In 2016, New York State Governor Cuomo signed a law, which once fully implemented, will provide New York Workers with the nation’s longest and most comprehensive Paid Family Leave benefits (PFL).

Insurance coverage for Paid Family Leave must be available to employees beginning January 1, 2018, and generally will be included under an employer’s existing disability benefits policy.

As of January 1, 2018, most employees will be eligible to be paid for leave for maternity/paternity, caring for a sick relative, or for active duty deployment – up to 8 weeks in 2018, 10 weeks in 2019 and 2020, and 12 weeks thereafter. Employees will be eligible for 50% of their average weekly salary, capped at 50% of NYS’s average weekly pay (which means the cap is currently $652.96).

Paid family leave will be funded through employee payroll contributions. Employers can begin withholding as of July 2017, and this is meant to offset the increase in the disability benefit policy premium, making this program funded by employees.

Penalties for Non-Compliance

Employers must ensure that their employees are aware of the Paid Family Leave program and that their policies comply with the law. Employers that fail to provide paid family leave coverage by purchasing insurance or self-insuring will be liable for payment of paid family leave benefits, and will waive the right to collect employee contributions for that period. In addition, employers that fail to provide paid family leave coverage may be subject to a fine of 0.5% of their weekly payroll for the period when there was no coverage, plus a fine of up to $500. Disputes relating to a claim for paid family leave will be subject to arbitration pursuant to the New York Workers’ Compensation Law.

How MBAF Can Help

It is important that New York State based employers revisit their family leave policy now, as their staff will be eligible to receive up to $652.96 per week from their disability policy beginning next year. We can help to make sure you are meeting your obligations under the law, with minimal impact to your bottom line, through withholding advice and/or modification of your benefits plan, if necessary.

Understanding and taking advantage of all available “tax breaks” can be complex. If you would like to benefit from our expertise in these areas, or if you have further questions on this Advisory, do not hesitate to contact our Tax and Accounting Specialists, or call us at 1-800-239-1474.