In 2018, the Massachusetts legislature passed the Paid Family and Medical Leave Act, or Massachusetts General Law (MGL) c. 175M, to balance the needs of employers and employees in circumstances when employees must take extended medical leave for serious medical conditions, including but not limited to pregnancy, or caring for family members.
Under the new law, beginning in January of 2021, employees and certain independent contractors and self-employed individuals may take up to 26 weeks of leave, paid for by contributions from the state. Portions of this law go into effect September 30, 2019. The program will be funded by premiums paid by employees, employers, and the self-employed.
Contributions to the program will begin on October 1, 2019, and will be managed through the Department of Family and Medical Leave (DFML).
The law requires employers to give time off to employees and allow them to return to their jobs at the end of the leave without penalty or retaliation. The primary reasons an employee can take PFML include birth, adoption, or foster child placement; a serious health condition; to care for spouse, son, daughter, parent with a serious health condition; or, for any qualifying exigency arising out of the fact that an employee or his or her spouse, child or parent is on active military duty.
How Employers Can Prepare for the Mass. Paid Family and Medical Leave Act
Step 1: Notify Employees and Hang the PFML Poster in the Workplace.
Starting on September 30, 2019, Massachusetts employers must provide a written notice to employees and to covered independent contractors about their rights under the law. After that, all new hires must be given this notice as well. Failure to provide notice can lead to a fine of up to $300. Businesses also must display a poster about the law by September 30, 2019. Templates for the notice and poster are located at: https://www.mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical-leave.
Step 2: Determine the Employer’s 2018 Massachusetts Workforce.
This step is necessary for calculating an employer’s 2019 contribution responsibilities. There are two important inquiries to determine. The first is whether or not the employer’s 1099 contractors are considered covered individuals. The second is whether an employer is responsible for paying a share of the contributions.
An employer’s Massachusetts workforce is the average number of the following types of workers that it employed during the previous calendar year. This is made up of (1) Massachusetts W-2 employees and (2) Massachusetts 1099 contractors who (a) perform services as an individual entity, (b) live in Massachusetts, and (c) perform services in Massachusetts
The employer should add up the total number of Massachusetts W2 employees it paid each pay period in 2018 and divide that number by the number of pay periods. This is the 2018 Massachusetts W-2 average. Next, the employer should add up the total number of Massachusetts 1099 contractors it paid for services each pay period in 2018 and divide that number by the number of pay periods to arrive at the employer’s 2018 Massachusetts 1099 average. These two averages will be used to calculate the employer’s number of covered individuals in step 3 below.
Step 3: Calculate the Employer’s Number of Covered Individuals
Massachusetts W-2 employees will always be considered covered individuals. If an employer’s Massachusetts 1099 contractor average is less than or equal to its Massachusetts W-2 average, then only the employer’s Massachusetts W-2 employees are considered to be covered individuals. If an employer’s Massachusetts 1099 contractor average is greater than or equal to its Massachusetts W-2 average, then its Massachusetts W-2 employees and its 1099 contractors are considered to be covered individuals. This number is locked in for one year, so you do not need to report fluctuation in your workforce.
Step 4: Understand the Employer’s Financial Responsibility.
If the number from above as to covered individuals is less than 25, then the employer will not be responsible for the employer portion of the medical leave contributions. Note that even if an employer is not required to pay a contribution, the employer will be required to remit the worker’s contribution to the state on their behalf. If it is 25 or greater, the employer must contribute. A contribution calculator is available at the following web address: https://calculator.digital.mass.gov/pfml/contribution/.
Step 5: Notify Covered Individuals.
Employers must notify covered individuals of their benefits, contribution rates, employer contribution rates (if applicable), job protections, and other provisions as outlined M.G.L. c. 175M. Be sure to use your FEIN on the notice to employees. An example Employer Notice to a covered individual is provided at: https://www.mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical-leave.
It is important to remember that while an employee is on leave, an employer must continue to provide an employee with health insurance. Other benefits such as paid time off, sick time, vacation, or seniority do not have to accrue while the person is on leave.
