HR Alert

New York State Issues Tax Guidance on Paid Family Leave Program

Paid Family Leave to be Phased in Beginning January 1, 2018

The New York Department of Taxation and Finance has released tax guidance regarding the state Paid Family Leave (PFL) program.

PFL Tax Guidance
The PFL guidance concerns the appropriate tax treatment of family leave contributions and benefits for New York employees, employers, insurers (including self-insured employers), and employer plans, among other entities. According to the guidance:

  • Benefits paid to employees will be taxable non-wage income that must be included in federal gross income.
  • Taxes will not automatically be withheld from benefits; employees can request voluntary tax withholding.
  • Premiums will be deducted from employees' after-tax wages.
  • Employers should report employee contributions on Form W-2 using Box 14 - State disability insurance taxes withheld.
  • Benefits should be reported by the State Insurance Fund on Form 1099-G and by all other payers on Form 1099-MISC.

Note: The state has emphasized that while the guidance may be helpful for PFL implementation, it is still the responsibility of each employee and employer/insurer to consult with its tax advisor.

Click here to read the guidance.

The New York PFL law will be phased in beginning January 1, 2018 and will apply to employers of all sizes. When the law is fully phased in over the next several years, employees may be eligible for 12 weeks of paid, job-protected leave when certain life events occur.

Employers will be required to purchase a PFL insurance policy or self-insure. The premium of the policy will be paid for by employees. No employer will be required to fund any portion of the family leave benefit. Employers will not have to pay an employee's salary while the worker is on leave--the employee will receive the PFL benefit through the insurance policy.

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