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New York State Paid Family Leave Program: What Small Businesses Need to Know

Starting in 2018, New York will establish a paid family leave insurance program that will enable workers 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. The New York State Paid Family Leave Program will be entirely funded by modest employee contributions, and employees who take leave will be guaranteed job protection.

This document is intended to answer any questions small employers in New York might have about the program and its effects on small business owners and their employees.

What is the New York State Paid Family Leave Program?

  • The Paid Family Leave Program (PFL) is an insurance program administered by the state that will enable workers in New York to take up to 12 weeks of paid time off 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.
  • Employees will be eligible for paid leave benefits after working full-time for their employer for 26 weeks, or part-time for 175 days.

How will the new Paid Family Leave Program work?

  • The program is being 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 PFL law; all employers covered by PFL are already covered by the TDI program.
  • Notice requirements for employees to their employers with respect to leave under PFL are the same as current requirements under the TDI program. An employer’s ability to require proof for each purpose under PFL is specified in the law.
  • Employees would receive up to eight weeks of paid leave in the first year of the program, and their weekly benefit while on leave would amount to 50% of their average weekly wage, up to a maximum benefit. By the time the program is fully implemented in 2021, 12 weeks of paid leave will be offered at 67% of the employee’s average weekly wages.

Which employers will be covered under the law?

  • As with the current Temporary Disability Insurance law, New York’s Paid Family Leave Program will apply to most employers, regardless of size. If you work as an independent contractor, you will not have access to PFL benefits unless you purchase coverage for yourself.

What will employers’ obligations be under the program?

  • Under PFL, employees who take leave will 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 paid leave—partial wage replacement during leave is funded entirely by employee payroll deductions. Employers must deduct PFL 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 will be able to offer the benefit through the PFL 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 cost-savings.

How will the Paid Family Leave Program be funded?

  • The program will be funded entirely by small contributions from employees. In the first year, employees will be offered paid leave benefits capped at 50% of $1,296, the statewide average weekly wage. The rate of payroll deduction for PFL will be 0.126% of an employee’s weekly wage, and will be capped at $1.63 per week.

What effects will PFL have on businesses?

  • Based on the experience of businesses in California and other states that have implemented paid leave programs, PFL has proven it does not have a significant effect on businesses. The program is entirely funded by employees; employers do not have to pay employees’ salaries while they are on leave.
  • A recent poll conducted for Small Business Majority found a majority of small businesses already have some type of policy—formal or informal—in place when it comes to family medical leave—time an employee would take to care for a family member with a serious illness or caregiving need. More than 7 in 10 (72%) small business owners have either a formal written policy, a consistent but not written policy or informal policy provided on a case-by-case basis to provide family medical leave. Of the small business owners who do offer family medical leave, 61% offer full or partial pay and 22% offer pay depending on the employee.

What effects will PFL 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.

Do other states have similar programs?

  • Yes. California , New Jersey and Rhode Island have paid family and medical leave insurance programs. California’s Paid Family Leave program has been in effect for more than 10 years. New Jersey’s Family Leave Insurance program has been in effect for seven years, and Rhode Island’s Temporary Caregiver Insurance program has been in effect for three years. All programs have been implemented successfully. Evidence suggests that neither California, nor New Jersey nor Rhode Island’s program has imposed a burden on businesses, and all 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.

Where can I get more information about New York’s Paid Family Leave Program?