Employers must provide notice to all employees and some independent contractors by June 30, 2019; deductions begin July 1, 2019.

The Massachusetts Paid Family and Medical Leave (MPFML) will soon be a reality. Employer obligations begin in June 2019 and employees will be eligible to receive benefits on January 1, 2021. The Massachusetts Department of Family and Medical Leave (the Department), the new state agency established to administer the program, recently published an Employer Tool Kit to assist employers in complying with the law. The Department also issued updated draft regulations, which are set to become effective on July 1, 2019. This LawFlash highlights the key elements of MPFML and provides a summary of important dates and compliance measures.

Overview of MPFML

As outlined in more detail below, MPFML is both a leave law and a benefits law, which means it requires employers to give employees job-protected leave, and also guarantees employees and some self-employed individuals benefits while they are away from work. Employer compliance with MPFML requires that employers understand both the leave and the benefits parts of the law. On the leave side, employers must ensure they properly administer leave, allow employees who meet the statutory requirements to return to work, and do not retaliate against employees for exercising their rights under the law. As for benefits, except where an employer/covered business entity has sought and received an exemption for a private plan, the Department administers and oversees the benefit claim process and pays employees and eligible independent contractors while they are on leave. Still, employers/covered business entities will be involved in the benefits side of the law due to the interaction between employer-paid benefits (such as accrued paid time off and paid family leave) and state MPFML benefits.

MPFML benefits are funded through a contribution, initially assessed at 0.63% of earnings up to the federal Social Security OASDI limit – currently the first $132,900 an employee earns. The Department annually allocates the contribution between family leave benefits and medical leave benefits, and permits employers to deduct a portion of it from qualified earnings paid to workers. Employers pay contributions quarterly through MassTaxConnect, and a state-controlled trust fund will hold the funds.

Given the sweeping nature of the MPFML law and the frequency with which workers will use it, employers should consider adding to their employee handbooks a comprehensive policy explaining employees’ MPFML rights.

Who Is Required to Comply?

Traditional Employers

Most private sector employers in the commonwealth with one or more employees must comply with MPFML. The statute and regulations adopt the definition of “employer” used in the Massachusetts unemployment law (on which much of the MPFML law is modeled), but the Department indicates in its Frequently Asked Questions that the MPFML definition of employer includes religious institutions, nonprofit organizations, and colleges and universities employing students – types of employment that are exempt from complying with the unemployment law.

Private sector employers with 25 or more employees are required to comply with all provisions of MPFML. Private sector employers who employ fewer than 25 employees are exempt from the employer contribution requirement, but are required to collect and remit the employee contributions and to provide employees with job protected leave.

Companies with Self-Employed Workers, Including ‘Gig Economy’ Businesses

Some businesses are required to give notice to and pay contributions for—and may take deductions from covered earnings paid to—covered contract workers. Under MPFML, “covered business entities” are businesses that contract with self-employed individuals and are required to report payments to such individuals on IRS Form 1099-MISC for more than 50% of their workforce. Self-employed individuals who contract to provide services to a covered business entity are “covered contract workers.” MPFML requires covered business entities to notify covered contract workers of their rights and to remit contributions on behalf of covered contract workers. Additionally, if a covered business entity or employer made payments to individuals that must be reported on 1099-MISC, it must also provide in its quarterly employment and wage detail report filed with the Department the name, social security number or individual taxpayer identification number, and amounts of payments made in the calendar quarter to each such individual.

Who Is Eligible for MPFML Benefits and Job-Protected Leave?

