VP Compliance Health & Benefits

Coping with NY’s New Paid Family Leave Benefits

Addressing Your Implementation Questions

April 2018

Jill Bergman, CEBS, CPE-Compliant

Information provided in this presentation is based on our understanding of the New York Paid Family Leave Law and implementing regulations to date and is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance in respect of matters of law, tax and related regulation.

Presented to COPA: Human Resources Professionals Conference for

the Disability Provider Community

Agenda: Answering Your Questions

• About NY Paid Family Leave (“PFL”) Job protected

Maintain health insurance

No retaliation

• Eligibility

• Contributions/Premiums

• Benefits

• Managing/Coordinating Time-Off

• PFL Checklist

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Taking Paid Family Leave

• Family member’s serious health condition Child, parent, grandparent, grandchild, spouse, domestic partner

• Child NOT limited to minor child/needing help with self-care

• Child bonding 1st 12 months

Birth, adoption, foster care

• Qualifying FMLA military exigency Limited to child, spouse, parent

or domestic partner

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Maximum PFL Weekly/Annual Benefit 2018 (and 2019) NY State Average Weekly Wage (in effect January 1, 2018): $1,305.92

Maximum 2018 Benefit: Weekly: $652.96 [50% x $1,305.92]; Annual: $5,223.68 [$652.96 x 8 weeks]

NYS AWW for 2019 (announced March 2018): $1,357.11 Maximum Benefit: Weekly: $746.41 [55% x $1,357.11]; Annual: $7,464.10 [$746.41 x 10 weeks]

Date Family Leave

Occurs/Begins

Weekly Benefit as a

Percentage of Average Weekly Wages

(AWW)

Length of Benefit During Any

52-Consecutive Week Period

January 1, 2018* 50% 8 weeks

January 1, 2019 55% 10 weeks

January 1, 2020 60% 10 weeks

January 1, 2021 and later 67% 12 weeks

* Child bonding available for events in 2017

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• 2018 and 2019 weekly and annual benefit amounts

• Percentage increase from 2018 to 2019

• Contribution rate announced later in the year

• Superintendent has authority to delay scheduled increases

PFL Increases 2019 2018

NYS AWW

$1,357.11 (3.9%)

$1,305.92

Benefit Percentage

55% (10%)

50%

Maximum Weeks

10 weeks (25%)

8 weeks

Maximum Weekly Bft

$746.41 (14.3%)

$652.96

Maximum Annual Bft

$7,464.10 (42.9%)

$5,223.68

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Excluded from PFL

• Public employers (and public unions) Optional

• Private sector unions subject to PFL CBA benefits at least as favorable

• Executive officers of 501(c)(3) engaged in professional or teaching capacity

• Persons receiving rehabilitation services in a sheltered workshop operated by such institutions under a certificate issued by the U.S. Department of Labor

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• Do temporary & seasonal EEs qualify for PFL?

What about summer interns?

• When do EEs with fluctuating hours become eligible for PFL?

• How are breaks-in-service counted?

Eligibility

• 20-hour per week threshold +20:26-consecutive work weeks <20: after working 175 days in

employment • Include: vacation, personal, sick

– PFL contributions

• Exclude: On NY DBL

• Waivers: ER obligation to notify • Toll breaks-in-service

Part of regular employment Still considered in “employment”

20-hour Threshold PFL Rules

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• Does PFL cover EEs who don’t work in our NY location?

• Can we elect to cover out-of-state EEs on our PFL policy rider?

NO

• How do we treat an out-of-state EE who transfers into NY?

Eligibility

• No PFL: NY work is incidental

• PFL applies:

Out-of-state work is incidental

Work not performed in any other single state; some NY work and:

• Based in NY, or

• Controlled from NY, or

• Lives in NY

Out-of-State Employees PFL Rules

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• Can an ER subsidize PFL? YES; may need to impute income

Post-tax contributions

• How is EE PFL contribution determined? Confusion? YES: NY Website calculator original

maximum ($1.65); now shows correct “FICA” method

• What if EE maxed out PFL contributions at prior job?

