By Allissa Kline  |  Buffalo Business First  |  Dec 8, 2017, 2:15am EST

Paid Family Leave: What you need to know before Jan. 1

Lockport manufacturer RubberForm Recycled Products LLC has 20 employees. When one person is out, there’s a scramble to handle the work left behind.

That scramble might intensify next year with the Jan. 1 start of New York state’s Paid Family Leave Act. The law – the most generous of its kind in the nation – provides wage replacement and job protection for employees who take leave to care for a new child or a close relative with a serious health condition, or to assist a close family member who has been called to active military duty.

That’s good news for those who are eligible. But some employers are concerned about who’s going to do the work when someone takes leave or whether the employee-funded model is sustainable.

Susie Robbins, RubberForm’s vice president of finance, worries about both.

“I’m worried it’s going to affect our insurance costs,” said Robbins, whose company uses scrap rubber and plastic to make products such as speed bumps, umbrella bases and parking lot wheel stops. “But also it’s just – who are we going to have to cover these people? A big company usually has multiple people so somebody can pick up the slack, but we have 20 people. Everybody has very specific duties they’re doing and we don’t necessarily have others to cover them.”

New York’s Paid Family Leave Act was signed into law by Gov. Andrew Cuomo in 2016. It differs from the federal Family Medical Leave Act – because it includes paid benefits and it applies to all private-sector employers, regardless of size.

It will be phased in over four years. In 2018 employees may take up to eight weeks of paid family leave and receive 50 percent of their average weekly wage, capped at $652.96 per week. In 2021, employees may take 12 weeks off and receive 67% of their average weekly wage.

 Under the legislation, a weekly employee payroll deduction will cover the costs of the program, which means employers don’t have to contribute. The program is set to be administered by employers’ insurance disability carriers.

Supporters say that workers will no longer have to choose between caring for family members and risking their financial security. Critics say it is one more hurdle to doing business in New York.

Cindy Lawrence is a human resources consultant for Employer Services Corp., a professional employer organization in Amherst. She’s been helping local employers understand the new law.

“I’ve heard some of them say, ‘This is a great thing and I’m glad my employees have this available to them,’” Lawrence said. “I’ve heard many others say, ‘My gosh, this is really going to impact my business operations.’ I think employers are mostly concerned with whether this will be sustainable in the long run.”

According to Robbins, at least two RubberForm employees will be eligible for eight weeks of paid leave next year. She doesn’t know if either will take the time, but she’s preparing by making sure that employees are cross-trained. If necessary, she will hire temporary workers.

A similar plan is taking shape at Wendel, an architecture and engineering firm in Amherst that employs 270. Even if companies aren’t contributing to the benefits, there’s a still a cost, according to Sandra Budmark, associate principal and director of organizational development.

“We’re going to need people to do all the tracking and make sure we’re compliant and that’s not free,” Budmark said. “Anytime you add more burden on record-keeping, claims-filing and keeping track of leaves, there’s a cost impact.”

With less than 30 days to go before the law takes effect, Business First has compiled a list of questions about Paid Family Leave and what it means for employees and the employers who must comply.

Let’s start with the basics. What is this concept of paid family leave, anyway?

Paid family leave provides partial wage replacement and full job protection for employees who take leaves of absence from work to care for close relatives. Unlike FMLA, workers cannot take paid family leave for their own health issues.

At the moment, California, New Jersey and Rhode Island are the only states that offer Paid Family Leave.

Under what circumstances could employees apply for Paid Family Leave?

There are three categories:

  • To bond with a child during the first 12 months after birth or placement. That includes cases of adoption or foster care.
  • To care for a close relative with a serious health condition. A close relative includes a child, spouse, domestic partner, parent, grandparent or grandchild.
  • To assist family members who are deployed or called for active duty.

Matt Miller is chair of labor and employment law at Rupp Baase Pfalzgraf Cunningham LLC in Buffalo. He’s been answering client questions about paid family law for the past several months.

“(Paid Family Leave) provides people with some economic security for these particular circumstances,” Miller said. “One thing to remember with Paid Family Leave is that it’s not for one’s own condition. It’s for someone else’s condition.”

Are all employees in New York state eligible for Paid Family Leave benefits?

No. Public-sector employees are not eligible unless their employers opt into the program. Farm laborers are also ineligible. But virtually all private-sector employees can take leave. Full-time employees – those who work 20 or more hours per week – are eligible after working for 26 consecutive weeks. Part-time employees – those who work less than 20 hours per week – are eligible after working at least 175 days in a 52-week period.

