We are now in the third year of New York’s Paid Family Leave Program. It continues to get more costly for employees. But the benefits also get better. Here a primer on New York’s 2021 Paid Family Leave Program.
Employee Contributions
The New York Department of Financial Services (DFS) has announced the maximum employee-contribution rate for 2021. It will increase from 0.270% to 0.511% of the employee’s gross wages, up to an annual maximum. This maximum annual contribution will be $385.34 in 2021 compared to $196.72 in 2020.
The contribution rate increased from 0.153% to 0.270% in 2020. That changed the maximum annual contribution from $107.97 to $196.72. Thus, the maximum annual contribution has nearly doubled since last year and increased overall by 350% in just 3 years.
This means an additional annual cost of up to nearly $300 for many employees from 2018 to 2021. And additional increases remain likely each year.
2021 Paid Family Leave Benefits
But it’s not all bad news for workers. DFS also confirmed that the weekly paid family leave benefit will increase again in 2021. The weekly benefit rate increases from 60% of the employee’s average weekly wage to 67%. This percentage only applies up to the first $1,450.17 of weekly earnings. An employee who earns more than that can only receive $971.61 per week in paid family leave benefits.
The maximum leave allowance also increases from 10 weeks in 2019-2020 to 12 weeks in 2021. That is the last scheduled increase in the length of the paid leave allowance, which began at 8 weeks in 2018.
Preparing for 2021
Companies should confirm their 2021 paid family leave premiums with their insurance carriers. Then make sure that next year’s payroll will include the correct contribution rates.
If your paid family leave policy reflected specific rates for paid family leave in 2020 (or earlier), then you might want to update that component.
This is also an excellent opportunity for employers to review which employees are eligible to opt out of the paid family leave program. Employers must offer qualifying employees the chance to waive coverage (and corresponding paycheck deductions). However, the waiver automatically expires if the employee later becomes eligible for paid family leave.
Finally, employers might find that these changes coupled with unique COVID-19 issues increase the utilization of paid family leave in 2021. First, the benefits are higher and last longer, making it more financially viable for employees to take time off from work. Plus, since employees have to pay more for the program, they might feel even more entitled to use it. These factors might require employers to replace more worker hours next year or otherwise allow for lost productivity.
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