S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5217
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               March 7, 2023
                                ___________
 
 Introduced  by  M.  of  A.  BARCLAY,  LEMONDES, DeSTEFANO, J. M. GIGLIO,
   BRABENEC -- Multi-Sponsored by -- M. of A. K. BROWN, MANKTELOW -- read
   once and referred to the Committee on Small Business
 
 AN ACT to amend the state finance law and the tax law,  in  relation  to
   the  establishment  of  the  small  business  child and dependent care
   savings program
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The state finance law is amended by adding a new article 17
 to read as follows:
                                ARTICLE 17
  NEW YORK STATE SMALL BUSINESS CHILD AND DEPENDENT CARE SAVINGS PROGRAM
 SECTION 255. SHORT TITLE.
         256. DEFINITIONS.
         257. PROGRAM ESTABLISHED.
         258. PROGRAM ADMINISTRATION.
         259. PROGRAM IMPLEMENTATION AND ENROLLMENT.
         260. PAYMENTS.
         261. DUTY AND LIABILITY OF THE STATE.
         262. DUTY AND LIABILITY OF PARTICIPATING EMPLOYERS.
         263. DELAYED IMPLEMENTATION.
   §  255.  SHORT  TITLE. THIS ACT SHALL BE KNOWN AND MAY BE CITED AS THE
 "NEW YORK SMALL BUSINESS CHILD AND DEPENDENT CARE SAVINGS PROGRAM ACT".
   § 256. DEFINITIONS. THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEAN-
 INGS:
   1. "COMMISSIONER" SHALL MEAN THE COMMISSIONER OF LABOR.
   2. "COMPTROLLER" SHALL MEAN THE COMPTROLLER OF THE STATE.
   3. "EMPLOYEE" SHALL MEAN ANY INDIVIDUAL WHO IS EIGHTEEN YEARS  OF  AGE
 OR  OLDER,  WHO IS EMPLOYED BY AN EMPLOYER, AND WHO EARNED WAGES WORKING
 FOR AN EMPLOYER IN NEW YORK STATE DURING A CALENDAR YEAR.
   4. "EMPLOYER" SHALL MEAN A PERSON OR ENTITY  ENGAGED  IN  A  BUSINESS,
 INDUSTRY,  PROFESSION,  TRADE,  OR  OTHER  ENTERPRISE IN NEW YORK STATE,
 WHETHER FOR PROFIT OR NOT FOR PROFIT, THAT (A) HAS AT ALL  TIMES  DURING
 THE  PREVIOUS  CALENDAR YEAR EMPLOYED AT LEAST ONE BUT NOT MORE THAN ONE
 
              

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03829-01-3
 A. 5217                             2
 
 HUNDRED EMPLOYEES IN THE STATE, (B) HAS BEEN IN BUSINESS  AT  LEAST  TWO
 YEARS, AND (C) HAS NOT OFFERED A CHILD AND DEPENDENT CARE SAVINGS PLAN.
   5. "ENROLLEE" SHALL MEAN ANY EMPLOYEE WHO IS ENROLLED IN THE PROGRAM.
   6.  "FUND"  SHALL MEAN THE NEW YORK SMALL BUSINESS CHILD AND DEPENDENT
 CARE SAVINGS PROGRAM FUND.
   7. "PARTICIPATING EMPLOYER" SHALL MEAN A SMALL BUSINESS THAT  PROVIDES
 A  PAYROLL  CHILD AND DEPENDENT CARE SAVINGS ARRANGEMENT AS PROVIDED FOR
 BY THIS ARTICLE FOR ITS EMPLOYEES WHO ARE ENROLLEES IN THE PROGRAM.
   8. "PAYROLL DEPOSIT CHILD  AND  DEPENDENT  CARE  SAVINGS  ARRANGEMENT"
 SHALL  MEAN  AN  ARRANGEMENT  BY  WHICH  A PARTICIPATING EMPLOYER ALLOWS
 ENROLLEES TO REMIT PAYROLL DEDUCTION CONTRIBUTIONS TO THE PROGRAM.
   9. "PROGRAM" SHALL MEAN THE NEW YORK STATE SMALL  BUSINESS  CHILD  AND
 DEPENDENT CARE SAVINGS PROGRAM.
