Recently enacted New Jersey legislation (A 3975) makes significant changes to the state's family leave (FLI) and temporary disability insurance (TDI) programs. One change will, effective January 1, 2020, increase the FLI/TDI taxable wage base by almost four times the current level to fund the changes to state paid leave benefits. As a result of this law change, the FLI/TDI taxable wage base will no longer be coupled with the state unemployment insurance (SUI) taxable wage base.

The benefit increases and higher administrative costs under the law will be charged exclusively to workers through increased withholding. (See the bill's fiscal note and the governor's press release for more details.)

FLI/TDI taxable wage base to be computed separately from SUI beginning in 2020

The bill increases the FLI/TDI payroll taxes and increases the taxable wage base to fund a benefit expansion (see below) and to cover additional program administration expenditures.

Effective January 1, 2020, the FLI/TDI taxable wage base will be computed separately from the SUI taxable wage base. The computation for the FLI/TDI taxable wage base will change from 28 times the state average weekly wage (SAWW) to 107 times the SAWW, increasing the taxable wage base significantly. It is estimated that the modification will increase the current FLI/TDI wage base from the current $34,400 for 2019 to an estimated $131,000 for 2020.

For example, using the SAWW in effect for the 2020 computation, $1,228.25 times 107, rounded up to the nearest 100, equals $131,500. (For 2019, $1,228.25 times the current 28, rounded up to the nearest 100, equaled $34,400.)

The 2020 employee withholding rates (for 2019, 0.08% for FLI and 0.17% for TDI) will be announced in late 2019.

Other changes affecting employers

Effective July 1, 2019, the threshold at which employers are required to grant job-protected unpaid family leave (FLA) is lowered from 50 or more employees to 30 or more employees. This causes the New Jersey FLA law to now differ from the federal Family and Medical Leave Act.

Effective July 1, 2020, private employers are no longer allowed to require employees to use their company paid time off before the payment of FLI benefits (though employees may elect to do so).

For any period that the employee receives paid leave (i.e., sick or vacation pay), the employee may not collect state benefits. The number of days an employee must give advance notice to their employer when requesting intermittent leave is reduced from 30 to 15 days. The advance-notice requirement for other leave requests remains at 30 days.

New employer penalties for violations of the FLI and TDI laws now apply. Specifically, employers that fail to provide certain notifications and disclosures as required (including the posting of a notice in the workplace and providing notice to new employees) will be fined up to $1,000 and in certain cases imprisoned for up to 90 days.

In addition, the law prohibits employer retaliation against an employee for taking or requesting TDI or FLI benefits, except that employers with fewer than 30 employees are not required to reinstate an employee after a period of FLI leave.

The civil fine for the first act of prohibited retaliation ranges from $1,000 to $2,000, with each subsequent violation resulting in a fine not to exceed $5,000.

The updated FLI poster is available here.

FLI and TDI benefit expansions

FLI/TDI benefit changes include the following:

• Effective July 1, 2019, the one-week waiting period for FLI benefits is eliminated.
• Effective July 1, 2020, the amount of weekly FLI and TDI benefits will increase from two-thirds to 85% of a claimant's average weekly wage, up to the maximum weekly benefit amount. The maximum weekly benefit amount will increase from 53% to 70% of the SAWW. Effective July 1, 2020, the maximum FLI benefit period doubles from 6 to 12 weeks during any one-year period and the maximum intermittent FLI leave increases from 42 to 56 days.
• The bill expands the types family members for whose care individuals may receive FLI benefits during periods of leave. FLI benefits are also extended to individuals who take time off from work to assist a family member who is a victim of violence.
• An employee with more than one employer will be allowed to take FLI under one employer while continuing to work at a second employer as long as the second job's hours don't increase.

Ernst & Young LLP insights

Employers should review their policies and withholding programs in preparation for these upcoming changes.

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