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ABCs of the Paid Family Leave Act

By Aron M. Schwartz, Esq. and Stephanie G. Reckord, Esq.

 

In early May of this year, Governor Corzine signed into law the Paid Family Leave Act (“PFLA”), officially titled Family Temporary Disability Leave Law (Senate Bill No. 786). The PFLA expands the current State temporary disability insurance (TDI) system, allowing employees to take up to six weeks off per year with limited pay under certain circumstances related to the care of a family member. Covered employees will be able to collect up to two-thirds of their pay, with a cap at $524 per week. Under the PFLA, a covered employee may take up to six weeks off per year or 42 days intermittently (with certain restrictions) to (1) care for a new child (during the first twelve months after birth or adoption); or(2) care for a parent, spouse, civil union partner, domestic partner or child with a serious health condition, “including providing psychological comfort and arranging third party care for the family member.” A “serious health condition” means an illness, injury, impairment or physical or mental condition that requires (a) inpatient care in a healthcare facility; or (b) continuing medical treatment or supervision by a healthcare provider.

 

This law covers all private and government sector employees subject to the unemployment compensation law (N.J.S.A. 43:21-1 et seq.), including local government employees whose employers have opted out of the regular TDI program. Therefore, the PFLA covers all New Jersey employers that are subject to the unemployment compensation law.

 

This program will be entirely funded through payroll tax deductions and administered through the existing Temporary Disability Benefit Program. There will be no employer contributions. Employers must ensure that payroll deductions begin January 1, 2009. Employees will pay an additional tax of .09% on the portion of wages currently subject to TDI in 2008. The law provides that the tax will increase to .12% in 2010. The State Assembly Appropriation Committee estimates that maximum employee contribution will be $25 for 2009 and $33 for 2010, approximately $.64 per week. Employees will not be able to receive benefits under the PFLA until July 1, 2009, leaving the State time to raise sufficient revenues.

Under the new law, there is a one week waiting period before employees can start receiving benefits after the triggering event occurs. The law also requires employees to provide advance notice of the expected leave. If an employee is utilizing benefits based upon the birth or adoption of a child, the law requires thirty (30) days notice. If such notice is not provided, the employee may lose two weeks of benefits, unless the lack of notice is due to unforeseen circumstances. Intermittent leave is not permitted for the birth or adoption of a child unless the employer consents.

 

If leave is sought to care for a sick family member, the employee must provide reasonable advance notice “to minimize disruption of employer operations” unless an emergency impedes such notice. Intermittent leave for the care of a family member requires fifteen (15) days notice (absent emergency or unforeseen circumstances) and advance notice of a regular schedule of the days or days of the week when leave will be taken. The law states that intermittent leave must be scheduled to avoid any undue disruption. If leave is to care for a family member with a serious health condition, the employee must provide the Division of Temporary Disability Insurance with a medical certification from the health care provider of the family member stating: the date on which the serious health condition commenced; the likely duration of the condition; the medical facts regarding the condition; a statement that the condition warrants the individual’s care; and an estimate of the time such care by the individual will be required. If the employee seeks intermittent leave, the employee must provide the employer with a copy of the medical certification and the medical certification must also state the necessity of the intermittent leave, expected duration of intermittent leave, and if leave is for planned medical treatment, the dates of treatment.

 

Under the PFLA, an employer may permit or require employees to use any paid sick or vacation time before utilizing the PFLA benefits, but the employer may not require employees to exhaust more than two (2) weeks of unused sick or vacation time. However, employees of the State of New Jersey or of any governmental entity must exhaust any accumulated sick leave. Employers may offset the six week State benefit by the number of days of leave paid by the employer. However, if an employer does so, it must permit the employee to use employer paid vacation or sick time during the statutory one week waiting period.

 

Similar to the traditional TDI program, employers may utilize a private plan through self insurance or an insurance policy in lieu of the program created by the PFLA provided that the employers do not impose harsher eligibility and employee contribution requirements or lower benefits than the State plan. Nothing in this law requires employers to maintain a private plan for employee disability, family leave or a combination of both, but should the employer wish to include any such benefits under a private plan in accordance with the State plan, the proposed modification must be given to the Department of Labor and Workforce Development (“DOL”) and to the employees covered under the plan.

 

The PFLA also increases the penalties for misrepresentations, fraud and other violations of the current TDI program and the family temporary disability benefit program. These penalties will range from $250 to $1,000.

 

Leave taken pursuant to the PFLA will run concurrently, not consecutively, with leave under the FMLA or New Jersey Family Leave Act (NJ FLA). However, an employer is not required under the PFLA to reinstate employees unless they are required to under the FMLA or the NJ FLA. Thus, employers not subject to those statutes because they have fewer than fifty (50) employees may permanently replace employees who take leave pursuant to the PFLA.

 

The State is expected to issue regulations implementing the requirements under the PFLA. The law provides that the employer must provide information on State provided forms to the State by the ninth day of an employee’s leave sufficient for the State to make an eligibility determination, including wage information and facts regarding the employer’s paid leave benefits. The employee must provide the DOL with a notice, claim and medical certification (if necessary) not later than thirty (30) days after the leave begins. An employer may not deny a request for a leave, buy may thereafter challenge the State’s determination of eligibility. The employer must conspicuously post a notice of Paid Family Leave Rights that will be issued by the DOL in a place or places accessible to all of the employer’s employees. Within thirty (30) days of the issuance of the notice by the DOL, the employer must provide a copy to each employee. In addition, a copy must be provided to each employee at the time of hire, when an employee notifies the employer that the employee is taking time off for reasons under which benefits are permitted under the PFLA, and upon an employee’s first request.

 

The PFLA is a change in the TDI system that requires the attention of all New Jersey employers. Even though employees may not take PFLA leave until July 1, 2009, employers should ensure that their payroll department is prepared to collect the new taxes starting January 1, 2009. Employers should take the time to understand the new benefits program and work with their attorneys to make certain that they are prepared to comply with all the new rules and regulations imposed by the PFLA. Additionally, employee manuals and policies regarding employer-paid sick and vacation time should be updated to reflect the new employee rights granted by this Act.