In Massachusetts, bonding with a new baby will no longer require an employee to take several weeks of unpaid leave. The Paid Family and Medical Leave (PFML) law will allow eligible Massachusetts workers to take up to 26 weeks per year of paid leave for family and/or medical reasons. The onus is on the employer to deduct and remit the contributions that fund these benefits. With PFML set to take effect on October 1, 2019, unprepared Massachusetts employers have no time to lose.
Massachusetts PFML: An Overview
Eligibility: Any W2 employee who works for a Massachusetts business, or a state or federal government agency, are automatically eligible for PFML benefits. Employees who work for local government agencies are eligible only if their employers opt into the program. Your independent contractors are eligible if they make up more than half your workforce. Self-employed workers may opt-in for PFML benefits by paying their own contributions. Temporary foreign employees with most types of work visas are also eligible; only seasonal agricultural workers are exempt from PFML.
Workers will have to earn at least 15 weeks of earnings, and will have to have earned at least $4,700 in the previous 12-month period, before they will be allowed to access their paid leave benefits.
Benefits: Covered individuals may take paid leave in one of several circumstances. Per benefit year, the program allows for up to 12 weeks of paid family leave, up to 20 weeks of paid medical leave, and up to 26 weeks of paid family leave if an individual must take care of a family member hurt while on active duty.
Family leave is to be used for caring for or bonding with a new child, caring for a family member with a serious medical condition, or attending to circumstances related to a family member’s active duty status. Medical leave may be used whenever a covered individual is too sick or injured to work.
PFML benefits are largely funded by employee contributions, though companies with 25 or more employees are required to pay a share of their medical leave contributions.
- Employers must notify covered individuals about their PFML benefits by September 30, 2019.
- Employers must start making deductions from employees’ wages, starting on October 1, 2019.
- Employers must remit employees’ contributions to the Department of Family and Medical Leave (DFML) each quarter, starting on January 1, 2020.
- Eligible workers can start taking paid medical leave, or paid family leave because of a new child or family member’s deployment, starting on January 1, 2021.
- Eligible workers can start taking paid family leave to care for a family member with a serious medical condition, starting on July 1, 2021.
The Employer’s Obligations
For a Massachusetts employer with workers eligible for PFML, the only way to opt-out of the program is to offer equal or better-paid leave benefits than those provided by the program.
Complying with the new PFML requirements will affect your payroll and accounting processes. Your biggest obligation will be to manage the deduction of employee contributions, and to remit them to the DFML using the MassTaxConnect system. You may be required to pay a share of those contributions, depending on the size of your company.
If you have 24 or fewer covered individuals, you’ll remit 0.378% of each person’s eligible wages each quarter. (Eligible wages include commissions and bonuses, 401K employer contributions and non-cash tips.) Broken down, that’s 0.13% for the family leave contribution and 0.248% for the medical leave contribution, as of 2019.
If you have 25 or more covered individuals, you’ll remit 0.75% of each person’s eligible wages per quarter. The employee still contributes 0.13% of their wages toward family leave and 0.248% toward medical leave. The employer is responsible for paying an additional 0.372% of the employee’s wages toward medical leave, for a total of 0.75%.
Calculating an employee’s pay rate on paid family or medical leave is not the employer’s job. Eligible workers who earned less than half of the statewide average wage in the prior 12 months may receive 80 percent of their weekly income during paid family or medical leave. The percentage drops as income increases and the maximum weekly benefit for any eligible employee is $850.
Employers are, however, subject to notification requirements. The Paid Family and Medical Leave workplace poster must be displayed in a visible location within the workplace. Employees and independent contractors must be given written notice about the benefits, contributions, and protections associated with PFML. Employers should also request that workers give written acknowledgment of having received that notification. Employee notification must be completed by September 30, 2019.
Finally, employers must be aware of the protections afforded to employees who use their PFML benefits. Like leave taken under the federal Family and Medical Leave Act, employees are promised job protection during leave taken under PFML. Employers may not retaliate against workers who take this leave and must continue to provide any health benefits while workers are out on leave.
There’s a lot to prepare for around PFML. Massachusetts employers may have to adjust their accounting practices slightly to accommodate for new contributions and a new type of employee leave. The good news is that complying with PFML shouldn’t complicate tax management for your company. Do you have questions about preparing your business for this new program? Contact LGA today.
by John Geraci