Massachusetts Paid Family and Medical Leave (PFML)

May 30th, 2019 by Thomas Harte

(Important Update:  June 12th, 2019 – The State of Massachusetts has delayed the deadline to start taking payroll deductions for MA-PFML to October 1st, 2019.  Please see updated content below.  Employers must continue to communicate the appropriate notices to affected employees based on the schedule listed below.)

The State of Massachusetts joins a number of other States that have passed legislation mandating and regulating a requirement to provide paid family and medical leave to affected individuals.  With the Massachusetts Paid Family and Medical Leave (PMFL) legislation, covered employers are those that employ one or more affected workers.  These covered individuals will be eligible to claim certain benefits as of January 1, 2021 and additional benefits on July 1, 2021.

Disclaimer:  The State of Massachusetts continues to refine the PFML and provides updates through their news feed.  We encourage any covered employers to sign up for the PFML newsletter. 

The program will provide employees who contribute to the program the ability to take the following paid leave:

• Up to 12 weeks a year to care for a family member or bond with a new child,
• Up to 20 weeks a year to deal with a personal medical issue
• Up to 26 weeks to deal with an emergency related to deployment of a family member for military service.

Weekly benefit amounts will be calculated as a percentage of the employee’s average weekly wage, with a maximum weekly benefit of $850.

During a qualified leave, employers must continue to contribute to the individual’s health insurance benefits, as if the individual had not taken the leave and the employee remains responsible for the their contribution to the premium. A current employee on leave must be able to accrue vacation time, sick leave, bonuses, length-of service credit, and other benefits for which they would have been eligible had they not taken leave.

It is important to note, language in regulations provides that “an employee who has taken family or medical leave shall be restored to the employee’s previous position, or to an equivalent position, with the same status, pay, employment benefits, length of service credit and seniority as of the date of leave.”

Important Deadlines:

• June 30, 2019:  Notify all affected employees of the PFL – Failure to comply with notice requirements may result in civil penalties of $50 per employee for a first violation, escalating to $300 per employee for subsequent violations.
  • Post the Paid Family and Medical Leave workplace poster in a highly-visible location
    • For a workforce that includes multiple languages, please click here for various languages of the workplace poster
  • Provide written notice of contributions, benefits, and workforce protections to Massachusetts W2 employees and Massachusetts 1099-MISC contractors
    • Please click here for the employer notice to employees, which includes the signed acknowledgment on page 4.
  • Collecting signed acknowledgments of receipt of such notice from Massachusetts W2 employees and Massachusetts 1099-MISC contractors
• October 1, 2019:  Begin payroll deductions for Q1 2019, unless exemption has been approved
• October 31, 2019:  Remittance of Q1 2019 PMFL contributions to Department of Revenue’s MassTaxConnect
• January 1, 2021:  Covered individuals can begin to take paid leave for most covered reasons
• July 1, 2021:  Covered individuals can begin to take paid leave for all covered reasons

Affected Employees:   According to the State of Massachusetts, affected employees includes all MA W-2 employees and Massachusetts 1099-MISC contractors only if they make up over 50% of your total workforce.

Considering many employers have a primary place of business outside of Massachusetts (e.g. New Hampshire employer with Massachusetts residents) we submitted a question to the MA-PFML with regard regarding MA residents working outside of MA.  In the correspondence we received from the State of Massachusetts they advised of the following:  “If an employee is performing services within the Commonwealth on behalf of an employer, then the employer must remit the applicable contributions“.  A description of what constitutes performing services in the Commonwealth is further addressed in the revised draft regulations.

Affected Employers:  Every employer is required to collect and remit contributions; however, if your workforce includes an average of fewer than 25 covered individuals last year, you are not required to pay any portion of the medical or family leave tax.  The State of Massachusetts has created a document for employers to highlight the requirements under this legislation.

Required Taxes:  The tax impact is a total of 0.63% up to the Social Security base wage ($132,900 for 2019) of wages, adjusted annually, for covered individuals.  This tax is comprised of a tax on medical leave of 0.52% and family leave of 0.11%.

Employer Minimum Contribution:  Employers with more than 25 employees are required to contribute 60% of the medical leave tax of 0.52% and 0.00% of the family leave tax.

Exemptions:  If an employer already provides paid leave benefits to the workforce, you may apply for an exemption from collecting, remitting, and paying PFML contributions. To be granted an exemption, your plan’s benefits must be greater than or equal to the benefits provided by the PFML law and must provide the same rights and protections as under the law. All applications for Q1 2019 exemptions must be submitted by September 20, 2019.

Landmark Benefits, Inc. does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.