United States: New Jersey Governor Signs Historic Paid Family Leave Legislation

Paid Family Leave bill allows up to six weeks of paid leave for workers to care for a new child or a seriously ill family member; employers should review their human resources practices and procedures for compliance with all applicable state and federal laws.

On May 2, 2008, Governor Jon S. Corzine signed a momentous family leave insurance bill, making New Jersey the third state in the country to enact a paid family leave program for workers, enabling employees to take up to six weeks of paid leave to care for seriously ill family members and newborn or newly adopted children. Only California and Washington have similar legislation in place.

In an effort to help workers balance the demands of a job and a family, the new law extends the state's existing Temporary Disability Insurance Program (TDI) to provide insurance benefits to New Jersey employees when they take time off to care for newborns, newly adopted children or seriously ill family members.

Paid Family Leave

Funding

The paid leave program is entirely funded by a state-administered employee payroll deduction, the size of which will be based on salary, with a maximum annual contribution of $33 per employee, or 64 cents a week. Employers do not have to contribute anything and they have the option to use the state fund or their own privately run program. The employer may charge for a similar private plan, but no more than the amount employees would pay under the new law.

Eligibility

The Paid Family Leave law covers all New Jersey employers who are subject to the unemployment compensation law, regardless of how many people they employ. This encompasses many large and small employers, including those not covered by the Federal Family and Medical Leave Act (FMLA) or the New Jersey Family Leave Act (NJ FLA).

Employees will be eligible to apply for and receive benefits if they have worked at least 20 weeks in covered New Jersey employment or earned in total at least 1,000 times the applicable minimum wage in such employment during the prior year, approximately $7,150 in a year, a relatively low threshold. Under the law, eligible employees will receive paid leave: 1) within the first year after a child's birth or adoption; or 2) to care for a seriously ill child, spouse, parent, civil union partner or domestic partner receiving inpatient care in a health care facility or under continuing supervision of a health care provider, providing the employee can obtain a medical certification from the health care provider. This is broader coverage than the FMLA or NJ FLA, which do not cover domestic partnership.

Benefits

Eligible employees will be entitled to take up to six weeks of paid leave per 12-month period. Alternatively, this leave can be taken in the form of 42 days, used intermittently throughout the 12-month period. There is a one-week waiting period before employees can start receiving benefits after the disability begins, with the exception of personal disability leave, which is similar to the existing TDI framework.

Participating workers will receive no more than two-thirds of their weekly base salary, up to a maximum weekly benefit of $524. Lawmakers expect approximately 38,000 employees, or 1 percent of New Jersey's workers, to use the paid family leave each year.

Employees are required to provide advance notice to employers of their need to take leave under the law. When seeking leave to care for a newly born or adopted child, employees are required to give their employer at least 30 days prior notice, and the leave cannot be intermittent unless agreed to by the employer. If the leave is to care for a seriously ill family member, the employee is required to give prior notice of the leave in a reasonable and practicable manner (unless an emergency precludes prior notice) and make a reasonable effort to schedule the leave so as not to unduly disrupt the operations of the employer. If the leave to care for a seriously ill family member will be intermittent, the employee must give 15 days prior notice and, when possible, provide the employer with a schedule of the workdays when leave will be taken.

Employers may permit or require employees to count up to two weeks of the employees' paid family leave against their available vacation or paid sick leave days as well. If the employer does deduct the employees' available paid leave for this time, then the employee must be allowed to use it during the one-week waiting period.

Interaction with Current Legislation

Related Laws

The FMLA allows workers in companies of 50 or more employees to take up to 12 weeks of unpaid leave over a 12-month period to care for a new child, a seriously ill family member or the employee's own serious health condition.

The NJ FLA allows workers in companies of 50 or more employees to take up to 12 weeks of unpaid leave over a 24-month period for the birth or adoption of a child or serious illness of a parent, child or spouse.

New Jersey's TDI system provides two-thirds wage replacement (up to a monetary cap) to those who cannot work because of sickness or injury not sustained on the job, including pregnancy, disability and recovery from childbirth. The current TDI structure will be used to prevent fraudulent claims under the Paid Family Leave legislation by using measures already in place, under the TDI structure, including criminal penalties and increased fines, against those who improperly claim benefits.

Paid Family Leave requires employees to take this leave concurrently with any leave under the FMLA or the NJ FLA, not consecutively. Therefore, when an employee is eligible for leave under multiple leave statutes, the leaves will run at the same time.

The Paid Family Leave law does not require employers to reinstate employees at the end of their leave. However, employers are required to reinstate employees if the FMLA or the NJ FLA require it. The bottom line is that employers may permanently replace employees on paid leave only if the employee is not eligible for protection under FMLA or NJ FLA leave, and keeping in mind obligations under federal and state disability laws.

Next Steps for Employers

Employers should review their human resources practices and procedures for compliance with all applicable state and federal laws and prepare to notify employees about their rights regarding paid family leave as required by the legislation.

Beginning January 1, 2009, employers must commence collecting and remitting the applicable contributions from employee paychecks to the state in compliance with the law. Employers should also prepare for July 1, 2009, when employees will be able to start applying for and receiving these benefits.

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.