Contributions/Premiums

• 2018 maximum EE contribution: 0.126% of EE’s weekly wage up to the annualized NYS Average Weekly Wage (“AWW”) AWW: $67,908

Max annual contribution: $85.56

• Reported on Form W-2 Box 14

• Public employers must notify WCB and EEs 90 days in advance

Employee Contributions PFL Rules

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Pay Period

Weekly Wage

PFL Weekly

Contributions

Cumulative Contributions

1 $2,000 $2.52 $2.52

2 $5,000 $6.30 $8.82

3 $1,600 $2.02 $10.84

4-20 17 weeks

$3,400 $4.28 x 17

$72.76 $83.60

21 $2,000 $1.96 $85.56

Contributions/Premiums

• Deduct based on total wages each pay period to annual maximum

Limited weeks; similar to FICA

• Shortfall: Collect $1.65/week for high wage earner ($2,000/week); terminates April 2018 (15 weeks)

$1.65 x 15 = $24.75

0.126% x $30,000 = $37.80

• Is your payroll provider correcting?

*Rounding differences 10

Average Weekly Wages

• Greater of: Total wages for eight weeks or portion thereof that the employee was

in such employment immediately preceding and including his last day worked prior to the first day of paid family leave, or

Total wages of the last eight weeks or portion thereof immediately preceding and excluding the week in which the paid family leave began, whichever is the higher amount

• Include pro-rated weekly amount of bonus and/or irregular commissions over 52-weeks prior to PFL See instructions Form PFL-1

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• Who calculates the PFL benefit?

Employer certifies eligibility

• How is the benefit taxed?

NYS and Federal

Benefits

• 2018: 50% x AWW (8 weeks) $652.96 weekly maximum

Form 1099-MISC

Form 1099-G (State Ins Fund)

• DBL & PFL cannot run concurrent Maximum: 26 weeks in a

52-week period

DBL in 2017 counts

• Single qualifying event 3 months

Amount & Duration PFL Rules

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• What if PFL overlaps into 2019?

• Can 2 family members take PFL at the same time?

• How is the daily/intermittent PFL benefit determined?

Benefits

• Amount/duration: onset of PFL

• Employer option to allow family members to use PFL for same qualifying event

• Weekly or daily intermittent

• May coordinate with reduced schedule FMLA

Amount & Duration PFL Rules

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Intermittent Leave: 2018 Example

AWW/average days worked per week (last 8 weeks)

2018: 50% x AWW for 8 weeks; 40 days

• Employee’s AWW = $800 Weekly benefit: $800 x 50% = $400

Total benefit: 8 x $400 = $3,200

Daily benefit: 5 days per week: $400/5 = $80 per day; 40 days = $3,200

Daily benefit: 4 days per week: $400/4 = $100 per day; 32 days = $3,200

• Maximum daily leave: 60 days (is this for 2021?)

• Additional information: employees who regularly work >5 days/week

• What information does the ER have to provide?

Forms lack enough detail for payment of full pay

Double-dipping?

Benefits

• Employee:

Responsible to file claim

• Employer:

3 business days to complete Part B Form PFL-1

• Carrier:

18 days approve/deny

Filing a Claim PFL Rules

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• Collecting sick pay or paid time off

• Work part of day for pay

• NY DBL

• Total disability under workers’ comp

Partial disability or reduced earnings; may collect under PFL

• No longer employee

• Administrative leave

When PFL Is Not Payable

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• Coordinating with FMLA?

• Coordinating with PTO?

• How to coordinate with FMLA taken in less than full days?

• How to manage maternity leave?

Managing Time Off

• PFL & FMLA may run concurrently • Concurrent FMLA & PFL; follow

FMLA rules for use of PTO Can’t require use of PTO if leave

not also covered by FMLA

• How is your company coordinating FMLA, PTO, PFL and other benefits (i.e. maternity/paternity benefit)? Require use of PTO?

• FMLA < full days Track FMLA hours; deduct PFL

PFL, FMLA, PTO & DBL PFL Rules

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FMLA and Paid Substitution (A Tale of Two Interpretations)

§825.207 Substitution of paid leave. • (a) Generally, FMLA leave is unpaid leave. However, under the circumstances described in this

section, FMLA permits an eligible employee to choose to substitute accrued paid leave for FMLA leave. If an employee does not choose to substitute accrued paid leave, the employer may require the employee to substitute accrued paid leave for unpaid FMLA leave.

• (d) Leave taken pursuant to a disability leave plan would be considered FMLA leave for a serious health condition and counted in the leave entitlement permitted under FMLA if it meets the criteria set forth above in §§825.112 through 825.115. In such cases, the employer may designate the leave as FMLA leave and count the leave against the employee's FMLA leave entitlement. Because leave pursuant to a disability benefit plan is not unpaid, the provision for substitution of the employee's accrued paid leave is inapplicable, and neither the employee nor the employer may require the substitution of paid leave. However, employers and employees may agree, where state law permits, to have paid leave supplement the disability plan benefits, such as in the case where a plan only provides replacement income for two-thirds of an employee's salary.

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ERs can compel use of PTO for PFL/FMLA concurrent leave

• A literal reading of paragraph (d) suggests that you cannot compel the use of PTO for a leave pursuant to a disability leave (paid). Therefore, because PFL is not and cannot be taken for disability – paragraph (a) could apply as “FMLA” is indeed an unpaid leave.

PFL, FMLA and PTO ERs cannot compel use of PTO for PFL/FMLA concurrent leave • Even though paragraph (d) relates

to a disability leave, some conclude that PFL is also a PAID leave, and therefore you cannot compel the use of PTO. Paragraph (a) says the employer may require the employee to substitute accrued paid leave for UNPAID FMLA which PFL concurrent with FMLA is NOT UNPAID and therefore, should be treated similar to a disability leave.

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Bright Business 200 Employees

Subject to FMLA 25 PTO days; voluntary STD

• Amanda’s child due November 2018 • Expected Benefits

8 weeks NY DBL (2 weeks prior to birth) Voluntary STD (60%) 10 weeks PFL to bond w/ child

• Company leave policy Requires use of accrued PTO

• Leave qualifies under FMLA DBL & PFL CANNOT RUN CONCURRENTLY

Amanda’s baby born in 2018

Amanda files for PFL in Jnauary 2019 PFL: 55% x AWW for 10 weeks How much time-off might Amanda take? • 8 weeks: NY DBL & STD • 5 PTO days: DBL waiting period • 4 weeks PTO: full pay charged

against FMLA & PFL • 6 PFL weeks: consecutive or daily

Total time off 18 weeks DBL & PFL in 52-week period

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Amanda’s Maternity Leave (one version)

STD & DBL

PTO

PFL

FMLA

1 2 4 5 6 7 8 10 11 12 3 9

13 14 15 16 17 18

Bright Business Cannot Require Amanda To Use Accrued Vacation

& Personal Leave When FMLA No Longer Applies

NUMBER OF WEEKS

Employee wishing to maximize time off; may elect to use all DBL followed by PFL Employee wishing to maximize pay; may elect bonding at baby’s birth (i.e. there is no STD benefit; only $170/week DBL)

• Follow PFL & regulations

• Review each claim independently Statement of Rights

• Monitor payroll Prepare to reconcile

• Billed in advance

Don’t want to “refund” if collect more than the maximum allowable amount per employee

• Maintain DBL/PFL policy for ALL eligible employees Must issue opt-out waiver to

temporary employees

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PFL Checklist

• Carefully track eligibility and leave time taken

Coordinate w/ carrier

Ensure no “double-dipping”

• Receive PTO/PFL at same time

Outsource leave management?

• Update handbooks, leave policies, and notices

Prominently post required notice

• Communicate to employees

• Consult w/ counsel

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PFL Checklist (cont’d)

https://www.chernoffdiamond.com/

FREE BENCHMARKING REPORT FOR PARTICIPATING

www.chernoffdiamond.com

Direct: 516-247-3386

jbergman@chernoffdiamond.com

Jill Bergman, CEBS, CPE-Compliant

Vice President, Compliance Health & Benefits

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