CLIENT UPDATE

Putney, Twombly, Hall & Hirson LLP
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April 5, 2016

Governor Cuomo signs $15 Minimum Wage Plan and 12 Week Paid Family Leave Program into Law

On April 4, 2016, Governor Andrew M. Cuomo signed legislation to gradually increase New York’s minimum wage to $15 an hour for most workers. When fully implemented, the legislation will also require employers to provide twelve (12) weeks of paid family leave for their employees.

Minimum Wage Increases

Under this new law, the minimum wage will increase at different rates in three distinct regions of the state and will be phased in according to the size of the employer. For employees in New York City employed by large businesses (those with at least eleven (11) employees), the minimum wage will increase to $11 at the end of 2016, then another $2 each year after, until it reaches $15 on December 31, 2018. For employees in New York City employed by small businesses (those with ten (10) employees or fewer), the minimum wage will increase to $10.50 by the end of 2016, then another $1.50 each year after, until it reaches $15 on December 31, 2019.

For employees in Nassau, Suffolk, and Westchester counties, the minimum wage will increase to $10 at the end of 2016, then $1 each year after, until it reaches $15 on December 31, 2021. For employees in the rest of the state, the minimum wage will increase to $9.70 at the end of 2016, then another $0.70 each year until reaching $12.50 on December 31, 2020, after which the rate will continue to increase to $15 on an indexed schedule to be set by the Director of the Division of Budget in consultation with the Department of Labor. The large business/small business distinction applies only to employers in New York City, not to counties outside of New York City.

Paid Family Leave Benefits

The legislation also includes a paid family leave program, referred to as the Paid Family Leave Benefits Law. Employees may use this leave to bond with the employee’s child during the first 12 months after the child’s birth or placement for adoption or foster care, to care for a family member with a serious health condition, or to “relieve family pressures” when someone is called to active military service. Employees are eligible to participate after having worked for their employer for 26 consecutive weeks.

The program, which will be funded by a payroll deduction on employees, will be phased in, beginning on January 1, 2018.

Employee Contributions and Benefits

The State Superintendent of Financial Services will set the maximum employee contribution for family leave benefits.  Employers will not directly fund paid family leave benefits.

Beginning in 2018, paid leave benefits will operate at 50 percent of an employee’s average weekly wage, capped to 50 percent of the statewide average weekly wage. When fully phased-in by 2021, employees will be eligible for twelve (12) weeks of paid family leave, at 67 percent of their average weekly wage, capped to 67 percent of the statewide average weekly wage.

Interaction with Other Laws

Employees who are also eligible for disability benefits may only receive a combined amount of 26 weeks of disability benefits and paid family leave benefits in a 52-consecutive calendar week period. Employees may not collect disability benefits and paid family leave concurrently.
Employers may permit (but not require) an employee to choose whether the employee will use accrued, unused vacation or personal time to receive a full salary while on paid family leave.  If an employee chooses to use such vacation or personal time, an employer may request reimbursement from the employee for any paid family leave benefits received by the employee during that period.

During the period of paid family leave, employers are required to maintain any existing health benefits on behalf of the employee.

Return from Leave

Upon return from paid family leave, employers are required to reinstate employees to the position held when leave commenced, or to be restored to a comparable position with comparable benefits, pay, and other terms and conditions of employment.

Takeaway for Employers

Employers should review their anticipated budgets to reflect not only the increased minimum wage rates effective December 31, 2016, but the disparate rates across different regions of New York State. Employers should also review family and medical leave policies, disability leave policies, and related paid leave policies to ensure compliance and coordination with the January 1, 2018 effective date of the Paid Family Leave Benefits Law.

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If you have any questions regarding New York’s minimum wage or family leave laws, please do not hesitate to contact us.