The New York Department of Financial Services announced that the 2019 paid family leave (PFL) payroll deduction rate will increase to 0.153% of an employee's gross wages each pay period, up from 0.126% for 2018. The maximum annual contribution will be $107.97. Employees earning less than the current statewide average weekly wage of $1,357.11 will contribute less than the annual cap of $107.97, consistent with their actual wages.

Calendar year 2019 is the second year of the four-year phase-in period of New York's PFL program. Next year, eligible employees will be able to take up to 10 weeks of PFL, with each week's benefit equal to 55% of their average weekly wage, up to a maximum weekly benefit amount of $746.41 (55% of the current statewide average weekly wage). For more on New York's PFL program in 2019, go here.

History

As previously reported, New York Governor Andrew M. Cuomo signed into law in 2016 a measure that, effective January 1, 2018, established a system of insurance for PFL with the premium paid by employees through payroll deduction. (EY Payroll Newsflash, Vol. 17, 053, 4-5-2016; EY Payroll Newsflash Vol. 18, #100, 6-7-2017.)

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 with a regular schedule of 20 or more hours per week are eligible for PFL after working full-time for their employer for 26 weeks. Employees with a regular schedule of less than 20 hours per week are eligible after 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:

Coverage for PFL 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: information for employees.)

Ernst & Young LLP insights

In addition to those states that have already adopted paid family and medical leave insurance programs, Massachusetts recently enacted legislation that will establish a PFL program, funded by employees, employers and self-employed individuals, as of July 1, 2019, with benefits starting January 1, 2021. See EY Payroll Newsflash Vol. 19, #118 (7-12-2018) for more details.

The Trump Administration continues to propose a national PFL insurance system that would provide up to six weeks of PFL for new mothers, fathers and adoptive parents. The insurance system would be administered by the states and funded through unemployment insurance reforms. See EY Payroll Newsflash Vol. 19, #051 (2-21-2018) for more details.

Employers and third-party payers should be aware that the tax and reporting of paid family and medical leave benefits differs from that of disability pay. For more information on see our special report.

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EY Payroll News Flash