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09/11/2017

New York Paid Family Leave Law Updates (article)


As follow-up to last month’s Benefit Beat article discussion of the New York Paid Family leave (PFL) law, this article discusses some recently released guidance relating to reporting of employee contributions, as well as some additional compliance tips for employers.

 

Reporting Contributions on Form W-2. The New York Department of Taxation and Finance released guidance relating to the tax consequences of this law.  Under the PFL law, an employee can be required to pay the full cost of the benefit.  The tax guidance indicates that the premium is to be paid on an after-tax basis and reported on the employee’s Form W-2, using Box 14 (state disability insurance taxes withheld).  PFL benefits are taxable non-wage income that must be included in federal gross income.  Generally, withholding is not automatic, though, the individual beneficiary can request withholding.  The benefits paid are reported by the payer (generally, the insurer) on a Form 1099-MISC.

 

Next Steps for Employers.  In light of the final regulations adopted by New York Workers' Compensation Board and Department of Financial Services, following are some steps for employers to consider in an effort to ensure compliance with the law when it takes effect on January 1, 2018.

  1. Contact your state temporary disability insurer to begin the process of obtaining a PFL policy.
  2. Determine, in conjunction with your insurer, what, if any, payroll deduction will be collected from your employees.
  3. Develop an internal PFL policy. Points to include:
  • Eligibility.  Generally, employees who regularly work a minimum of 20 hours per week are eligible for PFL benefits after 26 consecutive weeks of employment; those working fewer than 20 hours a week are eligible after 175 work days.
  • Funding sources addressing whether contributions will be derived solely by the  employee contributions through a payroll deduction process, or, whether the employer fully funds the benefit, or perhaps a combination of both employee/employer contributions;
  • A description of how leave can be used.  Under the PFL law, instances giving rise for the need for leave include baby bonding, to provide physical or psychological care to a family member with a serious health condition; or to relieve family pressures when the employee’s spouse, domestic partner, child, or parent is on active military duty.  Leave taken to attend to the employee’s own serious health condition would be handled through the state temporary disability program. 
  • Definition of family member. Keep in mind that the law defines family member as a biological, adopted or foster child, a parent, grandparent, grandchild, spouse, or domestic partner.
  • Amount of leave available.  The law requires that PFL benefits must be available to an eligible employee for the first full day when family leave is required and thereafter during the continuance of the need for family leave, subject to limitations below:

 

Effective Date

Weekly amount of PFL per any 52-week period

 

Amount of Benefit

 

Benefit Cap

January 1, 2018

8 weeks

50% of employee’s average weekly wage

50% of the state average weekly wage

January 1, 2019

10 weeks

55% of employee’s average weekly wage

55% of the state average weekly wage

January 1, 2020

10 weeks

60% of employee’s average weekly wage

60% of the state average weekly wage

January 1, 2021

12 weeks

67% of employee’s average weekly wage

67% of the state average weekly wage

 

  • Coordination with other types of leave, including but not limited to the New York City Earned Sick leave law, the federal Family and Medical Leave law (FMLA), and any existing internal leave policies and applicable federal, state and local leave laws;
  • A description of the employee notification obligations addressing both foreseen and unforeseen instances that would give rise for the need for leave and the process for requesting leave. Include the insurer contact information, where applicable.  Under the PFL law, employees making a claim for PFL leave are required to complete a designated PFL request form provided by the insurer, or by an employer who is self-funding the benefit.  Generally, the employer would be required to complete its portion of the form and return it to the employee within three business days.  In addition, consider including an explanation of the process of how employees can provide proper substantiation for the need for leave, for example, medical certification from a healthcare provider, active duty orders or other military documentation, a birth certificate or other documentation of the need for family leave
  • A description of continuation of benefits during the leave including how and when health premium or other benefit premiums must be paid, as well as address the manner and methodology of benefit accruals during the leave; and
  • A description of reinstatement rights. Under the PFL law, an individual is entitled to be returned to his/her same or equivalent position once the individual returns from leave.

And finally, be aware of the workplace posting requirement.  Check with the insurer to determine whether a model workplace posting is available.

 

Additional information and any available updates about the New York PFL program can accessed on the state’s dedicated website.

 

The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.
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