- Massachusetts and New Jersey are the latest states to take legislative action with regard to employers' paid leave laws, which may have significant impact on respective policies and programs.
- In January, Massachusetts issued draft regulations to its Paid Family and Medical Leave Program, a leave act that was signed into law in June 2018 and becomes effective in 2021. Earlier this month, New Jersey signed into law Assembly bill A3975, which makes significant changes to the state's Family Leave Act.
- Employers in both states will need to review their leave policies and programs, and prepare to make any necessary changes in order to comply with the newly enacted or revised laws.
Only two months into 2019 and Massachusetts and New Jersey have taken action with regard to leave laws, continuing the recent trend of the last few years as states and other jurisdictions have been actively issuing leave and sick day statutes and ordinances.
On Jan. 23, 2019, Massachusetts regulators took action that will impact employers' leave policies. The Massachusetts Department of Family and Medical Leave (MDFML) issued draft regulations regarding the Massachusetts Paid Family and Medical Leave Program (MA PFML), a leave act signed into law on June 28, 2018, and which will become effective on Jan. 1, 2021. On Feb. 19, 2019, Gov. Phil Murphy of New Jersey signed into law Assembly bill A3975 (N.J. A3975), legislation that made significant changes to New Jersey leave laws.
As a result, employers in Massachusetts and New Jersey will need to review their leave policies and short-term disability and family paid leave policies and programs, and prepare to make any changes necessary in order to comply with the newly enacted or revised laws. This client alert briefly discusses some of the guidance provided by the MA PFML regulations and the changes made by N.J. A3975.
Massachusetts Paid Family and Medical Leave Program
Under the MA PFML, almost all employees who work in Massachusetts will be entitled to take paid family and medical leaves. The benefits will be financed by employee and employer contributions and will allow for up to 12 weeks of paid family leave and 20 weeks of paid medical leave in a benefit year. The proposed regulations issued by MDFML for the most part mirror the terms of the statute.
The regulations, however, did provide the following additional guidance:
- Require employers to submit a quarterly filing. Employers will be required to submit a quarterly filing through the MassTaxConnect system that will include each employee's name, social security number and wages paid as well as the employer identification number. Contributions will be calculated based on the quarterly filing and must be remitted within 30 days after the end of the quarter.
- Provides guidance on treatment of independent contractors. Where an employer uses a Form 1099 to report payments for services made to independent contractors for more than 50 percent of its workforce, the employer will be required to treat the independent contractor as an employee for purposes of the MA PFML.
- Provides guidance on employer contributions. Contributions have initially been set at a rate of 0.63 percent of wages. Employers are responsible for making the contributions, and employers with more than 25 employees may deduct a portion of the contribution from its employees' compensation. Employees may be required to pay 100 percent of the contribution for paid family leave benefits and 40 percent of the contribution for paid medical leave benefits. Employers with less than 25 employees are permitted to deduct the full contribution from employees pay. According to the MDFML website, for employers with more than 25 employees, the 0.63 percent contribution will initially be apportioned 0.52 percent for medical leave, and 0.11 percent for family leave.
- Offers guidance regarding how to count employees. Employers with less than 25 employees are not required to make any portion of the required contributions. To assist with this provision, the draft regulations contain a detailed explanation of how an employer will calculate its workforce, which includes requirements for counting part-time employees and independent contractors.
- Allow employers to adopt a private plan. An employer may use a private plan to pay benefits if the private plan meets the obligations of the MA PFML. Applications for approval of a private plan will be accepted by the MDFML on a rolling basis and approvals will be effective for one year. Employers will be required to provide the MDFML with 30 days advance notice before making any changes to the terms or conditions of a private plan.
- Sets forth benefit claim procedures. Employees will be required to submit a claim for benefits with the MDFML. Once a claim is submitted, employers will receive notice from the Commonwealth and may be required to submit information to the MDFML, including information about the employee's wages for the past 12 months, a description of the employee's position, information about the employee's schedule and weekly hours worked, and a description of the employer's paid leave policies.
- Establishes an offset for amounts paid by an employer plan. The weekly benefit amount for a period shall be reduced by the amount of benefits that an employee receives for that period under a permanent disability policy or program of an employer.
The MDFML is expected to finalize the draft regulations by July 1, 2019. Benefits under the MA PFML will not begin to be paid until 2021, but contributions are set to begin on July 1, 2019. Employers in Massachusetts should begin to prepare for the required contributions and should watch for the final regulations and additional guidance regarding the MA PFML as it is issued.
New Jersey Assembly Bill A3975
N.J. A3975 includes changes that impact the right to leave under the New Jersey Family Leave Act (FLA), as well as benefits payable to an eligible individual for periods of family temporary disability leave under the New Jersey Paid Family Leave Insurance Law (FLI), and periods of disability covered under New Jersey Temporary Disability Insurance (TDI) for pregnancy and recovery from childbirth. The legislation also amends the leave provisions of the New Jersey Security and Financial Empowerment Act (Safe Act).
Some of the changes made to FLA, FLI, TDI and Safe Act by the new law include:
- Subjects more employers to the FLA. Effective as of June 30, 2019, employers with 30 or more employees are required to provide job-protected family leave.
- Increases the available benefit. Employees will be entitled to up to 85 percent of their weekly wages up to the maximum benefit of 70 percent of New Jersey's average weekly wages during a leave necessary to care for an eligible family member under FLI or because of a disability under TDI. As way of an example, based on New Jersey's current average weekly wages, the maximum possible benefit would increase from $650 per week to $860 per week.
- Lengthens the duration of benefits available for a family leave. Provides employees with paid benefits for up to 12 weeks of family leave, a significant increase from the six weeks of paid leave previously offered by FLI and TDI.
- Provides more rights to intermittent leave. Employees will be entitled to take intermittent leave under the FLA upon the birth, adoption or foster care placement of a child without the employer's approval. In addition, employees may take up to 56 days of paid intermittent leave under the FLI within a 12-month period, versus the 42 days currently permitted.
- Expands the definition of family member. For purposes of the FLA, FLI, TDI and Safe Act, employees will be permitted to take leave to care for siblings, in-laws, grandparents, grandchildren, other blood relatives and any individual who can be shown to have the equivalent of a family relationship.
- Offers paid leave for victims of domestic violence. Employees who are victims of domestic violence may now take paid leave to receive medical care, counseling or to attend court or other legal proceedings. The law also amends the Safe Act to provide that employees may take paid leave to help a family member who is a victim of domestic or sexual violence.
- Expands the definition of child. Child for purposes of FLA and FLI will now include a foster child or a child born to a gestational carrier.
These provisions of N.J. A3975 and others will require employers to analyze and make changes to their leave and income replacement policies and procedures to ensure compliance.