New York’s Paid Family Leave (“PFL”) program is one of the most comprehensive employee-benefit programs in the country, but its roll-out has prompted many questions from employers and required occasional clarification from regulators. One issue employers have struggled to fully grasp is the amount of the employee contribution rates to cover the costs of the PFL premium. Last month, the NYS Workers’ Compensation Board clarified the employee contribution rate and resolved many employers’ lingering questions.
A July 28, 2017 Insurance Circular Letter issued by the New York State Department of Financial Services stated that employers may collect .126% of an employee’s weekly wage up to and not exceeding the statewide average weekly wage of $1,305.92 for the year 2018. The Insurance Circular Letter was widely interpreted as providing for a cap of $1.65 on weekly payroll deductions for PFL, calculated as .126% of $1,305.92. However, it is understood, for the calendar year 2018, that the annualized statewide average weekly wage is $67,908, which means the maximum annual premium to be charged to an employee for paid family leave benefits coverage for 2018 is $85.56.
The Workers’ Compensation Board has now clarified that there is no weekly cap on the employee contribution rate. Employers do not need to cap the weekly employee payroll deduction for PFL at $1.65 (or .126% of the New York State Average Weekly Wage). Employers can collect .126% of an employee’s weekly wage until the employee contributions total $85.56.
The clarification of the weekly contribution rate is confirmed by the Workers’ Compensation Board’s updated weekly deduction calculator, which can be accessed online at this link: Paid Family Leave Calculator. Prior versions of the State’s calculator capped all estimated deductions at $1.65. Currently, if an employee’s weekly earnings are greater than $1,305.92, the updated calculator generates an estimated deduction of .126% of such earnings, without a cap.
This development means that employees who earn more than the State Average Weekly Wage likely will meet their annual contribution of $85.56 before the end of the year. This will also provide employers with a more efficient method to collect the full premium from its employees during the year.
Employers should take advantage of the opportunity to ensure that their internal policies are consistent with the recently clarified law. As always, our employment attorneys stay apprised of the latest developments in the law and are well-equipped to assist you.