Overview

While the U.S. is the only industrialized nation that does not require paid family and medical leave, New York’s incoming Paid Family Leave Program (“PFL”) will guarantee paid leave for nearly all private sector employees, joining programs in California, New Jersey, and Rhode Island.

Covered employers should consider the following three points now in order to ensure a smooth transition next January:

It Takes One Employee to Qualify in Half of the Time

Except for sole proprietorships, the PFL covers all businesses that employ one or more people.  By contrast, the Family and Medical Leave Act (“FMLA”) only applies to businesses that employ 50 people within a 75-mile radius. Since nearly 90% of U.S. businesses employ fewer than 20 people, employers that never had to worry about FMLA requirements must now play double catch-up to comply with a far stricter companion law.

Full-time employees will also become PFL-eligible after 26 consecutive weeks, with part-timers qualifying after 175 days, regardless of the number of hours worked.  This is less than half of the FMLA waiting period, which requires 12 months of employment and 1,250 hours.

Employers that will be covered by family and medical leave laws for the first time should conduct an audit of current employees and create a tracking system to know when employees become PFL-eligible. Employers already covered under the FMLA can include the PFL within their current tracking methods.

Employees Can Qualify for Either (or Both) the PFL and FMLA

There is considerable overlap between the PFL and FMLA: Both statutes allow employees leave for the birth and care of a biological child (or newly placed adopted or foster child) and to care for a spouse, child, or parent with a serious health condition.  The PFL also adopts the FMLA’s “qualifying exigency” standard, which provides leave when a need, such as last-minute child care arrangements, is created when an immediate family member is on (or called to) active military duty.

Interestingly, the PFL separately allows leave for bonding with newborn (and newly placed) biological, adopted, and foster children; caring for parent-in-laws, grandparents, grandchildren, and domestic partners. However, unlike the FMLA, the PFL does not cover leave to care for one’s own serious health condition.

The partial overlap can make the PFL and FMLA interact in interesting ways, and employers covered by both statutes need to know the events that trigger both statutes, and those which trigger one statute, but not the other.  PFL and FMLA leave can run concurrently when both statutes are triggered by the same qualifying event.  However, failing to inform employees of this fact may entitle them to “double-dip” and receive a full 12 weeks of FMLA leave after their PFL leave and benefits expire.

Employees Fund the Coffers, but Employers Make the Deductions

Employers will not supply PFL funds from their own pockets, but they must properly deduct and forward 0.126% of their employees’ weekly wages to fund the program.  These deductions are further capped at 0.126% of the State Average Weekly Wage, or around $85 annually.

On July 1st, or six months before PFL contributions become mandatory, employers have the option to start making employee paycheck deductions to fund the incoming program.  Starting deductions early can help employers spread the cost of funding future PFL insurance premiums, which will have to be paid at the same time as Disability Benefit Law (“DBL”) premiums.  Since DBL contracts are usually paid in one annual lump sum, delaying deductions until January could create a cash flow crunch when insurance premium payments become due, especially since the new deductions could create indirect administrative expenses.

If you haven’t discussed the PFL with your employees and are concerned that an unannounced deduction (however small) may depress morale and create distrust, communicate the message as soon as possible. Be upfront about the fact that the deduction is optional until January 1st, but explain that starting deductions now will ensure stability in cash flow (and therefore wages and benefits) later.

Conclusion

Regardless of where they do business, employers should remain alert, as New York’s PFL may inspire other state and local governments to require paid family and medical leave benefits.  Washington, D.C.’s paid family and medical leave mandate will take effect July 1, 2020. Since January, San Francisco has built on California’s paid leave laws by guaranteeing 100% coverage for qualifying parental leave. Other states are actively exploring the means and ways of implementing paid family and medical leave programs.  This includes Pennsylvania, which was awarded a $250,000 grant from the Department of Labor to study the issue last August.

Whatever the paid leave climate is like in your business’s geographic footprint, now is a great time to reach out to preferred legal counsel and ensure your business is in compliance with all current and impending family and medical leave laws.


Alexander V. Batoff focuses his practice on counseling clients on federal and state employment laws and regulations and defending them in litigation.  He may be reached at 215-665-3048 or alexander.batoff@obermayer.com.

 

 

Michael S. Pepperman is a partner in Obermayer’s Labor Relations and Employment Law Department practicing in the area of employment and labor litigation. He can be reached at 215.665.3032 or michael.pepperman@obermayer.com