October 8, 2020
New York announces 2021 paid family and medical leave insurance deduction and benefit limits; accrued paid sick leave law is enacted
The New York Department of Financial Services announced that the 2021 paid family leave (PFL) payroll deduction rate will increase to 0.511% of an employee's gross wages each pay period, up from 0.270% for 2020. The maximum 2021 annual contribution will be $385.34, up from $196.72 for 2020. Employees earning less than the current statewide average weekly wage of $1,450.17 will contribute less than the annual cap of $385.34, consistent with their actual wages.
The Department explains the steep increase in the 2021 payroll deduction rate is due to the PFL benefits increasing to 12 weeks of leave at 67% of pay, the high utilization of the benefit, and the rise in the cost of coverage.
Employers should consider providing a notice to employees regarding the payroll deduction amount for 2021. A model notice is available here. An updated 2021 workplace poster is also available.
Calendar year 2021 is the fourth and final year of the four-year phase-in period of New York's PFL program. In 2021, eligible employees will be able to take up to 12 weeks of PFL (up from 10 weeks), with each week's benefit equal to 67% of their average weekly wage, up to a maximum weekly benefit amount of $971.61 (67% of the current statewide average weekly wage).
New York accrued paid sick leave law enacted
New York's state fiscal year 2021 budget legislation (SB 7506B, Part J) establishes a statewide paid sick leave law that requires employers to: (1) allow employees to begin accruing sick leave effective September 30, 2020, and (2) begin providing accrued sick leave to employees effective January 1, 2021.
According to Governor Cuomo's news release, employers with 100 or more employees will be required to provide at least seven days of job-protected paid sick leave each year (businesses with 5 to 99 employees will be required to provide at least five days of paid leave).
Employers with four or fewer employees will be required to provide five days of job-protected unpaid sick leave each year.
The Governor stated that the law provides for "the strongest paid sick leave program in the nation" expanding on the paid sick leave legislation (SB 8091) enacted in March 2020 that requires paid sick leave for individuals affected by COVID-19 (go here for more information). SB 7506B creates a permanent statewide paid sick leave law that will be available for all illnesses.
History of PFL law
In 2016, Governor Cuomo signed into law a measure that, effective January 1, 2018, established a system of insurance for PFL with the premium paid by employees through payroll deduction.
The New York Paid Family Leave Law establishes an insurance system that, like New York's 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 PFL 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 fact sheet.)
The New York Paid Family Leave Law was phased in over a four-year period as follows:
In addition to the above, a law signed by Governor Cuomo in April 2020 guarantees workers job protection and financial compensation in the event they, or their minor dependent child, are under an order of quarantine or isolation due to COVID-19. In these situations, PFL may be available for use. See the New York COVID-19 quarantine leave page for full details.
Coverage for PFL is included under the disability policy that all New York employers must carry. New York disability insurance can be obtained from the state (see NYSIF) or through a private insurance provider, or the employer can be self-insured. (New York Paid Family Leave: information for employees.)
Ernst & Young LLP insights
A growing list of states (California, Connecticut, District of Columbia, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington state) have established paid family and medical leave insurance programs. The states vary in whether employees solely fund the cost (e.g., New York), employers and employees share in the cost (e.g., Washington), or employers shoulder 100% of the cost (e.g., District of Columbia).
EY Payroll News Flash