   10.  "SMALL BUSINESS" SHALL MEAN A PERSON OR ENTITY ENGAGED IN A BUSI-
 NESS, INDUSTRY, PROFESSION, TRADE,  OR  OTHER  ENTERPRISE  IN  NEW  YORK
 STATE,  WHETHER FOR PROFIT OR NOT FOR PROFIT, THAT EMPLOYED AT LEAST ONE
 BUT NO MORE THAN ONE HUNDRED EMPLOYEES AT ANY  ONE  TIME  IN  THE  STATE
 THROUGHOUT THE PREVIOUS CALENDAR YEAR, AND THAT NOTIFIES THE COMPTROLLER
 THAT IT IS INTERESTED IN BEING A PARTICIPATING EMPLOYER.
   11.  "WAGES"  MEANS  ANY  COMPENSATION  RECEIVED BY AN ENROLLEE FROM A
 PARTICIPATING EMPLOYER DURING THE CALENDAR YEAR.
   12. "INTERNAL REVENUE CODE" SHALL MEAN THE INTERNAL  REVENUE  CODE  OF
 NINETEEN  HUNDRED  EIGHTY-SIX,  OR  ANY SUCCESSOR LAW, IN EFFECT FOR THE
 CALENDAR YEAR.
   13. "ADMINISTRATORS" SHALL MEAN THE  COMMISSIONER  OF  LABOR  TOGETHER
 WITH THE COMPTROLLER.
   §  257.  PROGRAM ESTABLISHED. A STATE CHILD AND DEPENDENT CARE SAVINGS
 PROGRAM IN THE FORM OF PAYROLL DEDUCTION, KNOWN AS THE  NEW  YORK  STATE
 SMALL  BUSINESS  CHILD AND DEPENDENT CARE PROGRAM, IS HEREBY ESTABLISHED
 FOR THE PURPOSE OF PROMOTING GREATER CHILD AND  DEPENDENT  CARE  SAVINGS
 FOR  PRIVATE-SECTOR  EMPLOYEES OF SMALL BUSINESSES IN A CONVENIENT, LOW-
 COST, AND PORTABLE MANNER.
   § 258. PROGRAM ADMINISTRATION. THE ADMINISTRATION OF THE PROGRAM SHALL
 BE OVERSEEN BY BOTH THE COMPTROLLER AND THE COMMISSIONER.  THE  ADMINIS-
 TRATORS  ARE  AUTHORIZED  AND  DIRECTED TO ESTABLISH A FLEXIBLE BENEFITS
 PROGRAM CONSISTENT WITH SECTIONS ONE HUNDRED TWENTY-FIVE AND ONE HUNDRED
 TWENTY-NINE OF THE INTERNAL REVENUE CODE AND REGULATIONS ADOPTED  PURSU-
 ANT  THERETO.  THE  ADMINISTRATIVE  DUTIES  AND  RESPONSIBILITIES ARE AS
 FOLLOWS:
   1. CAUSE THE PROGRAM TO BE DESIGNED, ESTABLISHED  AND  OPERATED  IN  A
 MANNER THAT:
   (A) MAXIMIZES PARTICIPATION AND SAVINGS;
   (B) MAXIMIZES SIMPLICITY, INCLUDING EASE OF ADMINISTRATION FOR PARTIC-
 IPATING EMPLOYERS AND ENROLLEES;
   2. DETERMINE THE NUMBER AND DUTIES OF STAFF MEMBERS NEEDED TO ADMINIS-
 TER THE PROGRAM AND ASSEMBLE SUCH STAFF, INCLUDING, AS NEEDED, EMPLOYING
 STAFF AND APPOINTING A PROGRAM ADMINISTRATOR.
   3. EVALUATE AND ESTABLISH THE PROCESS BY WHICH AN ENROLLEE IS ELIGIBLE
 TO CONTRIBUTE A PORTION OF HIS OR HER WAGES TO THE PROGRAM FOR AUTOMATIC
 DEPOSIT  AND  THE PROCESS BY WHICH THE PARTICIPATING EMPLOYER PROVIDES A
 PAYROLL DEPOSIT CHILD AND DEPENDENT CARE SAVINGS ARRANGEMENT TO  FORWARD
 THOSE  CONTRIBUTIONS  AND RELATED INFORMATION TO THE PROGRAM, INCLUDING,
 BUT NOT LIMITED TO, CONTRACTING WITH  FINANCIAL  SERVICE  COMPANIES  AND
 THIRD-PARTY  ADMINISTRATORS  WITH  THE CAPABILITY TO RECEIVE AND PROCESS
 EMPLOYEE INFORMATION AND CONTRIBUTIONS FOR  PAYROLL  DEPOSIT  CHILD  AND
 DEPENDENT CARE SAVINGS ARRANGEMENTS OR SIMILAR ARRANGEMENTS.
