Earlier this month, the New York State Assembly passed two significant pieces of legislation that will impact all employers in the state of New York, regardless of size, in the coming years. First, the new Paid Family Leave Benefits Law will create an additional payroll deduction and entitle employees to up to 12 weeks of paid family leave. Second, the minimum wage is increasing, ultimately to $15 per hour.
The minimum wage increases for most workers do not begin until December 31, 2016, and the Paid Family Leave Benefits Law does not go into effect until January 1, 2018, but both new laws create significant new obligations, and will likely require substantial changes for New York employers.
The Paid Family Leave Benefits Law
The Paid Family Leave Benefits Law goes into effect on January 1, 2018, and will require all employers to obtain paid family leave insurance for their employees (to be funded by a payroll deduction). Additionally, it will extend some of the benefits provided by the federal Family and Medical Leave Act (FMLA) (which applies only to employers with 50 or more employees), to employees of virtually all New York employers, regardless of their size. Below are a few of the critical provisions of the new law.
The Paid Family Leave Benefits Law will permit employees who have worked for their employer for 26 or more consecutive weeks to take up to 12 weeks of job-protected, paid leave for purposes of: (1) providing care, including physical or psychological care, for a family member of the employee made necessary by a serious health condition of the family member, (2) to bond with the employee’s child during the first 12 months after the child’s birth or placement for adoption or foster care, or (3) because of any “qualifying exigency” within the meaning of the FMLA, arising out of the fact that the spouse, domestic partner, child, or parent of the employee is on active duty in the armed forces, or has been notified of an impending call to active duty.
When the law takes effect on January 1, 2018, employees will be entitled to eight weeks of job protected, paid leave. The following year, the amount of the leave entitlement will increase to 10 weeks, and on January 1, 2021, it will increase to 12 weeks.
Unlike the FMLA, leave under this new state law is paid. However, employers do not directly pay the employee during this period. Rather, employers are required to obtain an insurance policy, with the premiums paid by employee contributions collected through payroll deductions.
When the law initially goes into effect, the amount of the benefit is capped at 50% of the employee’s average weekly wage, but not to exceed 50% of the state average weekly wage. A year later, on January 1, 2019, that figure increases to 55%. The following year, it increases to 60%, and on January 1, 2021, it rises again to 67%. The minimum weekly benefit is $100, unless the employee’s wages are less than $100 per week, in which case the employee will receive his or her full wages.
Employees are not entitled to family leave benefits if they have not provided a notice and medical certification, and the family member who is the recipient of care may be required to submit to a physical examination by a qualified health care provider, with such examination to be paid for by the insurance carrier. Where leave is foreseeable due to expected birth or placement, or planned medical treatment, the employee shall provide the employer with not less than 30 days’ notice of the employee’s intention to take family leave under this law (or such notice as is practicable, if the birth, placement or planned medical treatment requires leave to begin in less than 30 days).
Minimum Wage Increase
The new legislation also establishes steep increases to the state minimum wage (currently $9 per hour for most workers), to be phased in over the next few years. Beginning December 31, 2016, the minimum wage for employers in New York City with more than 10 employees will be $11 per hour. The following year, the hourly minimum wage for those employers will increase to $13, and the year after to $15. Employers in New York City with 10 or fewer employees will start with an increase to $10.50 per hour on December 31, 2016, with three annual increases thereafter, ultimately reaching $15 on December 31, 2019.
Outside of New York City, on Long Island and in Westchester County, the minimum wage will increase to $10 at the end of this year for all employers, regardless of size. Thereafter, the minimum wage will increase $1 per year, reaching $15 on December 31, 2021.
In the remainder of the state, the minimum wage will increase to $9.70 per hour at the end of this year for all employers, regardless of size, and will increase 70 cents each year thereafter, reaching $12.50 on December 31, 2020. The following year, the upstate minimum wage will be set by the New York State Department of Labor, at a rate not to exceed $15 per hour.
Food service workers who receive tips will see their minimum cash wage increase to the greater of $7.50, or two-thirds of the minimum wage then applicable to other workers (provided that the minimum cash wage, plus tips received by the worker, equal or exceed the applicable minimum wage figures set forth above). (Please note that there are other legal requirements concerning the tip credit.)
While both of these new laws will not be effective for several months, they are substantial and New York State employers are well advised to prepare as early as possible for their implementation.