New Jersey Enacts a Paid Family Leave Act (Mercer Business)

October 2008 Mercer Business

As originally seen in the October 2008 issue of Mercer Business.

On May 2, 2008, NewJersey Governor Jon Corzine signed into law the paid family leave act. In doing so, New Jersey has now joined California and Washington in offering paid family leave to employees.

The new paid family leave law is designed to provide up to six weeks (or 42 days if the leave is “intermittent”) of benefits - at the same level as those provided under New Jersey’s temporary disability benefits law (TDI) - for an employee who takes leave to:

• provide care certified to be necessary for a family member (i.e., child, spouse, domestic partner, civil union partner or parent) of the employee suffering from a serious health condition (i.e., an illness, injury, impairment, or physical or mental condition that requires: inpatient care in a hospital, hospice, or residential medical care facility, or continuing medical treatment or supervision by a health care provider);

• be with a child during the first 12 months after the child’s birth if either (a) the employee, or the domestic partner or a civil union partner of the employee, is the biological parent of the child or (b) placement for adoption with the employee’s family.

Paid family leave does not include any period of time during which the employee is paid benefits under TDI because the employee is unable to perform the duties of his or her employment due to the employee’s own disability. The six-week, state-paid benefit may be reduced by up to two weeks of any employer-paid sick or vacation leave.

In order to address and implement the new law properly, employers will also need to have a clear understanding of a number of additional terms, including: “domestic partner,” “civil union partner,” “health care provider,” and “parent of a covered employee.” While some of these terms are defined in the new law, others require a detailed understanding of other laws.

This new paid family leave benefit is to be funded through a payroll tax - approximately $25 per year for 2009 and increasing to approximately $34 per year in 2010. While employers will be required to collect the tax and remit it to the state, only employees will be required to pay the tax. Despite the relatively low annual tax, under the law, the maximum weekly benefit - for each week of the maximum six-week benefit period - will be two-thirds of the employee’s weekly compensation up to the statutory maximum. Thus, based upon 2008’s TDI benefit levels, the new law would have provided a maximum weekly benefit of $524. It is important to note that while employers will need to commence collecting and remitting the tax to the state for this benefit effective January 1, 2009, employees will not be able to apply for and receive these benefits until July 1, 2009.

Employees are required to provide advance notice to employers of their need to take leave under the law. Employees seeking leave to care for a child after birth or placement for adoption are required to provide the employer at least 30 days prior notice. However, if the leave is for the care of a sick family member, the employee is required to schedule, when possible, the leave in a manner to minimize the disruption of the employer’s operations, and give, where possible, 15 days prior notice of the need for leave where the leave will be intermittent. Additionally, with respect to intermittent leave, the leave cannot exceed 12 months and the employee must submit a medical certification which includes a statement of the medical necessity for the intermittent leave, the duration of the intermittent leave and, if the leave is for planned treatments, the dates of treatment.

While the law does notmandate that an employer maintain the employee’s position for any period of time, the law does addresses, to a certain extent, employers’ concerns regarding its interplay with both the New Jersey Family Leave Act (FLA) and the federal Family and Medical Leave Act (FMLA) by requiring, to the extent otherwise permissible, that these statutory requirements run concurrently. As a result, while the law provides a compensation entitlement, it does not in and of itself provide a leave entitlement similar to the FLA or FMLA.

Employers must be cautious about not reinstating an employee who takes paid family leave. While the law states that it is not intended to create a reinstatement entitlement, it provides only a partial safeharbor for employers who fail to reinstate an employee. In this regard, the law provides that it does not intend to create any right for an employee to take action against an employer in tort, for breach of an implied employment agreement, or under common law. This safe-harbor only applies, however, to employers with fewer than 50 employees. There are additional concerns raised by the limited nature of the safe-harbor that ultimately may create claims against larger employers as well.

The New Jersey Department of Labor and Workforce Development (DOL) will issue regulations fleshing out the administrative details of the new law as well as any applicable forms and postings.

To the extent employees or employers have any questions or concerns relating to New Jersey paid family leave or its interaction with the FLA and/or FMLA, or the interplay of these laws with workers’ compensation benefits, TDI benefits and/or employer paid time off policies, they should seek the advice of legal counsel.