The New York Paid Family Leave (NYPFL) law that went into effect on January 1, 2018 is widely viewed as the most comprehensive paid family leave program in the country. It’s likely to be used as a model for other jurisdictions in the near future. At this point, only five other states, plus DC, have a state-wide paid family leave mandate, but many more are expected soon. There is also pending federal legislation currently in congress, but its future is uncertain.
If you have even one employee working in New York, you’re required to comply with the law starting on January 1. Staffing companies who don’t currently have an employee working in New York should follow NYPFL developments closely because other states are likely to follow suit. Plus, if a new or existing client has a need for staff in New York, you’ll want to be ready to quickly comply.
The paid leave benefits are fully funded by employees through payroll deductions. All private-sector employers with one or more employees working in New York must comply. Full time employees are eligible to use their benefits after 26 consecutive weeks of employment, though payroll deductions should start in the very first pay. Part Time employees are eligible on the 175th working day in a 52-week period.
The NYPFL law guarantees eligible employees paid time off for qualified family situations, health insurance continuation while on leave, and job protection upon their return. The amount of the benefit will be phased in over four years, starting with 8 weeks paid leave in 2018 and increasing incrementally every year to 12 weeks in 2021.
Employees cannot use NYPFL benefits for their own disability, illness, or military event but they can use it to:
- Bond with a newborn, adopted or foster child during the first 12 months
- Care for a seriously ill family member, or
- Prepare for a family member’s impending military deployment
As with many employment regulations, the new NYPFL creates further complications for human capital agencies deploying a temporary workforce.
If an employee has gaps between their assignments with a staffing company, the absence periods count towards consecutive weeks’ employment, as long as their employment is not completely terminated. For instance, if one full-time assignment ends and there is a 2 week break before the next assignment starts, those 2 weeks must be counted towards the 26 consecutive weeks of employment for eligibility purposes, even if the employee is not paid during the 2 week break.
Luckily the NYPFL law does include a provision that will be helpful to staffing companies with short-term assignments.
If an employee starts a temporary assignment that is intended be less than 26 weeks (full time) or 175 days (part time), they can opt for an eligibility waiver. If the employee asks for a waiver, employers do not need to initiate payroll deductions for NYPFL. However, if the employee’s term is extended beyond 26 weeks/ 175 days, they will become eligible based on their original start date. The employer must comply with the NYPFL within 8 weeks of the assignment term extension.
Warning: The eligibility waiver is an opt-out choice by the employee, not the employer. If the employee is expected to work fewer than 26 weeks but still wants deductions for NYPFL, the employer must comply. To avoid claims of noncompliance, be sure to ask employees on short-term assignments if they want an eligibility waiver.
As a general best practice, human capital companies should review existing employees’ assignment terms at least every 6 months to insure that all NYPFL eligible employees have active payroll deductions.
Implications for Human Capital Companies
The NYPFL creates a steep increase in workload for companies with employees in New York. Some of the many considerations are:
- Payroll systems—Are they set up to deduct for NYPFL? Many companies have already started payroll deductions so that employees have funds in their “bank” by the time they officially become eligible on January 1
- Administration—the vast majority of companies are using their NY State Disability carrier to administer the NYPFL
- Posting– There are required postings required for the new law- for both you and your client locations
- Managing communications—You’ll need to fully communicate the new deductions to any staff working in New York and be sure they understand their eligibility waiver rights if their term is expected to be fewer than 26 weeks. You’ll also need to explain your plan for compliance with your client- they may not be familiar with the provision for eligibility waivers, so be prepared to explain how you’ll stay in compliance.
- Employee handbooks—You’ll need to update policies to explain the new benefit, eligibility requirements and when and how employees can use the benefit.
- No payouts—Be sure your handbook explains that if employees do not use their Paid Family Leave benefit, they will not be paid back their deductions upon separation. This is an insurance, not an earned benefit. Make sure your handbook clearly states that no payout will be issued.
Affiliate staffing companies who partner with People 2.0 have all back-office functions taken care of on their behalf. Our affiliates with employees in New York can be assured that all payroll deductions, administration, communication and compliance concerns are completely taken care of by People 2.0. To find out how People 2.0 can help relive back-office administrative burdens, contact us.