New Jersey Enacts Paid Family Leave Insurance Effective 2009

The New Jersey Paid Family Leave Insurance law became effective as of January 1, 2009.  The following will summarize the key provisions of the law.

Benefits of Paid Family Leave:  Up to 6 weeks of paid family leave funded through employee tax contributions.  Employers do not contribute.

Employers Covered:  All private employers and government sector employers covered under the New Jersey Unemployment Benefits Law, which includes any entity that employs one (1) or more persons in New Jersey and paid them at least $1,000 in the current or preceding calendar year.

Eligibility for Paid Family Leave:  Any employee working for a covered employer who meets New Jersey’s unemployment compensation law minimum eligibility standards - worked at least 20 calendar weeks in covered employment earning at least 20 times minimum wage ($143/week), or at least 1,000 x minimum wage adjusted to next higher multiple of $100 ($7,200 per year) in covered employment during “Base Year” period (current figures).

Reasons for Paid Family Leave:  Same reasons applicable to all leaves under NJ Family Leave Act – care for an immediate family member (parent, parent in-law, child under 18, spouse or civil union partner) with a serious medical condition.

Weekly Benefits:  Same as paid under NJ Temporary Disability Benefits – 2/3 of weekly compensation up to $524 per week, for up to six (6) weeks, during any twelve (12) month period.
  • If the employee takes intermittent leave, employee may receive up to $74.85/day for up to 42 days during any 12-month period.
  • One-week waiting period before eligible to receive benefits.
  • Employer may require employees take up to 2 weeks available sick/vacation pay or other paid leave time, before eligible to receive benefits.
  • Benefits reduced by the amount of time in which fully-paid leave is provided.  For example, if an employee who uses one (1) week of sick time only will be eligible for a maximum of five (5) weeks of family leave benefits.
Cost to Employers:  The law does not require any contributions by employers.

Cost to Employees:  As of January 1, 2009 employees start paying an additional tax of 0.09% on approximately $27,700 earnings, the portion of wages subject to NJ Temporary Disability Benefits law ($24.93/year, or about $0.48/week), paid through payroll deductions.

  •  Tax rate increases to 0.12% of wages as of 2010 ($33.24/year or about $0.64/week).
  • No paid family leave benefits until 7/1/09 to give State time to raise money to fund program.
Plan Options:  Employers have option of using State-operated plan or a private plan through self-insurance or an insurance policy.  A private plan must provide the same (or better) benefits under the same eligibility requirements and costs to the employee as the State-operated plan.

Job Protection:  Employees of employers covered under FMLA and NJFLA (employers with 50 or more employees) get no additional entitlement to employment restoration, but law also does not increase, reduce or modify any entitlement of an employee to return to employment or any right to take action under FMLA and NJFLA.

Mandatory Posting:  The law requires employers to notify eligible employees of their rights under the law, through written notifications.  The NJ Department of Labor & Workforce Development developed a mandatory posting, copies of which are available through the following link: http://lwd.dol.state.nj.us/labor/forms_pdfs/tdi/fli_poster.pdf


Practice Pointer: All New Jersey employers should modify their policies to include references to paid family leave insurance.  The law does not require smaller employers (less than 50 employees), who are not covered by NJ Family Leave Act or the federal Family and Medical Leave Act to grant family leaves of absence to their employees, even though those employees may be eligible for paid family leave insurance.  Nevertheless, all employers must review their leave policies to account for employees out on family leave.  At ZH we can help you with reviewing or developing your policies.

For additional information on this topic, please contact Douglas S. Zucker at DSZ@zuckerhatfield.com or  Kathryn V. Hatfield at KVH@zuckerhatfield.com.