Business implications of New York Paid Family Leave
Effective Jan. 1, 2018, New York will be the newest state to join California, New Jersey, and Rhode Island in implementing an employee-funded paid leave policy for virtually all workers.
From a business perspective, small companies of 49 or fewer employees will experience the biggest impact as a result of the new legislation. Larger businesses might already be familiar with FMLA, the federal family leave program, and have built their policies and business practices around the protection it provides to employees. New York Paid Family Leave (NYPFL) is a program specific to New York state with generally richer benefits and broader eligibility criteria than FMLA. The major differences are detailed in the chart below.
NYPFL, like FMLA, provides job protection. Companies of all sizes will need to reinstate employees returning from NYPFL to their prior position, or to a comparable position with comparable pay, benefits, and other terms and conditions of employment.
So, when an employee departs you may need to fill the talent gap due to their absence, but you must also be prepared to reinstate them upon their return.
Cost to employers
NYPFL is employee-funded through post-tax payroll deductions. You, as an employer, are not paying for the benefit. However, you will be required to obtain Paid Family Leave insurance. For Justworks customers, this will automatically be added to the disability insurance that you already access through us.
The biggest financial burden might be the benefits continuation you are required to provide to your employees. You must maintain their coverage under the same conditions as if they had remained actively employed, including any employer contributions to employee health plans and eligible dependents already on the plan.
We would recommend reviewing your company’s existing leave policies to ensure that they still align with your company’s goals and processes in light of this added benefit.
- Employers may not require employees to use PTO or other company-provided paid leave while on NYPFL. However, the employee may voluntarily do so.
- In the case of new mothers, employees can utilize any short term or statutory disability benefits they are eligible for before taking NYPFL. The employee can use only up to a maximum of 26 weeks of leave during any 52-week period.
- NYPFL may not be used concurrently with disability benefits.
- An employer might supplement the PFL benefit via a paid company leave policy.
Your company is required to supply employees working in New York State with notice of their rights and responsibilities with regard to NYPFL by January 1, 2018, whether that be by amending your company handbook or providing a separate written notice.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.