Additional Obligations for New York Employers Coming Down the Pike: Paid Family Leave and Higher Minimum Wage

Just when employers think they have figured out how to navigate their way through the federal Family and Medical Leave Act (the "FMLA"), the state of New York has added more lanes to the highway by enacting a new law that will provide much greater benefits to New York employees. In a budget agreement that Governor Andrew Cuomo and the New York State Senate and Assembly leaders reached, a new law requiring employers to provide paid family leave to their employees has emerged.

Beginning in 2018, New York employees will be eligible for 12 weeks of paid family leave when caring for an infant, a family member with a serious health condition or to relieve family pressures when someone is called to active military service. In 2018, eligible employees will be able to receive 50% of their average weekly wage (capped to 50% of the statewide average weekly wage); once fully implemented in 2021, that amount will rise to 67% of the statewide average weekly wage. In an effort to appease employers, the law provides for funding through a payroll deduction on employees, not employers. However, in what many employers correctly may perceive as a tremendous inconvenience, the law will apply to employers of all sizes (not just those with 50 or more employees, as under the FMLA), and employees will become eligible for the 12 weeks of paid leave after just six months of employment (instead of the minimum of 12 weeks of paid leave and 1,250 hours under the FMLA). In what may be the biggest challenge for employers, they will be required to hold open the job of an employee who takes paid family leave, and to reinstate the employee after being absent for 12 weeks. The law states that an employee who takes leave "shall be entitled, on return from such leave, to be restored by the employer to the position of employment held by the employee when the leave commenced, or to be restored to a comparable position with comparable employment benefits, pay and other terms and conditions of employment." While large employers may be familiar with this obligation under the FMLA, this new requirement may be quite burdensome to smaller employers who may struggle with staffing when an employee is out for 12 weeks.

The law is silent on whether time off will run concurrently with the federal FMLA, although it is logical to expect that it will. Notably, the New York paid family leave does not pertain to paid time off for an employee's own medical condition. While employees may be eligible for short-term disability ("STD") benefits under existing law, the current STD law in New York does not require reinstatement in the way the new paid family leave law will. In addition, it is unclear how the interplay between the STD law, the new paid family leave law and the FMLA will work when an employee needs time for his or her own disability as well as time later that year to care for a baby or family member. Presumably these details will be addressed in regulations prior to 2018.

In the same new budget deal, the New York minimum wage will increase as well, dependent upon the size of the employer and the county where the employer is based. For employers in New York City with 11 or more employees, the minimum wage will increase to the amounts as follows:

• $11.00 per hour on or after December 31, 2016;
• $13.00 per hour on or after December 31, 2017; and
• $15.00 per hour on or after December 31, 2018.

Employers in New York City with 10 or fewer employees also will have to pay their employees a higher wage rate, but the minimum wage will increase at a slower rate. The hourly wage rate will go to $10.50 per hour on December 31, 2016, and will rise to $15 per hour on December 31, 2019.

Outside New York City, the hourly wage rate also will increase, although at smaller amounts. For the non-New York City employers in "downstate" New York, which includes Nassau, Suffolk and Westchester counties, the minimum wage will increase to $10.00 per hour on or after December 31, 2016, and increase an additional one dollar per hour each year until December 31, 2021, when the minimum wage will be $15 per hour. For those employers in the remaining counties of New York, the minimum wage will increase to $9.70 per hour on or after December 31, 2016, with an additional increase each year until 2020. After 2020, the minimum wage will continue to increase based upon an indexed schedule that the Director of the Division of Budget will set, together with the New York State Department of Labor.

More details about the paid family leave obligations are likely prior to its 2018 implementation. In the meantime, New York employers had better fuel up their engines because a long and winding road is ahead.