 A. 5217                             3
 
   4. DESIGN AND ESTABLISH THE PROCESS FOR ENROLLMENT INCLUDING THE PROC-
 ESS  BY  WHICH  AN  EMPLOYEE  CAN OPT NOT TO PARTICIPATE IN THE PROGRAM,
 SELECT A CONTRIBUTION AMOUNT OR TERMINATE PARTICIPATION IN THE PROGRAM.
   5.  EVALUATE  AND  ESTABLISH  THE  PROCESSES  BY WHICH AN EMPLOYEE MAY
 VOLUNTARILY ENROLL IN AND MAKE CONTRIBUTIONS TO THE PROGRAM.
   6. SET MINIMUM AND MAXIMUM  CONTRIBUTION  LEVELS  IN  ACCORDANCE  WITH
 LIMITS.
   7. FACILITATE EDUCATION AND OUTREACH TO EMPLOYERS AND EMPLOYEES.
   8.  CARRY  OUT  THE DUTIES AND OBLIGATIONS OF THE PROGRAM IN AN EFFEC-
 TIVE, EFFICIENT, AND LOW-COST MANNER.
   9. EXERCISE ANY AND ALL OTHER  POWERS  REASONABLY  NECESSARY  FOR  THE
 EFFECTUATION  OF  THE PURPOSES, OBJECTIVES, AND PROVISIONS OF THIS ARTI-
 CLE.
   10. DETERMINE  WITHDRAWAL  PROVISIONS,  SUCH  AS  ECONOMIC  HARDSHIPS,
 PORTABILITY AND LEAKAGE.
   §  259.  PROGRAM  IMPLEMENTATION  AND  ENROLLMENT. EXCEPT AS OTHERWISE
 PROVIDED IN THIS ARTICLE, THE PROGRAM SHALL BE IMPLEMENTED, AND  ENROLL-
 MENT  OF EMPLOYEES SHALL BEGIN, WITHIN TWELVE MONTHS AFTER THE EFFECTIVE
 DATE OF THIS ARTICLE. THE PROVISIONS OF THIS SECTION SHALL BE  IN  FORCE
 AT  SUCH TIME AS THE PROGRAM ADMINISTRATORS OPEN THE PROGRAM FOR ENROLL-
 MENT.
   1. EACH PARTICIPATING EMPLOYER SHALL ESTABLISH A PAYROLL DEPOSIT CHILD
 AND DEPENDENT CARE SAVINGS ARRANGEMENT TO ALLOW EACH EMPLOYEE TO PARTIC-
 IPATE IN THE PROGRAM AFTER THE PROGRAM ADMINISTRATORS OPEN  THE  PROGRAM
 FOR ENROLLMENT.
   2.  ENROLLEES SHALL HAVE THE ABILITY TO SELECT A CONTRIBUTION LEVEL TO
 THE FUND. THIS LEVEL MAY BE EXPRESSED AS A PERCENTAGE OF WAGES OR  AS  A
 DOLLAR  AMOUNT.  ENROLLEES  MAY  CHANGE  THEIR CONTRIBUTION LEVEL AT ANY
 TIME, SUBJECT TO RULES PROMULGATED BY THE PROGRAM ADMINISTRATORS.
   3. FOLLOWING INITIAL IMPLEMENTATION OF THE PROGRAM  PURSUANT  TO  THIS
 SECTION,  AT LEAST ONCE EVERY YEAR, PARTICIPATING EMPLOYERS SHALL DESIG-
 NATE AN OPEN ENROLLMENT PERIOD DURING  WHICH  EMPLOYEES  WHO  PREVIOUSLY
 OPTED OUT OF THE PROGRAM MAY ENROLL IN THE PROGRAM.
