On June 28, 2018, Massachusetts Paid Family and Medical Leave (“PFML”) became law. PFML does not become available as a benefit until 2021, but employer obligations are beginning right now.
The new law applies to virtually all Massachusetts employers (without regard to size) and virtually all employees (full-time, part-time, permanent and seasonal) of those employers working in Massachusetts. In addition, if more than 50% of an employer’s workforce are independent contractors, the business must comply with PFML with respect to all employees and independent contractors (“covered individuals”).
Notice Requirements – June 30, 2019
All employers must provide written notice to covered individuals of their rights under the PFML by June 30, 2019 (the deadline was recently extended and had previously been May 31, 2019). The notice may be in hardcopy or electronic form but employers must collect a signed acknowledgment of receipt. Attached is a template. (A covered individual may also refuse (in writing) to sign the acknowledgement.)
Beginning July 1, 2019, employers must provide all new covered individuals with the notice (and obtain a signed acknowledgment of receipt) within 30 days of his or her start date.
Employers are also required to display the PFML workplace poster in a highly visible location that explains the benefits.
Payroll Tax Deductions – July 1, 2019
Covered individuals will receive a wage replacement benefit from the newly established Family and Employment Security Trust Fund. Contributions to PFML start with the quarter beginning July 1, 2019. The Family and Employment Security Trust Fund will be funded through a payroll tax on employers and covered individuals at an initial contribution rate of 0.63% of the person’s compensation up to the Social Security taxable wage base in effect for the year ($132,900 for 2019). Liability for the tax is allocated as follows:
Medical leave: 0.52% payroll deduction. Employers may deduct up to 40% of this amount from the amount paid to the covered individual. Employers with less than 25 covered individuals in the prior calendar year are exempt from paying the employer portion (0.312%) of the medical leave contribution.
Family leave: 0.11% payroll deduction. Employers may deduct up to 100% of this amount from amounts paid to the covered individual.
Contributions for the initial period of July 1, 2019 through September 30, 2019 must be remitted no later than October 31, 2019 via MassTaxConnect.
Leave Policies – Before January 1, 2021
Employers will need to amend their handbook polices to reflect the new leave benefits provided under the PFML. The new law provides the following benefits:
- Up to 12 weeks of paid family leave per benefit year (26 weeks to care for a covered service member)
- Up to 20 weeks of paid medical leave for the worker’s own serious health condition (12 weeks to care for a family member, beginning July 1, 2021)
- Up to 26 weeks of aggregate paid leave per benefit year
In general, a medical leave is triggered as a result of a personal serious health condition. Family leave is triggered as a result of the birth, adoption or foster care placement of a child or a serious health condition of a family member.
Covered individuals eligible for this benefit will, beginning in 2021 and after an initial 7-day waiting period, receive a weekly payment from the Family and Employment Security Trust Fund based on a percentage of the individual’s average weekly wage. (If the benefit could be received now, the weekly cap, according to the State, would be $850.)
An employee is also entitled to reinstatement to his or her previous position or an equivalent position with the same status, pay, benefits, service credit and seniority as of the date of the leave. This includes accrued vacation time, sick leave, bonuses, advancement, seniority, service credit and other benefits, plans or programs, although paid leave time under PFML is not required to be treated as service for purposes of benefit accrual, vesting or eligibility. The employer must also continue to offer the individual health coverage (including any employer paid subsidy).
Benefits run concurrently with qualified leave taken under applicable state and federal leave laws, including the federal Family and Medical Leave Act (“FMLA”) and the Massachusetts Earned Sick Time Act
Employers whose private plans provide employees with rights, protections and benefits that are equal to or greater than the PFML can apply for exemption from the new law with respect to a private plan. The wage replacement and other benefits must be at least equivalent to the amount provided under the law at no greater cost to an employee.
Failure to Comply
A failure to withhold and remit the new tax may result in an employer level assessment of 0.63% of the employer’s total annual payroll, plus an amount equal to the total benefits paid to covered individuals for whom it failed to make contributions. The employer is also prevented from recouping the employee portion of any contribution.
The law includes a broad anti-retaliation provision.