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Withholding for New York Family Leave

The New York Paid Family Leave Program was discussed in earlier posts on August 31, 2017, August 17, 2017 and June 29, 2017.

The program is effective on January 1, 2018.  Employers are required to add paid family leave coverage to their existing disability insurance policies as of that date.

Employers are permitted to withhold the premiums related to this program from the compensation of employees.  However, employers are not required to withhold these amounts.  If an employer chooses not to withhold the cost of the paid family leave premiums from the compensation of employees, then the employer will bear the cost of the paid family leave policy.

The New York State Department of Financial Services has indicated that the maximum 2018 cost of premiums (and the amount that employers can withhold from employee compensation in 2018, if they choose to do so) is computed as 0.126% multiplied by the annualized statewide average weekly wage of $67,908 per year.  (This annualized amount is computed as the statewide average weekly wage of $1,305.92 multiplied by 52 weeks).

As a result, the maximum premium for any employee as well are the maximum amount that can be withheld from any employee’s compensation is $85.56 (computed as $67,908 x 0.126%).

This annual cap of $85.56 averages out to $1.65 per week for an entire year; however, New York State has clarified that the maximum premium and withholding amounts are based on the actual annual wages of the employee, not on the employee’s weekly pay, which can vary during the year.

Therefore, in 2018, employers who withhold from employees’ compensation should withhold 0.126% of employee’s compensation and stop withholding when the cumulative withholding reaches $85.56 for the year.

The information provided herein is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional service. As such, M + O = CPE, Inc. and the author disclaim any responsibility or liability for the information supplied herein or the application of said information.