Let’s say I want to take a paid family leave in 2018 and I make $1,000 a week. How much will I receive in benefits?

Fifty percent of $1,000 – so $500 per week for every week of your paid leave.

And what if I make $2,000 a week?

You won’t receive $1,000 per week. Instead, you’ll get $652.96 per week. That’s because benefits are capped. The limit is based on the state’s average weekly wage in 2016, which was $1,305.92.

“If your average weekly wage is lower than the statewide average, then you’ll get 50 percent of what’s yours,” said James Grasso, partner at Phillips Lytle LP law firm in Buffalo. “If it’s above that state average, then it will be capped.”

The New York Department of Labor determines the average every year.

All benefits, by the way, are taxable.

So how do I file a leave request?

The first thing to know is that insurance companies will receive and process claims – not employers. If possible, workers should give their employers at least 30 days’ notice of a pending leave. Once notice is given, employers must fill out their portion of the leave request form that’s available through the New York state Worker’s Compensation Board. The form must be completed and returned to the employee within three days, and then the employee must complete the paperwork and send it to the insurance carrier. The carrier must approve or deny the request within 18 days of receipt.

Sounds easy enough. Let’s talk about funding. Who’s paying for this?

Ding, ding, ding. That’s what everybody wants to know. Paid Family Leave is set up as an employee-funded program. Right now, the contribution is set at 0.126 percent of an employee’s weekly wage and that deduction is automatically taken out of paychecks. The annual cap per worker is $85.56.

Some companies have been taking deductions since July 1. Every employer must start by Jan. 1. Employers will then use those deductions to pay premiums to their insurance carriers.

What about seasonal or temp workers? Do they have to pay into the system?

Employers are obligated provide waivers to those who are never expected to be eligible because they work too few hours or don’t work consecutive weeks. If the employee does not sign the waiver then the employer still must take deductions.

Got it. How about insurance? What do employers need to do on that front?

Very little, according to Brian Murphy, a partner at Lawley who specializes in employee benefits.

“It’s really pretty simple,” Murphy said. “If you have New York state disability insurance, there will be a rider on that plan that will start Jan. 1 that will cover Paid Family Leave. In most cases, it’s an automatic rider that anyone with disability insurance will receive.”

What happens if there’s not enough collected in premiums to cover all of the state’s Paid Family Leave claims?

Lots of employers worry about that. Some speculate that the contribution rate will rise. Others wonder if employers will have to pay. For now, it’s a wait-and-see approach.

“There’s a fear that ultimately the cost of all of this is going to have to be born in part by employers if there are more claim dollars paid out that premium dollars taken in,” Lawrence said.

I hear there’s a twist in 2018 whereby someone who welcomed a new child in 2017 – and already took FMLA leave to care for that child – could take eight weeks of Paid Family Leave next year for bonding purposes, as long as it’s taken within 12 months of the birth or placement of that child. Is that true?

Yes. If an employee had a baby in July 2017, that same employee would be eligible to take eight weeks as long as it’s within the one-year timeframe.

“There are going to be some employers who are surprised by that if they’ve got an employee with a 10-month-old child and that employee has already taken 12 weeks and now they’re going to take another eight weeks,” Miller said. “Some of my clients are suspecting that will happen, so they’re already starting to identify employees where that’s a possibility.”

Sounds like employers have a lot to think about. What should they have in place before this law takes effect?

First, make sure you have coverage in place, through a rider or standalone policy, Grasso said. Then make sure you post the required notices from the Worker’s Compensation Board, he said.

Employers should also add language to their employee handbooks that explains Paid Family Leave and addresses how Paid Family Leave will be integrated with the company’s existing leave policies. According to Miller, employers should notify eligible employees that their time off is designated as leave under both FMLA and paid family leave and provide those employees with FMLA notice and certification. If an employer doesn’t provide notice, Paid Family Leave does not have to run concurrently with FMLA leave – which means that some employees would be able to take as many as 20 weeks of leave in 2018.

Grasso emphasized that all private-sector employers – even those with just one employee – must provide Paid Family Leave.

“There is no size limitation on this, so if you have one employee who qualifies, that person is eligible and there is no hardship exemption,” Grasso said.

I still have questions. Where can I get more information?

New York state has set up a Paid Family Leave helpline: 844-337-6303. It’s available between 8:30 a.m. and 4:30 a.m. Monday through Friday.

The state also has a Paid Family Leave websiteopens in a new window.