Employees returning from leave must be restored to their previous position or to an equivalent position, with the same status, pay, employment benefits, and seniority as of the date of leave. Employees who would have been laid off if they had not taken leave do not have to be restored. Retaliation against employees seeking or taking leave is prohibited. If there is any negative change to the terms and conditions of employment (such as demotion, pay cut or termination) while an employee is on leave, or for 6 months after the leave ends, there is a presumption that such action is retaliatory.
Step 6: Make Payroll Withholdings Based on Contribution Rates.
October 1, 2019 will mark the beginning of the first quarter of payroll and wage withholdings. These will be remitted to DFML thirty (30) days following the conclusion of each calendar quarter.
Step 7: Complete Quarterly Filings and Submit Contributions through Mass Tax Connect.
All employers will be required to file quarterly reports through Mass Tax Connect beginning on January 1, 2020. This will require the submission of the employer’s Massachusetts workforce information, including the employer’s name and the covered individual’s name, social security number, wages paid or other payments for services. Employers may register for Mass Tax Connect at the following website: https://mtc.dor.state.ma.us/mtc.
Step 8: Determine if any exemptions apply.
Any employer that offers a qualifying private plan to its workforce with benefits greater than or equal to the benefits provided by the PFML law may apply for exemption. Self-insured employers must provide a bond even if granted an exemption. Private plan exemptions for the first quarter of contributions must be filed by Dec. 20, 2019.
Which Employers Must Make Contributions?
Employers with Under 25 Covered Individuals
Employers with fewer than 25 covered individuals must remit an effective contribution rate of 0.378% of eligible wages. This contribution rate is less because small employers are not required to pay the employer share of the medical leave contribution, reducing the total contribution amount.
Small employers are responsible for remitting the funds withheld from covered individuals’ earnings but are under no obligation to contribute themselves. However, they may elect to cover some or all of the covered individuals’ share. A visual breakdown of the contribution breakdown is provided here:
Employers with 25 or More Covered Individuals
Employers who have 25 or more covered individuals will be required to remit a contribution to the DFML of 0.75% of eligible wages. This contribution can be split between covered individuals’ payroll or wage withholdings and an employer contribution. A visual breakdown of the contribution scheme for such an employer is provided here:
How Will The Paid Family and Medical Leave System Operate?
Starting January 1, 2021, individuals covered by the PFML law can take leave as follows:
- Up to 12 weeks off for birth, adoption, or foster care placement of a child;
- Up to 12 weeks off for a qualifying exigency involving a family member in the armed forces;
- Up to 20 weeks off for one’s own serious health condition; and/or
- Up to 26 weeks off to care for the serious health condition of a family member in the armed forces.
Starting July 1, 2021, individuals may also take up to 12 weeks off to care for a family member’s serious health condition. An individual cannot take more than 26 weeks of PFML per year. Employees can also request, and be granted, either reduced schedule leave or intermittent leave (for instance, leave taken occasionally for medical appointments, or leave taken several days at a time over months).
Individuals will apply to the state for leave. While the individual needs to give notice to his or her employer, the DFML alone will decide whether the leave is approved. The DFML may, but is not required to, ask for information from the employer. If leave is approved, the state will provide the individual with payments equal to a percentage of his or her regular pay (up to $850 per week).
Individuals denied leave by DFML may appeal that determination. However, businesses have no right to challenge a request for leave. PFML leave can run concurrently with other leaves, such as FMLA or state sick or parental leave. However, the PFML is significantly broader than other leave laws. Therefore, an individual could take PFML leave that would not be covered by another leave law, and take leave under the other law later in the year.
Other Resources Available to Employers
For additional information on the law, refer to the “Employer’s Guide to Paid Family and Medical Leave,” which is accessible at: https://www.mass.gov/guides/employers-guide-to-paid-family-and-medical-leave.
To obtain more detailed information on the law and your company’s implementation requirements, employers are advised to contact Attorney Michael G. McDonough today by calling (413) 454-5310 or by email at mgm@efclaw.com.
