Gov. Phil Murphey signed into law Tuesday an extensive expansion of New Jersey’s 10-year-old paid family leave program, allowing workers in the state to take off more time to care for a newborn or sick relative and to collect a larger piece of their pay while on leave.
The program’s overhaul was sought after by progressive advocates who said its payouts were too low and many low- and middle-income families still could not afford to take time away from their jobs.
“Paid family leave can be vital in allowing them to focus attention on where it is most needed: on their families,” Murphy, a Democrat, said before signing the law at JFK Library in Piscataway.
In 2009, New Jersey became the second state, behind California, to enact paid family leave. But in recent years, researchers have found that too few workers knew the benefits were even available and the reimbursements needed to be raised to boost enrollment.
A 2017 study found just 12 percent of New Jersey’s eligible new parents were receiving family leave benefits. In its first seven years, family leave insurance paid out nearly half a billion dollars in benefits on more than 200,000 claims. About eight in 10 claims were for maternity leave, while two in 10 were to take care of a family member.
Right now, new parents or caregivers can receive up to six weeks of benefits equal to two-thirds of their pay, but capped at $633 a week. A worker making $15 an hour, or $600 a week, receives $400 a week in wage replacement under those rules.
Starting July 1, 2020, eligible workers will be able to receive 80 percent of their wages — up to $860 — for 12 weeks.
New Jersey Working Families, a liberal Trenton think tank, said that raising the wage cap would help out middle-class families, while raising the two-thirds limit on wage replacement would help lower-income families.
Siblings, grandparents, grandchildren and parents-in-law also are now newly covered as caregivers, effective immediately. Caregivers may also qualify for benefits to care for a family member who is a victim of domestic or sexual violence. Previously, only children, parents, spouses, domestic partners and civil union partners qualified.
State Assemblywoman Annette Quijano, D-Union, a main sponsor of this bill, said this bill is important to her because two of her grandparents were hospitalized and her family argued over who would be able to make the time to be with them.
“This can actually break up families,” Quijano said at Tuesday’s event. “Who gives the time? Who doesn’t? Who has that flexibility?”
As of June 30, the new law will also confer job protections to employees of businesses with at least 30 employees, down from 50.
It also sets aside $1.2 million to advertise and promote the paid leave program.
The nonpartisan state Office of Legislative Services estimates insurance claims paid out will increase by $277 million to $363 million a year once the expansion is fully implemented.
Former Gov. Chris Christie, a Republican, vetoed a similar bill in 2017, saying that the cost of the expansion would be too much to bear for New Jersey workers. Republican lawmakers had similar concerns when the Democrat-controlled state Legislature passed this bill last month.
The program is funded through a small payroll deduction paid by every New Jersey worker. As of Jan. 1, every worker is contributing on their first $34,400 in wages, or a maximum of $27.52 a year. This law adjusts the formula for calculating the deduction to tax the first $131,000 in wages. It’s not clear exactly how much more those working in New Jersey would pay because the rate is changed each year to meet the program’s needs.
“Today, we send a very clear message that family matters,” Assembly Speaker Craig Coughlin, D-Middlesex, said Tuesday.
Who is eligible?
You’re eligible to receive benefits if you are paying into the program through an automatic payroll deduction at work.
You must also have to have been working for at least 20 weeks with at least $172 in weekly wages or you have to have earned at least $8,600 in the preceding 12 months.
You can apply for insurance benefits to care for a seriously ill family member or a newborn or recently adopted child.
How is it funded?
The program is completely funded by New Jersey workers through a payroll deduction, similar to how you pay into unemployment insurance and temporary disability insurance funds.
This year, every worker will contribute .08 percent on the first $34,400 of their taxable wages — up to $27.52.
This bill would adjust the formula for calculating the deduction to tax the first $131,000 in wages. It’s not clear exactly how much more those working in New Jersey would pay because the rate is changed each year to meet the program’s needs.
How much money will you get?
This law will allow you to receive 85 percent of your weekly wage up to a maximum of $860 per week. You will receive a prepaid debit card in the mail.
Is your job protected while you’re on leave?
In addition to replacing some of your income while you’re on leave, the paid family leave program also guarantees you’ll have a job when you return — for some workers.
The bill Murphy will sign into law confers job protections to employees of businesses with at least 30 employees. This change is effective June 30.
The expansion makes new allowances for people working more than one job, allowing you to take leave from one job and receive benefits while continuing to work a second job, according to the New Jersey Time to Care Coalition. This will take effect in July 2020.
Are you taxed on the benefits?
Family leave benefits are subject to the federal income tax but not the state gross income tax. The application includes an option to have 10 percent of your benefits withheld for taxes.
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