As previously reported, New York Governor Andrew M. Cuomo signed into law in 2016 a measure that effective January 1, 2018 establishes a system of insurance for paid family leave (PFL) with the premium paid by employees through payroll deduction. (See Tax Alert 2016-622.)

Further details concerning the New York Paid Family Leave law are available in final regulations recently issued by the New York Workers' Compensation Board.

Family leave overview

The New York Paid Family Leave Law establishes an insurance system that, similar to New York disability insurance, provides qualified employees some replacement for wages they lose for time off of work to bond with a child, care for close relative with a serious health condition or relieve family pressures when someone is called to active military service. In addition to wage replacement, employees on paid family leave are guaranteed to be able to return to their jobs at the end of the family leave period and to continue their health insurance coverage provided they pay their portion of the premium cost while on leave. New York employees are eligible for paid family leave after working full-time for their employer for 26 weeks or part-time for 175 days. (New York State Paid Family Leave.)

The New York Paid Family Leave law is phased in over a four-year period as follows.

New York paid family leave insurance

Coverage for paid family leave is included under the disability policy all New York employers must carry. New York disability insurance can be obtained from the state (see NYSIF,) through a private insurance provider or the employer can be self-insured. (New York Paid Family Leave: How it Works.)

The PFL premium is paid by employees through payroll deduction with the maximum employee contribution established each year by the New York State Department of Financial Services. For the 2018 coverage period, the PFL will be 0.126% of an employee's weekly wage, up to a maximum of $1.63 per week (0.126% of the statewide average weekly wage of $1,296). (New York State Department of Financial Services, June 1, 2017.)

Ernst & Young LLP insights

New York joins California, Rhode Island, and New Jersey as states that currently require paid family leave.

Effective July 1, 2020, District of Columbia law requires up to eight weeks of paid parental leave when a new child joins a household through birth, adoption, foster care, or assumed legal guardianship, six weeks of paid sick leave for the care of sick relatives and two weeks of self-care to individuals working in the District at least 50% of their time for a covered employer.

President Trump's fiscal year 2018 budget proposal calls for up to six weeks of paid family leave with an average benefit of $300 per week for new mothers, fathers and adoptive parents administered by the state and funded through unemployment insurance reforms. Some of these reforms would expand on current program integrity policies such as further curtailment of improper payments and speedier job placement of the unemployed. (See ax Alert 2017-859; A New Foundation for American Greatness, Fiscal Year 2018, page 20.)

———————————————

———————————————
ATTACHMENT

EY Payroll News Flash