Important deadlines concerning the new Massachusetts Paid Family and Medical Leave (PFML) law are approaching. In June 2019, the Massachusetts legislature passed legislation to delay the start of employer and employee contributions until Oct. 1, 2019 (the PFML Delay). Over the past few weeks, the Massachusetts Department of Family and Medical Leave (Department) issued its final regulations governing the program and addressed questions regarding the program.
This Holland & Knight alert provides an overview of the new deadlines and the substantive changes to the implementation and administration of PFML as reflected in the final regulations and additional information released by the Department.
New Employer Deadlines
New Implementation Deadline: Employers must begin payroll deductions for PFML contributions on Oct. 1, 2019 (an extension from the prior deadline of July 1, 2019).
New Contribution Rate: The PFML Delay postponed payroll deductions for three months, but it did not delay the date employees may start taking PFML (on Jan. 1, 2021, and July 1, 2021, respectively, depending on the type of leave). To account for the revenue that would have been generated during the PFML Delay and ensure that the PFML program will have adequate funding by 2021, the Department adjusted the contribution rate to 0.75 percent (an increase from the prior contribution rate of 0.63 percent).
New Notice Requirements: The Department granted employers additional time to provide their workforces with written notice of their rights under PFML, until Sept. 30, 2019 (an extension from the prior deadline of June 30, 2019). If an employer has not yet provided its workforce with written notice of PFML and obtained a written acknowledgment of receipt of the information from each employee (or a statement indicating the employee's refusal to sign), it should use the updated templates published by the Department, including the notices to employees and 1099-MISC contractors, which reflect the changes to the PFML. If an employer provided its workforce with notice before the PFML Delay, it must issue the workforce an updated rate sheet, explaining the new dates and contribution rates resulting from the PFML Delay. Employers are still encouraged to display the workplace poster as soon as possible, which has also been revised by the Department to reflect the changes to PFML.
Other Changes to PFML
The Department's final regulations are substantially similar to the Department's previous draft regulations. A few significant clarifications and additional information provided by the Department are highlighted below.
Certain Categories of Employment Are Excluded from PFML: The Department has announced that certain types of employment that are excluded from the unemployment statute are also excluded from PFML. Accordingly, certain employees are not eligible for PFML, including:
- work-study students, student nurses and interns of work trainee programs administered by nonprofit or public institutions
- real estate brokers/salespeople and insurance agents/solicitors in commission only jobs
- employees of churches and certain religious organizations
- employees in the railroad industry, or
- services performed by inmates of penal institutions
- services performed for a son, daughter or spouse
- if under 18, services performed for one's father or mother
- newspaper sales and delivery by persons under 18
Employers May Require Employees to Use Intermittent PFML in Increments: An employer may require an employee to take PFML leave in increments that are not shorter than a time period designated by the employer and not greater than four consecutive hours.
Employers May Not Be Required to Restore Employees to Short-Term Jobs: An employer is not "required to restore an employee who was hired for a specific term or only to perform work on a discrete project, if the employment term or project is over and the employer would not otherwise have continued to employ the employee."
Employers May Pay Different Contribution Rates for Different Groups of Employees: An employer may deduct different percentages from the wages of different groups of covered individuals, so long as it does not require any employee to pay more than 40 percent of the medical leave allocation or 100 percent of the family leave allocation.
Employers May Apply for a Private Plan Exemption Only Once Per Quarter: An employer may apply for a private plan exemption no more than once per quarter. Accordingly, if the Department denies the employer's application, the employer must remit PFML contributions to the Department and wait until the following quarter to reapply.
Three-Year Record Retention Requirements for Approved Private Plans: An employer with an approved private plan must retain all reports, information and records related to the approved plan, including those related to all claims for benefits made under the plan,for three years and furnish such records to the Department upon request.
Penalty for Failure to Maintain an Approved Private Plan: An employer who fails to maintain an approved private plan, orhas approval withdrawn by the Department, may be assessed a penalty equal to the employer's annual payroll (or covered workforce it failed to maintain a plan for) multiplied by the annual contribution rate. Additionally, an employer who fails to renew or maintain a private plan approved for the future payment of PFML scheduled to begin Jan. 1, 2021, may be responsible for retroactive contributions to the Department.
Non-Renewal of Private Plans: An employer who does not intend to renew its approved private plan must provide notice to individuals covered by the plan at least 30 calendar days prior to the termination date. An employer must continue to provide paid leave benefits under the private plan's terms and conditions for the entire duration of an employee's leave, provided such leave began prior to the private plan's termination date.
What Are the Deadlines?
Based on the PFML Delay and updates provided by the Department, below are key upcoming dates.
- Now: Display the new "Notice of Benefits Available Under M.G.L. Chapter 175M Paid Family and Medical Leave" poster, which has been updated by the Department to reflect the new Oct. 1, 2019, implementation date, in a conspicuous location where other workplace posters are located.
- Sept. 30, 2019: Distribute written notices to employees and covered individuals who are 1099-MISC contractors, and obtain written acknowledgments from those workers recognizing their receipt (or a statement indicating the individual's refusal to sign such acknowledgment). If an employer provided written notices to its workforce before the announcement of the PFML Delay, it will need to provide its workforce with updated rate sheets explaining the new dates and contribution rates, which are explained in more detail below.
- Oct. 1, 2019: Employers begin PFML payroll deductions.
- Dec. 20, 2019: Deadline for employers to apply for private plan exemptions for the Family Leave Program and the Medical Leave Program, or both.
- Jan. 31, 2020: Employers must remit employee and (if applicable) employer contributions for the Oct. 1 to Dec. 31 quarter through MassTaxConnect.
- Jan. 1, 2021: Paid family leave benefits available for bonding with a new child, service member-related leave and for serious personal health conditions.
- July 1, 2021: Paid family leave benefits available for a family member's serious health condition.