Most employees, covered contract workers, self-employed individuals who elect coverage, and former employees who satisfy the financial eligibility requirements outlined below and have not been separated from employment for more than 26 weeks (collectively known as “covered individuals”) who perform work in the commonwealth are eligible for MPFML benefits. Eligible employees are entitled to job-protected leave and reinstatement. MPFML determines individuals’ eligibility using the financial eligibility requirements for unemployment compensation under Massachusetts law (i.e., a covered individual must have earned (a) 30 times the weekly unemployment benefit amount the covered individual would be eligible to receive, and (b) at least $4,700 during the four proceeding calendar quarters; and all earnings must have been earned with an employer in the commonwealth). MPFML does not impose a length of service requirement for leave eligibility, so employees may be eligible to take paid leave on the first day of their employment with a new employer.

Qualifying for Leave and Benefits Under MPFML

To qualify for leave and benefits under MPFML, a covered individual must have a “qualifying reason,” which are more expansive than those under the federal Family and Medical Leave Act (FMLA) (as described in the chart below) and include: (1) the care of the covered individual’s or a “Family Member’s” serious health condition (the definition of Family Member under MPFML is also more expansive than under FMLA); or (2) to bond with a child during the first 12 months after the child’s birth, adoption, or placement in foster care.

Amount of Leave and Benefits Available Under MPFML

MPFML entitles covered individuals to receive up to 26 weeks of paid leave in a benefit year. Family leave may not exceed 12 weeks in a benefit year, medical leave may not exceed 20 weeks in a medical year, and the two combined may not exceed 26 weeks.

Those who take MPFML leave will receive weekly benefits currently capped at $850. The $850 weekly cap is subject to rules regarding other income-replacement benefits an employee may receive. In essence, an employee may not receive more than $850 a week through government-paid benefits and an employer’s “permanent” disability program, but that amount may be supplemented by an employer’s “temporary” disability program or paid family and/or medical leave policy. The Department will reimburse employers who pay workers more while they are on leave than the required MPFML benefit amount. The Department has not yet announced how it will track and measure private benefits employees receive or how it will handle reimbursements.

Covered individuals who need to take leave for a qualifying reason may choose to use accrued employer-paid leave in lieu of applying for MPFML benefits. Employers must notify employees that use of this job-protected leave runs concurrently with their leave entitlement under MPFML, and use of accrued employer-paid leave disqualifies employees for paid benefits under MPFML.

MPFML permits the use of intermittent leave. An employee may use intermittent family leave: (1) to bond with a child following birth or placement if the employee and employer mutually agree; or (2) to care for a family member’s serious health condition if the healthcare provider determines it is medically necessary. An employee can use intermittent medical leave to care for his or her own serious health condition if medically necessary, and must attempt to establish a schedule that does not unduly disrupt the employer’s operations, subject to the approval of the healthcare provider.

Leave taken by covered individuals runs concurrently with leave under the FMLA, the Massachusetts Parental Leave Law, and the Massachusetts Earned Sick Time Act, when the leave taken is for a qualified reason under those acts.

Differences Between FMLA and MPFML

While MPFML is similar to the FMLA, it is considerably more expansive in terms of the leave and benefits it provides. The following chart identifies certain important distinctions between the two laws.

Provision FMLA MPFML

Employee Provided Compensation While on Leave

No compensation provided to employees who take leave for a qualifying reason

Employees are eligible to receive up to $850 a week when they take leave for a qualifying reason

Employers Required to Provide Leave

Employers with 50 or more employees within 75 miles of the worksite

Employers with one or more employees in the commonwealth

Employees Eligible for Leave

Employees who have worked 1,250 hours and 12 months with the same employer in the 12 months prior to the FMLA leave

The definition also includes former employees who satisfy the financial eligibility requirements at the time of their termination and who ended their employment within 26 weeks of the start of their MPFML benefits eligibility.

Self-Employed Individuals Eligible for Leave

No job protected leave for self-employed individuals

Self-employed individuals are eligible for benefits payments in some circumstances, but are not entitled to reinstatement

Amount of Leave to Be Taken

Up to 12 weeks of job protected, unpaid leave in a benefit year

Up to 12 weeks of family leave and up to 20 weeks of medical leave, but the entire leave entitlement may not exceed 26 weeks in a benefit year

Employees Exempted from Workforce Headcount

Self-employed individuals are not included in the workforce headcount

Self-employed individuals must be included in the workforce headcount if the employer’s workforce is composed of 50% or more self-employed individuals

Exemption from Offering Job Protection to Certain Employees

“Key Employee” exemption available as a basis to deny job protection to an employee under certain circumstances

No similar provision under MPFML

Tracking the Benefit Year

Several ways employers may track the benefit year

Requires employers to measure the benefit year forward for 52 weeks from the Sunday immediately preceding the date a covered individual first uses protected leave

Use of Paid Time Off During Leave

Employers may require employees to use any paid sick time or vacation time/PTO while taking FMLA leave

Prohibits employers from requiring employees to use paid sick time or vacation/PTO while taking leave

Qualifying Reasons for Leave

Includes the right to care for the employee’s own serious health condition, or the employee’s spouse, son, daughter, or parent with a serious health condition; for the birth of a son or daughter, and to care for the newborn child; or for the placement of a son or daughter with the employee for adoption or foster care

In addition to the FMLA reasons, includes the care of a “family member’s” serious health condition or to bond with a child during the first 12 months after the child’s birth, adoption, or placement in foster care.

“Serious Health Condition”

involves (i) inpatient care in a hospital, hospice, or residential medical facility; or (ii) continuing treatment by a health care provider

An illness, injury, impairment, or physical or mental condition that involves (i) inpatient care in a hospital, hospice, or residential medical facility; or (ii) continuing treatment by a health care provider

“Family Member”

Family member is not a defined term under the FMLA, but instead the FMLA enumerates the following familial roles: (1) spouse; (2) parent; (3) son or daughter

In addition to the FMLA definition, includes domestic partners, parents-in-law, grandchildren, grandparents, and siblings

“Child”

Child is not a defined term under the FMLA; “son” or “daughter” is defined as a minor biological, adopted, or foster child, stepchild, a legal ward or a child of a person standing in loco parentis; or an adult child who is incapable of self-care because of a mental or physical disability

But, when determining if leave to care for a child falls within a qualifying reason, the definition of child follows the FMLA and requires that the child be a minor or an adult child who is incapable of self-care because of a mental or physical disability

“Parent”

This includes the biological parent of an employee or an individual who stood in loco parentis to the employee when s/he was a son or daughter

In addition to the FMLA definition, includes step- and foster parents

Notice Requirement

By June 30, 2019, employers and covered business entities must provide various kinds of notice. Employers and covered business entities are required to post a Department-issued poster outlining worker entitlements and protections under MPFML where workers may easily read it. The notice must be available in English and any language that is the primary language of five or more individuals in the employer’s workforce. Employers are required to provide the notice in another language only if that translation is available from the Department.

In addition to the posted notice, employers and covered business entities must provide written notice of MPFML benefits to all current employees and self-employed individuals by June 30, 2019 and, commencing June 1, 2019, to new employees within 30 days of their first day of employment and to self-employed individuals at the time the employer enters into a contract for their services. The timing and content of the notices differs in that covered business entities must inform self-employed individuals, at the time they enter into the contract, of how they can become covered individuals. (This is a seemingly unusual obligation, because most self-employed individuals receiving notice will already be covered individuals as covered contract workers. Some covered contract workers may lose that status as the employer’s workforce changes, however, and also the Department apparently hopes employers who are not covered business entities will voluntarily notify self-employed individuals they contract with as to how they can elect coverage as self-employed individuals.)

The Department has provided a sample notice to an employee and a sample notice to a self-employed individual on the Department’s website, although employers and covered business entities are not required to use the Department’s forms. The notice must be written in the employee’s or covered contract worker’s primary language, provided that the Department has a translation of its relevant form in that language. Employers and covered business entities must request a written acknowledgement of receipt of the notice from each employee and self-employed individual. These communications may be electronic.

Employers who fail to comply with the notice provisions are subject to civil penalties assessed per employee and self-employed individual of $50 for a first violation and $300 for each subsequent violation.

Deduction and Reporting Obligations

Employers and covered business entities must submit their first MPFML report and quarterly payment no later than October 31, 2019, to reflect data for the months of July, August, and September. Quarterly reports must contain the employer’s/covered business entity’s tax identification numbers along with the name, social security number, and all wages or other earnings paid to all employees, which includes all full-time, part-time, seasonal and temporary workers, and all covered contract workers. Based on the report filed, the Department will determine the employer’s/covered business entity’s contribution amount and notify the employer of its obligation. The first payment is due in October, following the remittance of the employer’s/covered business entity’s quarterly report to the Department.

Deductions for employee and covered contract worker contributions begin on July 1, 2019. Employers and covered business entities must calculate and remit contributions for all employees and covered contract workers. Employers and covered business entities may deduct these contributions from wages or other qualifying payments made to employees and covered contract workers. Employers and covered business entities may deduct up to 100% of the family leave contribution and up to 40% of the medical leave contribution, but they remain responsible to pay 60% of the medical leave contribution. Deduction of employee contributions is discretionary, and the regulations permit employers to subsidize worker contributions.

Exemptions and Private Plans

Employers may file at any time for an exemption from MPFML’s contribution requirements if they offer paid medical leave, paid family leave, or both that are greater than or equal to the leave and benefits provided by MPFML, and that do not cost employees and covered contract workers more than the state plan. The Department will approve exemptions for plans that will provide benefits by January 1, 2021, even if they do not currently offer the benefits required by MPFML. Employer-sponsored plans supported by private insurance or self-insured plans may qualify for an exemption, but if insurance supports the employer-sponsored plan, a Massachusetts licensed insurance company must issue the policy for the plan to qualify. Additionally, if an employer currently offers a self-insured plan and seeks an exemption, it must secure a bond running through the commonwealth in the amount required by the Department. Employers must resubmit their applications annually. If the Department grants an exemption, an employer remains subject to the Department’s regulatory claims appeals process.

If an employer applies for and receives an exemption from only one of the leave programs (paid family leave or paid medical leave), the employer remains responsible for contributions under the other aspect of the program to which it remains subject.

The exemption application is now live, and the Department is accepting exemption applications. The deadline to apply for an exemption for the first quarter is September 20, 2019. Exemptions received after July 1, 2019, will be applied retroactively, and in the event that an exemption is denied, the employer remains obligated to comply with the reporting and contribution requirements for the first quarter. Employers pursuing an exemption should therefore still budget for and prepare to comply with the reporting and contribution requirements.

Return from Leave – Fitness for Duty Certificates

Employers/covered business entities that want to require fitness for duty certificates for workers to return from medical leave must have policies in place and take steps at or near the beginning of the individual’s medical leave. Within five days after the Department provides the employer/covered business entity with notice of the designation of the leave, the employer/covered business entity must give the individual a list of the essential functions of their job and must state to the individual that the certification must address their ability to perform the essential functions. The foregoing process must occur pursuant to a uniformly applied policy or practice by which the employer or covered business entity requires a fitness for duty certificate from all similarly situated workers (i.e., same occupation, same serious health condition).

Provided the employer/covered business entity has complied with these requirements, it may delay an employee or covered individual’s return to work until he or she submits a required fitness for duty certification.

Strict Anti-Retaliation Protection Under MPFML

MPFML contains an anti-retaliation provision that will likely be the subject of a significant amount of litigation. The law creates an unusual presumption of retaliation for any adverse employment action taken against an employee within six months of that employee’s return from leave under MPFML. The presumption is rebuttable, and the burden is on the employer to demonstrate that it did not retaliate against the employee for taking leave under MPFML. Employers may rebut the presumption by clear and convincing evidence that the action was not retaliation against the employee and that the employer had sufficient independent justification for taking the action, and the employer would have taken the same action regardless of the employee’s use of leave. This burden allocation and standard of proof puts a significant thumb on the employee/covered contract worker’s side of the scale. It provides yet another reason for employers to document, promptly and carefully, performance and disciplinary issues with all employees.

Private Right of Action and Remedies Available

Employees and former employees aggrieved by a violation of MPFML can sue their employer, subject to a three-year statute of limitations. In addition to all remedies available in common law tort actions, prevailing plaintiffs may be entitled to: (1) temporary restraining orders or preliminary or permanent injunctions to restrain continued violations of the law; (2) reinstatement to the same position held before the violation or to an equivalent position; (3) reinstatement of full fringe benefits and seniority rights; (4) trebled lost wages, benefits and other remuneration and interest; and (5) reasonable costs and attorney fees.

Claims Process

The Department’s draft regulations provide some information on the claims process, but the Department has stated that it is developing a more definite process, which will be part of its “Phase Two” implementation. Phase Two has no definitive implementation date, but presumably will precede January 1, 2021, and will include the forms required for filing claims, the claims management process, and related documents.

What we know now is that the draft regulations require employees/covered individuals, where possible, to provide 30 days’ notice of the anticipated start date of the leave; the anticipated length of the leave; the type of the leave; and the anticipated return date. All claims must include certification that the leave serves a covered purpose. Within five business days of an employee filing a claim for benefits, the Department will contact the employer to request relevant information regarding the claim, and employees must provide the Department with consent to share their information.

The Department will issue eligibility determinations within 14 business days of receiving a claim. Leave benefits will begin, at the latest, 14 calendar days after the eligibility determination is made, unless the determination is made more than 14 days before the onset of eligibility, in which case payment commences at the time of eligibility. No benefits are payable during the first seven days following an eligibility determination, but employees may use accrued vacation or sick pay or other paid leave provided by an employer during the seven-day waiting period.

Open Questions/Updates

While the Department has worked to address many questions under MPFML through regulation and informally through its website, a number of questions remain open to date, including:

  1. Will the employee deductions to offset the 0.63% employer contribution be a subject of mandatory bargaining in unionized workforces?
  2. Should employers calculate contributions on a pre- or post-tax basis? The Department submitted this question to the IRS for guidance, and it recently announced via newsletter update: “Until IRS guidance is issued, individuals and businesses are urged to consult with their own tax advisors on these questions. Based on its own review of federal rules and following consultation with the Massachusetts Department of Revenue, the Department of Family and Medical Leave anticipates that the IRS will conclude that employee contributions should be withheld from after-tax wages. A definitive rule for proper tax treatment of contributions will be available once IRS guidance is issued.”
  3. Should employers include benefits in calculating contributions?
  4. Will the calculation of the workforce take into account turnover, when one employee leaves and the employer replaces the employee in the same quarter? This is especially relevant for those employers who may otherwise qualify as an employer with fewer than 25 employees.
  5. Will the Department waive contributions for those employees out on leave?
  6. If an employee takes leave under MPFML while ineligible for FMLA leave but becomes eligible for FMLA leave within the same benefit year, is the employee entitled to take FMLA after using MPFML benefits? The Department has not yet addressed this issue, and intends to take it to the legislature.
  7. How will employers collect benefit premiums for private benefits while an employee is on leave, if the benefits are being supplied directly by the commonwealth? The regulations require employees to make these payments directly to the employer while on leave in accordance with the employer’s uniformly applied practices and policies, but the Department has yet to address how, or if, an employer may recover money owed by an employee for benefits premiums if not paid by the employee while on leave.

Finally, there is a bill pending in the US House and Senate to ensure that employers’ unemployment insurance rates do not increase due to turnover from hiring replacement workers while employees are on leave and then terminating these replacement workers when employees return to work.