   4.  AN EMPLOYEE WHO OPTS OUT OF THE PROGRAM AND WHO SUBSEQUENTLY WANTS
 TO PARTICIPATE THROUGH  THE  PARTICIPATING  EMPLOYER'S  PAYROLL  DEPOSIT
 CHILD  AND DEPENDENT CARE SAVINGS ARRANGEMENT MAY ONLY ENROLL DURING THE
 PARTICIPATING EMPLOYER'S DESIGNATED OPEN ENROLLMENT PERIOD OR IF PERMIT-
 TED BY THE PARTICIPATING EMPLOYER AT AN EARLIER TIME.
   5. EMPLOYERS SHALL RETAIN THE OPTION, AT ALL TIMES, TO SET UP ANY TYPE
 OF EMPLOYER-SPONSORED CHILD AND DEPENDENT CARE SAVINGS PLAN  INSTEAD  OF
 HAVING  A  PAYROLL  DEPOSIT CHILD AND DEPENDENT CARE SAVINGS ARRANGEMENT
 SUCH THAT EMPLOYEES ARE ALLOWED TO PARTICIPATE IN THE PROGRAM.
   6. AN ENROLLEE MAY TERMINATE HIS OR HER PARTICIPATION IN  THE  PROGRAM
 AT ANY TIME IN A MANNER PRESCRIBED BY THE PROGRAM ADMINISTRATORS.
   7.  TO  THE EXTENT PERMITTED BY SECTION ONE HUNDRED TWENTY-FIVE OF THE
 INTERNAL REVENUE CODE AND  REGULATIONS  ADOPTED  PURSUANT  THERETO,  AND
 SALARY  DEFERRED  BY  AN  EMPLOYEE  AS  DEFINED  IN SUBDIVISION THREE OF
 SECTION TWO HUNDRED FIFTY-SIX OF THIS ARTICLE UNDER A FLEXIBLE  BENEFITS
 PROGRAM ESTABLISHED PURSUANT TO THIS ARTICLE SHALL BE CONSIDERED PART OF
 ANNUAL COMPENSATION FOR THE PURPOSE OF COMPUTING RETIREMENT BENEFITS.
   §  260. PAYMENTS. EMPLOYEE CONTRIBUTIONS DEDUCTED BY THE PARTICIPATING
 EMPLOYER THROUGH PAYROLL DEDUCTION SHALL BE PAID  BY  THE  PARTICIPATING
 EMPLOYER TO THE FUND USING ONE OR MORE PAYROLL DEPOSIT CHILD AND DEPEND-
 ENT  CARE  SAVINGS  ARRANGEMENTS  ESTABLISHED BY THE ADMINISTRATOR UNDER
 THIS ARTICLE, EITHER:
 A. 5217                             4
 
   1. ON OR BEFORE THE LAST DAY OF THE MONTH FOLLOWING THE MONTH IN WHICH
 THE COMPENSATION OTHERWISE WOULD HAVE BEEN PAYABLE TO  THE  EMPLOYEE  IN
 CASH; OR
   2.  BEFORE  SUCH  LATER  DEADLINE  PRESCRIBED BY THE ADMINISTRATOR FOR
 MAKING SUCH PAYMENTS, BUT NOT LATER THAN THE DUE DATE FOR THE DEPOSIT OF
 TAX REQUIRED TO BE DEDUCTED  AND  WITHHELD  RELATING  TO  COLLECTION  OF
 INCOME  TAX  AT SOURCE ON WAGES OR FOR THE DEPOSIT OF TAX REQUIRED TO BE
 PAID UNDER THE UNEMPLOYMENT INSURANCE SYSTEM FOR THE PAYROLL  PERIOD  TO
 WHICH SUCH PAYMENTS RELATE.
   §  261.  DUTY  AND  LIABILITY OF THE STATE. 1. THE STATE SHALL HAVE NO
 DUTY OR LIABILITY TO ANY PARTY FOR THE PAYMENT OF ANY CHILD AND  DEPEND-
 ENT CARE SAVINGS BENEFITS ACCRUED BY ANY ENROLLEE UNDER THE PROGRAM. ANY
 FINANCIAL LIABILITY FOR THE PAYMENT OF CHILD AND DEPENDENT SAVINGS BENE-
 FITS IN EXCESS OF FUNDS AVAILABLE UNDER THE PROGRAM SHALL BE BORNE SOLE-
 LY  BY  THE  ENTITIES  WITH  WHOM THE PROGRAM ADMINISTRATORS CONTRACT TO
 PROVIDE INSURANCE TO PROTECT THE VALUE OF THE PROGRAM.
