New York State Adopts Paid Family Leave and $15/Hour Minimum Wage

New York state has enacted two new major employment laws that all New York employers need to prepare for: (1) the most comprehensive paid family leave law in the country commencing in 2018; and (2) beginning Dec. 31, 2016, incremental, annual increases in minimum wage rates in New York City, its surrounding counties and the remainder of New York state (ultimately raising the minimum wage to $15 statewide). This advisory explains the key elements of each law and what employers need to do to get ready.

New York State Paid Family Leave

Beginning in 2018, employees who have worked for their employer for at least six consecutive months will be eligible for paid family leave when caring for a new child (including adopted or foster children), a family member with a serious health condition, or to relieve family pressures when a family member is called to active military service. Since employees will be entitled to paid family leave if they are otherwise entitled to coverage under New York state’s Temporary Disability Insurance Law (and there are no carve-outs for employer size), this law will cover the vast majority of employees in New York.

In 2018, employees will be entitled to eight weeks of paid leave at 50% of their average weekly wage (capped at 50% of the statewide average weekly wage). Those benefits will gradually increase to 12 weeks of paid leave at 67% of the employee’s average weekly wage (capped at 67% of the statewide average weekly wage) by 2021. The program will be funded exclusively through a payroll deduction of approximately $1.00 per week from employees, which means that employers will not have to actually pay their employees who are out on paid leave; rather, employees on paid family leave will be paid by the state. The new law also provides for job protection as well as continuation of health care benefits.  

New York employers should review and revise their leave policies before the paid family leave law becomes effective, especially small employers who currently do not provide family leave to their employees because they have fewer than 50 employees and therefore are not subject to the federal Family and Medical Leave Act (employers who are subject to the FMLA will be permitted to require employees to take paid family leave concurrently with FMLA leave). Additionally, since this law creates a benefit to which independent contractors would not be entitled, it is important that, prior to 2018, businesses review their independent contractor relationships to ensure that they are properly classified to avoid liability in the event an individual is deemed to have been misclassified.

Minimum Wage Increases

The legislation signed by Governor Cuomo also increases the minimum wage throughout New York state over the next several years, and is projected to affect 2.3 million workers employed in the state. Although these wage increases are gradual, all New York employers should be prepared to raise the minimum wage by the end of 2016. The most significant increase affects New York City businesses with 11 or more employees whose minimum hourly wage will increase from $9.00 to $11.00 as of Dec. 31, 2016 (an increase of approximately 22%).

The annual minimum wage increases are as follows: