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Paid Family Leave Act amounts to a positive development for both employees and employers. Workers in New Jersey will have access to much needed funds at moments of needs and employers have the flexibility to make personnel moves if they become necessary. On May 2, New Jersey joined California and Washington as the only states to have enacted laws providing paid family leave benefits to employees. The Paid Family Leave Act, Assembly Bill No. 873 (the “PFLA”), amends New Jersey’s Temporary Disability Benefits Law, N.J.S.A. 43:21-25 et seq., and provides to qualifying employees a total of six weeks paid leave in any 12-month period, to be paid at two-thirds the employee’s regular weekly salary with a cap of $524 per week. The PFLA operates in conjunction with both the New Jersey Family Leave Act (“NJFLA”), N.J.S.A., 34:11B-4, and the Federal Family & Medical Leave Act (“FMLA”), 29 U.S.C. §2612; however, the PFLA has no impact on an employee’s rights, or an employer’s obligations, under those acts. For example, when an employee is eligible for leave under the NJFLA and/or the FMLA, paid leave runs concurrently. If an employee is entitled to 12 weeks of “protected” leave under the FMLA and/or the NJFLA, the PFLA does not grant any additional time off from work. Rather, it simply provides the employee with a means of income during a portion of that 12-week leave period. ALL WORKERS TO ENJOY BENEFITS With respect to who qualifies for paid leave benefits, unlike the NJFLA and the FMLA, the PFLA does not contain a 50-employee threshold for it to apply. Rather, the law applies to all private and state government sector businesses who meet the definition of a covered employer under the Temporary Disability Benefits Law. This is any business entity that employs one or more individuals and pays the individual(s) at least $1,000 in the current or preceding calendar year. For an employee to become eligible for paid family leave, he or she must have earned at least $142.00 per week for a period of 20 consecutive calendar weeks or earned at least $7,200 (approximately 1,000 times the current hourly minimum wage of $7.15/hr) in the 52 weeks prior to the leave. Under the PFLA, employees will be entitled to take paid leave to care for sick family members or to care for a newborn or a newly adopted child within 12 months of birth or placement. Only legal guardians and biological, foster, adoptive and step-parents are entitled to paid leave for a newborn or a newly adopted child, and employees will only be afforded paid leave to care for a spouse, civil union partner, domestic partner, parent or child who suffers from a serious health condition. Under the new law, “care” means but is not limited to physical care, emotional support, visitation, transportation and arranging for a change in care. For an employee seeking leave to care for a sick family member, medical certification must be provided. The PFLA also permits an employee to receive paid leave on an intermittent basis. Again, consistent with the right to intermittent leave under the FMLA and NJFLA, employees will be afforded six weeks for “any one period” of family leave or 42 days for “any one period” of family leave taken on intermittent basis to care for a family member who suffers from a serious health condition during any 12-month period. Employees will be subject to a one-week “waiting period” before being able to receive benefits and an employer may require employees to first use up to two weeks of accrued sick, vacation or other fully paid time off before accessing paid leave benefits. EMPLOYER RIGHTS As is the case with individual temporary disability benefits, employers may decide to provide paid leave benefits under a private plan, as long as the private plan grants the same or better benefits under the same eligibility requirements and costs to the employee as the state plan. Nothing prohibits an employer from granting greater benefits or from providing additional benefits to all or some of its employees. With respect to notice, the PFLA is similar to the notice obligations established under the FMLA and NJFLA for both employees and employers. Under the PFLA, employers are required to provide each employee with and “conspicuously post” a notification of the new law in a form approved by the Division of Temporary Disability Insurance of the Department of Labor and Workforce Development (the “Division”). Employers must also provide each employee with a written copy of the notification at the time of hiring and whenever an employee notifies the employer of a need for leave. Absent emergency or unforeseen circumstances, an employee must provide adequate notice to his or her employer when taking leave. In order to apply for consecutive leave to care for a sick relative, an employee must provide prior notice “in a reasonable and practical manner” and an employee must give 15 days notice when requesting intermittent leave. When requesting to leave to care for a newborn or newly adopted child, employees are required to provide 30 days of notice. A failure to provide adequate notice may result in the loss of two weeks worth of benefits. FILING FOR BENEFITS In order to receive paid leave benefits both the employer and the employee must complete forms provided by the Division. Employers will have nine days from the start of any paid leave period to issue to the employee and the division a completed employer form. The form must include the employee’s name, Social Security number, address, wage information, any sick pay, vacation pay or other fully-paid time off provided by the employer during the leave period and the name, address and division identity number of the employer. Employees will have 30 days after the start of the leave period to submit a separate information form supplied by the division. After the Division has received both the employer and the employee’s forms, it is the Division’s responsibility to determine if the employee is entitled to paid leave. Employers may challenge the Division’s determinations of eligibility by the same appeal procedure applicable to other Temporary Disability Insurance appeals. There will be a $250 fine for any false statement made by an employee in an effort to receive benefits and a $1,000 fine for violations with the intent to defraud. On the minds of many employers prior to the enactment of the PFLA was the issue of how paid leave would be funded and whether employers would be obligated to contribute. This concern has been eliminated; the PFLA will be funded by an employee payroll tax with no employer contribution. The rate for 2009 will be 0.09 percent and will increase to 0.12 percent in 2010. This means that in 2009, employees will be taxed approximately 48¢ per week ($25/year) and in 2010 this tax will increase to about 64¢ per week ($33/year). Payroll deductions for the new law will begin on January 1, 2009 and the benefits will become available to eligible employees commencing July 1, 2009. Finally, and what was of even greater concern to small businesses prior to the enactment of the PFLA, the PFLA does not alter or amend an employee’s current rights with respect to whether or not the paid leave is considered “protected” or “unprotected” leave under the FMLA or NJFLA. Under the PFLA itself, employers are not required to hold employees’ jobs open when they take leave. Consequently, those businesses employing fewer than 50 employees may permanently replace employees who take leave under the PFLA. Despite this, those small businesses that were not subject to the obligations of providing “protected” leave under the FMLA or NJFLA remained concerned over the possibility of increased litigation over terminating an employee who was taking advantage of his or her paid leave benefits. In direct response to these concerns from the New Jersey small business community, the stated purpose of the PFLA explicitly provides that the PFLA “cannot be construed as granting any worker an entitlement to be restored by the employer to employment held by the worker prior to taking family temporary disability leave.” N.J.S.A. 43:21-26. Indeed it goes so far as to state that the PFLA does not provide any right to an employee to take legal action against an employer who fails to restore the employee to his or her prior position after the leave ends. Accordingly, the legislature has attempted to nip any potential litigation in the bud, so to speak, with respect to those small businesses that are not subject to the protections of the NJFLA or FMLA. With this in mind, it is clear that the intent behind the PFLA is to provide a right to monetary compensation during an employee’s period of involuntary leave. The most obvious benefit to the additional six weeks of pay is that it bridges the gap for employees on maternity leave during the typical 12 week period by extending the initial six weeks of temporary disability benefits available to them and thus providing at least some portion of pay to the employee during the time off from work needed to both recuperate and care for a newborn child. In essence, the Paid Family Leave Act amounts to a positive development for both employees and employers. Workers in New Jersey will have access to much needed funds at moments of needs and employers have the flexibility to make personnel moves if they become necessary. Marra DePekary is a member of Carroll McNulty & Kull in Basking Ridge.

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