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New NJ Legislation Extends Temporary Disability Insurance

Spring 2008Cole Schotz DocketAttorney: Jamie P. Clare

Since 1993, the New Jersey Family Leave Act (“NJFLA”) and the federal Family and Medical Leave Act (“FMLA”) have allowed New Jersey workers in companies with fifty or more employees to take twelve weeks of unpaid leave to care for a new child or sick relative.  Without a paycheck, however, many were forced to choose between family and job.  That has now changed.

On May 2, 2008, Governor Jon Corzine signed into law the Paid Family Leave Act, making New Jersey the third state in the nation to allow employees to take time off with limited pay to bond with newly born or adopted children or to care for seriously ill family members.  The Act extends New Jersey’s Temporary Disability Insurance (“TDI”) program to provide such benefits, and applies to all employers, large and small.

Under the legislation, employees receive up to six weeks of family leave benefits over a twelve-month period.  The benefits are the same as the weekly amount for TDI benefits during a worker’s own disability (two-thirds of the worker’s usual wage, with a maximum of $524 per week in 2008).  The maximum weekly benefit will be adjusted annually for inflation.

Paid family leave will be financed through worker payroll deductions.  In the first year, employees will have 0.09 percent of their salaries withheld from their paychecks.  By the second year, it will increase to 0.12 percent, or $33 a year on the $27,700 that is the maximum taxable income.  Under the Act, the state Department of Labor and Workforce Development can borrow up to $25 million from the existing TDI fund for start-up costs.

The legislation allows employers to require that employees use available sick or vacation pay, or other fully paid leave, before receiving family leave benefits.  (The maximum amount of fully paid leave the employer may require the employee to use before receiving family leave benefits is two weeks.)  Employers may also reduce the number of days of family leave benefits by the number of days that fully paid leave is provided.

For a new child, leave must be taken within 12 months of the child’s birth or adoption and employees must give 30 days’ notice prior to taking leave.  To care for an immediate family member (which means a child, parent, spouse or civil union partner — no second cousins, grandmothers or great-uncles), with a “serious health condition,” employees must give 15 days’ notice.

The FMLA and the NJFLA already require companies with fifty or more people to hold the job of someone on leave under most circumstances.  This Act does not change those protections, nor does it provide any job protection of its own.  However, given the interaction between this law, the FMLA, the NJFLA and state disability laws, confusion is inevitable.  Even small employers not subject to the FMLA and the NJFLA will now have to contend with family leave issues.  The legislation applies to all private and public employers subject to the unemployment compensation law; it will not apply to federal government employees.  Employees are able to start collecting family leave benefits on July 1, 2009.

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