Small Firms Find They Must Comply With New Leave Law

Insiders: Few business owners aware they must offer workers time off under state legislation

NJBIZ — Monday, June 1, 2009

By Beth Fitzgerald

A few weeks ago, Andy Cohen, who heads the 18-employee Newark real estate firm Rock Properties, suddenly realized his business must comply with the New Jersey Family Leave Insurance law, which takes effect July 1.

"I only found out because one of my employees told me he was eligible," Cohen said. Like many other small employers, Cohen just assumed the new law only covered firms with 50 or more workers, who have long been subject to both state and federal laws providing unpaid family and medical leave.

Cohen said it's fine with him that the employee who alerted him to the law will be able to use it to take some paid time off to adopt a baby.

"This is a gift to employees, something that will help them, and I approve of it," Cohen said. "For an employee that needs time off to care for a loved one, I would encourage them to take advantage of it."

Workplace experts are battling an epidemic of confusion over the new law, commonly called paid family leave, which applies to companies as small as a single employee.

John Sarno, president of the Employers Association of New Jersey, said the confusion arose during the legislative debate, when opponents branded it with the paid family leave moniker.

The confusion isn't surprising: State and federal laws already provide unpaid family and medical leave to employees of firms with 50 or more workers, so small employers may assume the new law just provides wage-replacement benefits to workers already entitled to the time.

But Family Leave Insurance isn't a leave law — it's an extension of New Jersey's temporary disability law. Employees began paying into the fund Jan. 1, and once they've worked long enough — and accumulated sufficient wages to qualify — they can collect six weeks a year of family leave insurance when taking time off to bond with a newborn or adopted child, or care for a family member with a serious health condition. And since it's not a leave law, companies with fewer than 50 employees don't have to take the employee back when the leave is over.

Don Mallo is vice president, human resources for Extensis, in Woodbridge, a professional employer organization serving 300 employers — 80 percent of them with fewer than 50 workers.

"Employers think, 'I don't have 50 people, so I am exempt,' and that's just not the case," Mallo said. "We've been like Paul Revere over the last six months — Webinars, meetings, refresher announcements — and our agenda over the next two weeks is to ramp up our communications through weekly alerts to remind employers of their responsibilities come July 1."

While small companies don't have to retain workers who use the insurance, "it will be very challenging for a small-business person not to keep a job open for someone who takes care of a sick relative or gives birth. The public-relations issues outweigh the legal realities, and most will keep the jobs open," Mallo said.

Sarno has held 12 seminars on the new law throughout New Jersey, and when he asks if any employers present had fewer than 50 employees, "hardly any hands went up," which told him small employers don't have Family Leave Insurance on their radar screens, he said.

"The demographics of the work force make it more likely than not that an employee at a small firm will use this benefit," Sarno said. But it doesn't need to seriously disrupt the workflow, as employers can cross-train workers so they're prepared to take over when a co-worker is out, he said.

Top Top | NJCA in the News | NJCA Homepage