United States: New York Enacts Paid Family Leave Law And Increases Minimum Wage Rate

Executive Summary: On March 31, 2016, New York State lawmakers finalized a budget deal that included: (1) a bill mandating paid family leave for most employees (the "Paid Family Leave Law") and (2) a statewide incremental increase to a $15 per hour minimum wage.

New York's Paid Leave Law

New York recently became the fourth state in the country to offer paid parental leave to its residents. On April 4, 2016, New York Governor Andrew Cuomo signed into law the most generous paid family leave policy in the United States: up to 12 weeks paid time off for new parents (this includes men, women, adoptive parents and foster parents); individuals who need to take care of a family member with a serious medical condition; or to relieve family pressures when a family member (including a spouse, domestic partner, child or parent) is called to active military service.

Once implemented, the Paid Family Leave Law will apply to full-time and part-time employees who have worked for their employer for a minimum of six months ("eligible employees"). The law has no exception for small businesses. Unlike New York State disability benefits where there is a waiting period before employees start receiving benefits, paid leave benefits will be available to eligible employees on the first full day that leave is required for eligible employees. The law will phase in gradually. Beginning on January 1, 2018, eligible employees can get up to eight weeks off at 50 percent of their weekly pay (up to a maximum of 50 percent of the statewide average weekly pay as computed by the New York State Department of Labor). The amount of leave and pay will increase yearly until, by 2021, eligible employees will be able to get the full 12 weeks off at 67 percent of their weekly pay (up to a maximum amount of 67 percent of the statewide average weekly pay).

An eligible employee may take paid family leave to care for a new child any time within the first 12 months after the child's birth or 12 months after the placement for adoption or foster care of a child with the employee.  Paid leave to care for a family member with a serious health condition includes leave to care for a child, parent, grandchild, grandparent, spouse or domestic partner. Eligible employees will be able to take their paid leave time intermittently in increments of one full day or one fifth of the weekly benefit. The law will guarantee job protection for all employees who take the paid family leave, and will require the continuation of health care benefits during the leave period. The law will prohibit retaliation against an employee for exercising his or her rights under the law.

Employers will be able to establish rules limiting employees from receiving paid leave benefits for the care of the same family member at the same time as another employee. Employers can require this leave to run concurrently with any unpaid leave for which an employee may be eligible under the federal Family and Medical Leave Act. The law will be employee-funded as it will be financed by employee payroll deductions of about $1 per week per employee. 

Only three other states have implemented paid leave policies to date: California, New Jersey and Rhode Island. California and New Jersey offer six weeks off while Rhode Island offers four weeks. Washington passed a paid leave law in 2007, but has not implemented it yet. Recently, the District of Columbia, Connecticut and Massachusetts legislatures have considered proposed paid family leave bills. On April 5, 2016, San Francisco became the first city in the country to approve six weeks of fully paid leave for new parents. For more information on this law, please see our April 7, 2016 Alert, San Francisco Becomes First U.S. City to Approve Fully Paid Leave for New Parents.

New York's Incremental Increase to $15 Minimum Wage

The Paid Family Leave Law was approved as a part of a state budget agreement that also includes a statewide incremental increase to a $15 per hour minimum wage depending on the county in which the employee works and the size of the employer, as set forth on the following schedule:  

  • For employees in New York City employed by "large businesses" (those with at least 11 employees), the hourly minimum wage will rise to $11.00 at the end of 2016, $13.00 at the end of 2017, and $15.00 on December 31, 2018.
  • For employees in New York City employed by "small businesses" (those with 10 employees or fewer), the hourly minimum wage will rise to $10.50 at the end of 2016, $12.00 at the end of 2017, $13.50 at the end of 2018, and $15.00 on December 31, 2019.
  • For employees in Nassau, Suffolk and Westchester Counties, the hourly minimum wage will increase to $10.00 at the end of 2016 and then increase by $1.00 at the end of each of the next five years, reaching $15.00 on December 31, 2021.
  • For employees in the rest of the state, the hourly minimum wage will increase to $9.70 at the end of 2016, and then increase by $0.70 at the end of each of the next four years, reaching $12.50 on December 31, 2020.  After 2020, the rate will increase to $15.00 on an indexed schedule to be set by the Director of the Division of Budget (DOB) in consultation with the Department of Labor.

To ensure that the minimum wage increases do not harm the state economy, the budget bill includes a "safety valve." Beginning in 2019, the DOB Director will analyze the economy in each region and the effect of the minimum wage increases statewide to determine whether the scheduled increases should be suspended.

The Bottom Line: New York State is expanding protections for employees.  New York State employers, both large and small, should prepare for the commercial and financial impacts of New York's new paid family sick leave law and the rising minimum wage. The minimum wage increases will affect more than two million workers statewide, and will require employers to closely monitor their payroll practices to ensure compliance with the increases. Employers should also prepare for administrative costs associated with the Paid Family Leave Law, including the costs of implementing changes to internal policies and costs related to employee absences during their paid family leaves.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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