Contacting your disability benefits insurance carrier to learn more about paid family leave coverage is important. So is notifying your payroll provider to start deducting premiums from an employee’s wages. But arguably the very first step – before deductions ever begin – is to notify employees first of what will ensue.
Informing employees of the Paid Family Leave Act should span a multitude of channels. If your company has an employee handbook, for instance, the new law must be indicated in the book under employee benefits. In addition, the new state guidelines must be posted in common areas of your business, such as break rooms.
Above all, everyone should be clear on eligibility. It kicks in for employees who work 20 or more hours per week once they’ve been on the job 26 weeks, and for employees working less than 20 hours a week, once they’ve accumulated 175 days. (For ineligible employees, a waiver is available for signing). As with FMLA, New York’s Paid Family Leave Act protects employees seeking family care; a birth, adoption, or fostering situation following the first 12 months of such an event; a serious health condition or active military duty deployment of a family member.
In all cases, the obligation, again, falls on the employer to inform employees of their eligibility, as well as their needed contribution: This year, an employee’s contribution is 0.126 percent of their weekly wage, not to exceed the same percentage of the annualized New York State Average Weekly Wage. To break down such technicalities and allay any employee concerns about costs, you may wish to spell out the employee’s weekly contribution – in many cases, no more than $1.65 per week – so they can easily understand their weekly deductions.
While on leave, employees receive half of their average weekly wage, each week. (That amount will increase to 67 percent of an employee’s average weekly wage by 2021, when eligibility grows to 12 weeks of coverage.)
As New York’s Paid Family Leave Act continues to unfold between now and 2021, it will be essential for your business to stay on top of changes – and new requirements – as they occur. Among those developments, you’ll want to stay abreast of New York’s Department of Labor and yearly changes to its statewide average weekly wage, which is updated every March. In addition, keep in mind verbiage on the Paid Family Leave Act changes each year and must be updated accordingly in your employee handbooks and accompanying materials.
If and when questions arise, you’ll want to make sure you consult the right experts to help you navigate the law’s unfolding complexity, not to mention cases where PFL and FMLA obligations hit your business concurrently. Proactive steps like these will help ensure you and your employees not only stay fully apprised of the law but also maintain peace of mind throughout your working relationship.