If you employ Massachusetts workers, you will soon have to comply with the new Massachusetts Paid Family Medical Leave (PFML) law. The PFML provides that almost all MA employees will be entitled to take paid family and medical leave. Specifically, the MA PFML will provide eligible employees with up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave, for a maximum of 26 weeks in a single year. The paid leave is administered through a fund that the Massachusetts Department of Family and Medical Leave will oversee.
While individuals will not be able to receive many of the benefits of the PFML until January 1, 2021, employers need to start preparing for those benefits now. While some of these changes were originally scheduled to begin on July 1, 2019, a 3 month extension was just approved in order to clarify some areas and give employers more time to understand the PFML law. Employers now have until October 1, 2019 before they are required to deduct payroll contributions into the fund. In order to make up for this 3 month extension, the contribution rate has increased from the original 0.63% to 0.75%. Below are some more detailed facts that all employers should be aware of as this new law goes into effect.
October 1, 2019
Beginning on October 1, 2019, employers will have to deduct payroll contributions from a covered individual’s wages or earnings in order to fund the PFML benefits.
January 1, 2021
Beginning on January 1, 2021, covered individuals can apply for benefits through the Department of Family and Medical Leave. Covered individuals may be entitled to the following in a single benefit year: up to 20 weeks of paid medical leave for a serious health condition; up to 12 weeks of paid family leave related to the birth, adoption or foster care placement of a child, or for managing family affairs when a family member is on active duty in the Armed Forces; and up to 26 weeks of paid family leave to care for a family member who is a covered service member with a serious health condition.
July 1, 2021
Beginning on July 1, 2021, covered individuals may be entitled to up to 12 weeks of paid family leave to care for a family member with a serious health condition.
Covered individuals are eligible for no more than 26 weeks, in the aggregate, of PFML in a single benefit year. The weekly benefit amount will be based upon the individual’s earnings, with a maximum weekly benefit of $850.
Who is Covered?
A worker is considered covered if the individual is paid wages by a MA employer; or resides in MA and is paid for contract services by a MA entity that is required to report payment for services on IRS Form 1099-MISC for more than 50% of its workforce; or the individual is self-employed and resides in MA and chooses to opt-in to the program.
What are Employers’ Contributions?
THE PFML contribution rate is 0.75% of the first $132,900 of an individual’s annual gross earnings. This 0.75% rate is split between contributions of 0.62% for medical leave and 0.13% for family leave. Both employers and employees contribute to the 0.75%.
If your workforce included an average of 25 or more covered individuals last year, employers are required to pay at least 60% of the medical leave contribution and 0% of the family leave contribution. Covered individuals are responsible for 40% of the medical leave contribution and up to 100% of the family leave contribution.
For instance, if an individual whose gross wages were $100,000, the total estimated PFML contribution for the year would be $750. Of this amount, $620 is for medical leave and $130.00 is for family leave. An employer that has an average of 25 or more employees, is required to pay at least 60% of the medical contribution. As such, in this scenario, the employer’s minimum contribution by year would be $372 for medical leave and $0.00 for family leave. The individual, on the other hand, would contribute $248 for medical leave and $130 for family leave in total for the year.
On the other hand, if your workforce included an average of fewer than 25 individuals last year, you are not required to pay the 60% employer share of the medical leave contribution and can deduct all of the rest from the covered individual’s wages. Employers can, however, elect to cover a portion of the covered individual’s share.
Using the same above scenario with the individual making $100,000, an employer with less than 25 employees would not be required to contribute to the fund. The total estimated minimum contribution to the fund by year for that individual would be $378 ($248 for medical leave and $130 for family leave), all of which would be paid by the individual.
If your company already offers paid family or medical leave benefits to employees through a private plan, you may be eligible to opt out of making contributions under the PFML law. These benefits, however, will have to be greater than or equal to the benefits offered under the PFML law. In order to receive an exemption, you will need to apply through MassTaxConnect.
Departures from FMLA
At first glance, the MA PFML is broader than the Family Medical Leave Act (FMLA) and allows for more people to be eligible to take PFML as the definition of a family member is more expansive and includes siblings, step relations, domestic partners, grandparents and in loco parentis. Additionally, while the FMLA mandates time off, it does not require that it be paid. Unlike the FMLA, MA PFML is administered by state government, not one’s employer. As such, employers cannot require employees to exhaust accrued, paid time off as they can under the FMLA. Total leave entitlement is up to 26 weeks in a 12 month period, as opposed to 12 weeks under FMLA.
Importantly, employers should be aware that under the MA PFML, there is a presumption of retaliation if there is an adverse action within the first 6 months after employee returns. An employee who files a civil action alleging discrimination may be entitled to treble damages.
What do Employers Need to Do Now?
By September 30, 2019, all employers should do the following:
- Notify employees of the PFML law by providing written notice of contributions, benefits and workforce protections. An updated template notice reflecting the updates to the law will be released next week.
- Collect signed forms from employees acknowledging that they received notice of the PFML law.
- Display the PFML workplace poster in a highly visible location on the premises. A copy of the poster can be found on mass.gov.
- Determine contribution amounts for your workforce
- Ensure that your payroll vendor is set up to start making payroll deductions into the fund by October 1, 2019.