How does a NYC restaurant track NY Paid Family Leave deductions?
New York Paid Family Leave is funded entirely through employee payroll deductions. You don’t pay into it as the employer. You withhold a percentage of each employee’s gross wages every pay period and remit those collected amounts to your PFL insurance carrier. The New York Department of Financial Services sets the rate and cap annually, usually announcing it in the fall for the following year. For 2024, the rate was approximately 0.373% of gross wages, capped at a maximum annual contribution tied to the state average weekly wage.
In your payroll system, PFL needs its own deduction line. It should be separate from New York State Disability Insurance, federal withholding, and state income tax. QuickBooks and most payroll platforms have a dedicated PFL field, but it has to be configured correctly. If PFL is getting lumped into another withholding category, your payroll reports will be wrong and remittance to your carrier won’t reconcile.
The part that trips up restaurant owners is tipped employees. PFL is calculated on gross wages, and gross wages include reported tips. Both cash tips that employees report and credit card tips factor into the number used to calculate the deduction. If tip reporting is inaccurate, your PFL withholding will be off. This is one more reason why accurate tip tracking matters beyond just income tax compliance.
High turnover adds another layer. Restaurants cycle through employees more than most industries, and every new hire needs PFL deductions set up from their very first paycheck. If someone leaves and comes back within the same year, you need to account for what was already withheld so you don’t exceed the annual cap. Payroll software handles this automatically when it’s set up right, but manual tracking makes it easy to miss.
You remit PFL deductions to your insurance carrier, not directly to the state. Most businesses carry PFL on the same policy as their disability insurance. Your carrier sets the remittance schedule, which is typically quarterly or annually depending on your policy terms. Keep records of what you’ve withheld per employee and what you’ve sent to the carrier. If there’s ever a discrepancy during an audit or a claim, you need that documentation.
A common mistake is confusing PFL with New York State Disability Insurance. They are separate programs with separate deductions and separate purposes, even though they often live on the same insurance policy. New York requires both to be itemized on employee pay stubs. If your pay stubs only show one combined line, that needs to be fixed.
Because the rate and cap change every year, it’s worth reviewing your payroll setup each January to make sure the new numbers are reflected. If you’re handling payroll through a provider that specializes in small business bookkeeping in the Bronx and the surrounding area, they should be updating this for you automatically. If you’re running it yourself, check the DFS website each December and update your system before the first payroll of the new year. Under-withholding means you could end up covering the difference out of pocket. Over-withholding means you owe refunds to employees.
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