For Payroll, that means new administration, coding and tracking requirements for the new leave.

Coverage Tiers for the NICU Leave Law

The new law applies to employers with 16 or more employees in two tiers:

• Employers with 16 to 50 employees must provide up to 10 days of NICU leave, and
• Employers with 51 or more employees must provide up to 20 days.

Payroll needs to know which tier applies before coding any leave.

The 4 Payroll Essentials

The leave is unpaid, so payroll should code it correctly from the start. No automatic wage replacement applies.

Employees may elect to substitute accrued paid leave, but employers cannot require it. If an employee elects substitution, payroll must apply the correct pay codes and reduce the paid leave balance accordingly.

Employers must maintain employee benefits during the leave period. Payroll should confirm how employee premiums will be collected while pay is stopped.

Finally, NICU leave tracks separately from time off under the Family and Medical Leave Act (FMLA). Eligible employees must exhaust FMLA first; NICU leave follows if the child remains in the NICU. Timekeeping systems should reflect that sequence rather than treat the two as a single concurrent bucket.

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