NY Paid Family Leave Insurance Bill
New York’s proposed Paid Family Leave Insurance (PFLI) legislation would create an insurance program that would enable workers in New York state to take up to 12 weeks of paid time away from work in order to care for a loved one or bond with a new child. PFLI would be entirely funded by modest employee contributions, and employees who take leave would be guaranteed job protection.
This document is intended to answer any questions small employers in New York might have about the proposed program and its effects on small business owners and their workers.
What is Paid Family Leave Insurance?
- Paid Family Leave Insurance (PFLI) is an insurance program administered by the state that would enable workers in New York to take up to 12 weeks of paid time away from work in order to care for a seriously ill family member, bond with a new child, or to address certain issues related to family members’ military service. A family member constitutes children, grandchildren, spouses, domestic partners, parents, parents of spouses or partners, siblings, or grandparents. A parent can take leave to bond with a newborn, newly adopted child, or foster child.
Which employers would be covered under the law?
- As with the current Temporary Disability Insurance law, the proposed Paid Family Leave Insurance law would apply to most employers, regardless of size.
What would employers’ obligations be under the PFLI program?
- Under PFLI, employees who take leave would be guaranteed job protection. Employers must hold the employee’s position until he or she returns to work, or must offer a comparable position with equivalent seniority, status, employment benefits, pay, and other terms and conditions.
- Employers are not responsible for paying their employees when they are on PFLI leave—partial wage replacement during leave is funded entirely by employee payroll deductions. Employers must deduct PFLI contributions from employees’ wages in the same way they now do for TDI. Employers must continue to provide health insurance coverage to employees while they are on leave.
Will employers have to pay employees’ salaries while they’re on leave?
- No. The program is entirely funded by employees; employers do not have to pay employees’ salaries while they are on leave. Many small businesses that previously could not afford to offer paid leave to their employees would be able to offer the benefit through the PFLI program. This helps small businesses compete for the best employees, and gives employers peace of mind that they are doing what’s best for their workers. Employers that already offer paid family leave can expect to see costsavings.
How would the Paid Family Leave Insurance program be funded?
- PFLI would be funded entirely by small contributions from employees. Payroll deductions would be capped at 45 cents a week in the first year. In subsequent years, New York’s Superintendent of Financial Services will determine the amount of employee contributions based on the cost per worker of providing PFLI through the state insurance fund.
How would the new Paid Family Medical Leave program work?
- The system is built on the infrastructure of New York’s Temporary Disability Insurance (TDI) program, which has been in place since 1950. Employees use TDI for off-the-job disability or pregnancy. Using the TDI system means administration would be relatively straightforward and would not require major start-up costs. It also means that employers will have no additional administrative requirements imposed under the PFLI law; all employers covered by PFLI are already covered by the TDI program.
- Notice requirements for employees to their employers with respect to leave under PFLI are the same as current requirements under the TDI program. An employer’s ability to require proof for each purpose under PFLI are specified in the proposed law.
- Employees’ weekly benefit while on leave would amount to two-thirds of their average weekly wage, up to a maximum benefit. This maximum would be raised in steps over four years until it equals 50% of the statewide average weekly wage.
What changes to New York state’s Temporary Disability Insurance (TDI) are included in the bill? Why?
- The proposed PFLI bill also includes a raise in the TDI benefit level. Although PFLI would be entirely employee funded, the cost of TDI is, and always has been, shared between employers and employees. In New York, TDI has been frozen for the past 25 years; it is currently capped at $170/week. The bill addresses a long overdue need to raise TDI insurance to more closely approximate today’s cost of living and the benefit levels of other states. It does so gradually, increasing the maximum benefit level for TDI and PFLI over four years until it equals 50% of the statewide average weekly wage (for example, the maximum weekly benefit in 2012 would have been $603 under this formula).
What effects will PFLI have on businesses?
- A recent poll conducted for Small Business Majority found that the vast majority (83%) of New York small business owners favor expanding the state’s disability insurance program to provide paid leave to care for a new baby or seriously ill family member, if the insurance premiums are paid through modest payroll contributions by employees (less than $1 a week per employee).
- In the poll, a majority (59%) of New York small business owners also favored a family leave insurance program funded by both employer and employees contributions. Although the survey did not ask specifically about TDI, employers’ support for a program requiring them to contribute funds suggests that most would not object to a moderate increase in TDI contributions as proposed in the bill.
- Based on the experience of other states with similar programs, PFLI is unlikely to have a significant effect on businesses in New York.
Do other states have similar programs?
- Yes. California and New Jersey have similar family leave insurance programs. In addition, Rhode Island created a family leave insurance program that took effect in January 2014. California’s Paid Family Leave program has been in effect for 10 years. New Jersey’s Family Leave Insurance program has been in effect for five years. Both programs have been implemented successfully. Evidence suggests that neither California nor New Jersey’s program has imposed a burden on businesses, and both have had significant benefits for employees. Moreover, many employers find that the program is actually good for their businesses, boosting employee loyalty and lowering turnover.
What effects would PFLI have on employees?
- Employees who need to take leave to care for a loved one or welcome a new child, would be able to do so without having to worry about whether they will be able to pay their bills or keep their jobs. There are numerous health benefits for mothers and children when longer maternity leaves are available. When fathers are able to take longer leaves, children experience improved developmental outcomes. Sick children recover more quickly when their parents are able to stay with them during treatment. With the population of older Americans growing quickly, more and more workers would benefit from being able to care for a sick parent or other relative without fear of job or wage loss. And military families will be able to address the needs that arise when their loved ones are called to duty without risking their economic security.