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N.Y.'s paid family leave affects out-of-state employers

The New York State Workers’ Compensation Board released the final version of its paid family leave regulations on July 19. While it may be a New York regulation, it has implications for employers outside of the state. The PFL regulation has an effective date of Monday, Jan. 1, 2018, and the duration of benefits is phased in until 2021, when it will require almost every private employer to provide twelve weeks of paid leave.

PFL is a benefit for employees who work in New York state, regardless of where the employer is located or headquartered. According to the New York State Workers’ Compensation Board, an employer with employees working in New York for 30 or more days in a calendar year must obtain PFL coverage. For example, employees who work from their home in New York are covered even if the employer is located outside of New York state. However, an employee that is required to travel occasionally into New York state to perform duties, such as a salesperson, will not be considered a state employee unless the employment is based in the state. Furthermore, an employer that is located outside of New York state does not need to cover employees who live in New York and work outside of the state.

Under PFL, a covered employer is any employer who employs one or more employees. The definition does not leave any exemption for small businesses, and, instead, seems to be all-inclusive. An employee of a covered employer who is regularly scheduled for 20 or more hours a week becomes eligible for benefits after 26 consecutive weeks of employment. Any employee of a covered employer who is regularly scheduled for less than 20 hours a week becomes eligible for benefits after the 175th day of employment.

Employers purchase PFL coverage through their disability insurance carrier, and collect employee contributions up to the maximum allowed by law. PFL is designed to be completely employee funded through employee payroll contributions, though an employer may choose to fully fund or partially fund the coverage as well. The weekly employee contribution for 2018 is 0.126 percent of an employee’s weekly wage capped at the New York state average weekly wage, which was $1,305.92 in 2016. Therefore, the maximum contribution in 2018 is $1.65 per week. Beginning Jan. 1, all New York disability benefits policies also will include PFL coverage in the disability policy. Effective Jan. 1, employees covered by their employers’ disability benefits policy are automatically covered for PFL regardless of whether the employers have updated their policy.

PFL allows for eight weeks of paid leave beginning Jan. 1, which increases to 10 weeks in 2019, and finally to 12 weeks in 2021. Benefits are paid by the disability insurance carrier of the employer at the rate of 50 percent of the average weekly wage in 2018, 55 percent in 2019 and 2020 and caps out at 67 percent in 2021.

PFL will affect any employers with employees located in New York state. The general rule is if the employers are required to provide DBL coverage in New York, they must provide PFL coverage as well. PFL will be an automatic rider to an employer’s New York DBL policy as of Jan. 1. It is important for any out-of-state clients with covered employees to prepare for this coverage to take effect. For more information, visit PIA’s HR Info Central or sign up for PIA’s Webinar on Thursday, Nov. 16, which also is open to your commercial clients.

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