2018 Compliance Update: Paid Family Leave

2018 Compliance Update: Paid Family Leave

At the beginning of 2018, the state of New York joined California, New Jersey, and Rhode Island in becoming the 4th state to offer paid family leave benefits to all its employees. All four state programs are funded through employee-paid payroll taxes and administered through their respective disability programs, operating similarly to disability insurance in that employees receive partial pay for the time off work. Employees can use paid family leave to care for a sick family member or bond with a new child, but must use disability for their own health condition.

New York’s Paid Family Leave Law

The newest paid family leave law provides employees with:

  • 8 weeks of paid time off in 2018, increasing to 12 weeks by 2021
  • Job protection while out on paid family leave
  • Health insurance continuation through the duration of leave

Employers pay for the leave by deducting 0.126% of pay from an employee’s wages up to a cap of $85.56 per year. Employers use the month withheld to purchase insurance to pay for the leave. Beyond this, employers are responsible for tracking the leave, filling out their portion of employee’s leave request forms, and informing employees of their eligibility for the leave, as well as opt-out waivers for certain groups. There is no direct funding required from employers.

A Growing Trend?

The United States is one of the few countries in the world that does not offer at least some paid time off to new parents, with some arguing that it is time for a change. The White House included paid family leave as part of its budget proposal this year. This proposal would fund paid family leave through state unemployment insurance programs, leaving much of the administration of the program to the discretion of the states. There is an alternative proposal that would allow new parents to tap social security early for paid family leave benefits. It is a safe bet that paid leave is a trend we will see growing in the coming years and one Paycor will continue to monitor.

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