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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We are now in the second year of New York’s Paid Family Leave Program. The phase-in continues. And it’s getting more costly for employees. What do you need to know about Paid Family Leave in 2020?

Employee Contributions

The New York Department of Financial Services (DFS) has announced the maximum employee-contribution rate for 2020. It will increase from 0.153% to 0.270% of the employee’s gross wages, up to an annual maximum. This maximum annual contribution will be $196.72 in 2020 compared to $107.07 in 2019.

The contribution rate increased from 0.126% to 0.153% in 2019. That changed the maximum annual contribution from $85.56 to $107.97.

Overall, the maximum annual contribution has increased by 130% in just 2 years.

This means an additional annual cost of up to $111.16 for many employees from 2018 to 2020. And additional increases are likely each year.

2020 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 2020. The weekly benefit rate increases from 55% of the employee’s average weekly wage to 60%. This percentage only applies up to the first $1,401.17 of weekly earnings. An employee who earns more than that can only receive $840.70 per week in paid family leave benefits.

The maximum leave allowance remains 10 weeks as in 2019.

Future Paid Family Leave Rates

Expect the contribution and benefit rates to change again.

Under the original schedule, maximum weekly benefits will increase to 67% of the average weekly wage in 2021. The NYS Superintendent of Financial Services could delay these increases, but did not do so for 2020.

The maximum leave allowance will increase to 12 weeks per year beginning in 2021.

What Must Employers Do?

Companies should confirm their 2020 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 2019, then you might need to change those.

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 increase the utilization of paid family leave in 2020. On one hand, the benefit is higher, making it more financially viable for employees to take time off from work. On the other hand, since employees have to pay more for the program in the first place, 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.

To stay up to date on employment law developments, trends, and best practices, click here to sign up for the Horton Law email newsletter.