   § 262. DUTY AND LIABILITY OF PARTICIPATING EMPLOYERS. 1.   PARTICIPAT-
 ING  EMPLOYERS  SHALL  NOT  HAVE  ANY  LIABILITY  FOR THE DECISION OF AN
 EMPLOYEE TO PARTICIPATE IN OR OPT OUT OF THE PROGRAM.
   2. A PARTICIPATING EMPLOYER SHALL NOT BE A FIDUCIARY,  NOR  CONSIDERED
 TO  BE, A FIDUCIARY OVER THE PROGRAM. A PARTICIPATING EMPLOYER SHALL NOT
 BEAR RESPONSIBILITY FOR THE ADMINISTRATION OF THE PROGRAM.    A  PARTIC-
 IPATING  EMPLOYER  SHALL  NOT  BE LIABLE FOR PROGRAM DESIGN AND BENEFITS
 PAID TO PROGRAM PARTICIPANTS.
   § 263. DELAYED IMPLEMENTATION. IF THE PROGRAM  ADMINISTRATORS  DO  NOT
 OBTAIN ADEQUATE FUNDS TO IMPLEMENT THE PROGRAM WITHIN THE TIME FRAME SET
 FORTH UNDER THIS ARTICLE OR SUCH FUNDS ARE SUBJECT TO APPROPRIATION, THE
 PROGRAM ADMINISTRATORS MAY DELAY THE IMPLEMENTATION OF THE PROGRAM.
   § 2. The state finance law is amended by adding a new section 99-qq to
 read as follows:
   §  99-QQ.  NEW  YORK  STATE  SMALL  BUSINESS  CHILD AND DEPENDENT CARE
 PROGRAM FUND. 1. THERE IS HEREBY ESTABLISHED WITHIN THE JOINT CUSTODY OF
 THE COMMISSIONER OF TAXATION AND FINANCE AND THE  STATE  COMPTROLLER,  A
 NEW  FUND  TO  BE  KNOWN  AS THE NEW YORK STATE SMALL BUSINESS CHILD AND
 DEPENDENT CARE PROGRAM FUND.
   2. THE FUND  SHALL  INCLUDE  THE  CHILD  AND  DEPENDENT  CARE  SAVINGS
 ACCOUNTS  OF  ENROLLEES,  WHICH  SHALL  BE  ACCOUNTED  FOR AS INDIVIDUAL
 ACCOUNTS.
   3. MONEYS IN THE FUND SHALL CONSIST OF MONEYS RECEIVED FROM  ENROLLEES
 AND PARTICIPATING EMPLOYERS PURSUANT TO AUTOMATIC PAYROLL DEDUCTIONS AND
 CONTRIBUTIONS  TO  SAVINGS  MADE UNDER THE NEW YORK STATE SMALL BUSINESS
 CHILD AND DEPENDENT CARE PROGRAM.
   4. THE FUND SHALL BE OPERATED IN A MANNER DETERMINED BY  THE  ADMINIS-
 TRATORS  OF  THE  NEW YORK STATE SMALL BUSINESS CHILD AND DEPENDENT CARE
 SAVINGS PROGRAM.
   5. THE AMOUNTS DEPOSITED IN THE FUND SHALL NOT CONSTITUTE PROPERTY  OF
 THE STATE AND THE FUND SHALL NOT BE CONSTRUED TO BE A DEPARTMENT, INSTI-
 TUTION, OR AGENCY OF THE STATE. AMOUNTS ON DEPOSIT IN THE FUND SHALL NOT
 BE  COMMINGLED  WITH STATE FUNDS AND THE STATE SHALL HAVE NO CLAIM TO OR
 AGAINST, OR INTEREST IN, SUCH FUNDS.
   § 3. Subsection (c) of section 612 of the tax law is amended by adding
 a new paragraph 47 to read as follows:
   (47) ANY PAYROLL DEDUCTION FOR  CHILD  AND  DEPENDENT  CARE  SERVICES,
 PURSUANT TO ARTICLE SEVENTEEN OF THE STATE FINANCE LAW.
   § 4. This act shall take effect immediately.