The Massachusetts Paid Family and Medical Leave law (PFML) will require most private employers to provide covered individuals with paid family and medical leave funded through a payroll tax. Beginning April 29, 2019, the Massachusetts Department of Family and Medical Leave (the “Department”) will offer approved plan applications for employers seeking an exemption from collecting, remitting, and paying contributions under the PFML that would otherwise be due beginning on July 1, 2019.
The 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 benefit year. Employees must meet certain financial eligibility requirements (i.e., have approximately 15 weeks or more of earnings and have earned at least $4,700 in the 12-month period before applying for leave). The weekly benefit amount will be equal to the portion of the employee’s average weekly wage that is less than or equal to 50% of the state average weekly wage replaced at a rate of 80%, plus the portion of the employee’s average weekly wage that is more than 50% of the state weekly wage replaced at a rate of 50%. These benefits will be paid for by a mandatory 0.63% payroll tax contribution, split between employers and employees, depending on the size of the employer and the type of leave taken, and submitted to a state trust fund.
Employers can meet their obligations under the PFML, however, through a private insurance plan, eliminating the requirement to remit funds to the PFML trust fund. For an application to be granted, the Department will assess whether the benefits offered to the employees under the private plan are greater than or equal to the benefits provided by the PFML. For example, the available leave must be offered under the same terms and conditions specified in the law, the wage replacement must be at least equivalent to the amount provided under the law, and the cost to employees must not be greater than the cost otherwise incurred under the PFML.
The private plan can be insured, or can be on a self-insured basis. If self-insured, an appropriate surety bond must be paid to the state in a form to be approved by the Department, and in the amount required by the Department.
An employer may apply for exemptions from medical leave coverage, family leave coverage, or both. Exemptions will be accepted by the Department on a rolling basis, will be effective for one year, and may be renewed annually. Notably, the Department can audit any private plan maintained by an employer and can withdraw approval when the terms or conditions of a private plan have been changed or if the employer does not follow the plan’s terms.
Employers should take note that if an employee is denied benefits under a private plan, the employee has the right to appeal the denial to the Department or to a Massachusetts district court. Consistent with this right to appeal, the current draft regulations grant authority to the Department to make decisions on individual eligibility under an employer’s private plan.