3-Month Delay to the Massachusetts Paid Family Medical Leave (PFML)
Originally published on June 13, 2019, updated June 14, 2019
While the Massachusetts Paid Family Medical Leave program does not become fully enacted until January 1, 2021 (with most benefits available) and July 1, 2021 (with all benefits being available), initially employers were required to start notifying their employees with specific details on how they would comply, by June 30, 2019 (which has since been extended to September 30, 2019). In a decision made on Tuesday, June 11, 2019, Massachusetts lawmakers agreed to delay the withholding of payroll tax contributions for PFML until October 1, 2019, in order to provide employers time to better understand the law and its effects on their workforce and business. Several other extensions and our changes have also been made, which we have noted below.
Here are 10 Fast Facts about the law we have compiled to help you get started as we understand as of June 14, 2019:
- COVERED EMPLOYERS – The law affects all Massachusetts based employers, including non-profits, private entities, universities, colleges and State and Federal employers. Cities, towns, districts and political subdivisions are not obligated to comply, but may opt in. Companies and entities in neighboring states that employ Massachusetts residents are not required to comply with the law, unless those employees perform work in/from Massachusetts in which case you should seek legal advice. The state has issued some guidance on what is considered working within the Commonwealth, which can be found here: Mass PFML Draft Regulations for Public Comment 3.29.19.pdf
- EMPLOYEE CONTRIBUTIONS – Payroll tax withholding from employee paychecks is now set to commence October 1st, 2019, based on the recent decision. Employers will be permitted to withhold contributions at a specified rate from employee paychecks. Originally the withholding rate was set as 00.63%; however, that rate will be increased to 00.75% in order to address any potential shortfalls due to the delay. Companies will be able to deduct up to 40% of the medical leave contribution (i.e. up to 82.5% of 00.75% of wages) and up to 100% of the family leave contribution (up to 17.5% of 00.75% of wages). Those contributions must be remitted by December 31st, 2019 via MassTaxConnect. Contribution rates are slated be adjusted on an annual basis commencing October 1, 2021.
- EMPLOYER CONTRIBUTIONS – Employers with 25 or more employees are responsible for contributing the remainder of whatever is not withheld from the employee’s paycheck, which is at least 60% of the medical leave and then the balance of whatever is not deducted from the employee’s pay for the family leave contribution. These contributions are submitted quarterly in conjunction with the employee contributions and will be adjusted annually as noted above.
- INCOME LIMITS – The income limit for PFML follows the limit set by Social Security. For 2019, that limit is $132, 900.
- INDEPENDENT CONTRACTORS – Self-employed, independent contractors are not required to participate, but may opt-in. If a company’s workforce is comprised of 50% or more independent contractors (i.e. if the company issues 1099-MISC forms to more than 50% of its workforce), then participation becomes mandatory and appropriate contributions should be withheld during payroll processing for both w-2 and 1099-MISC employees and remitted by the employer.
- PFML NOTICES AND POSTERS – All existing employees should be provided with a notice regarding PFML no later than September 30, 2019, and all new employees must be provided with the noticed when hired. A sample notice can be found here: . (Important Note: Failure to provide the notices may result in fines of up to $300 per violation). Employers must also post in a conspicuous location (i.e. where all other regulatory posters are displayed in your workplace) the Paid Family Medical Leave Workplace Poster. Given the ongoing revisions and guidance materials that the Massachusetts Department of Family Medical Leave (DFML) has been producing (for which you can receive ongoing updates by signing up for their newsletter here), it is advisable to sign up for a Employment Law Poster Service like the one offered by CheckmateHCM to always ensure you are displaying the most current version of the poster to be in compliance with the requirement and avoid potential fines and penalties.
- EXISTING PFML PROGRAMS – If you already provide Paid Family Medical Leave for your employees, you may be able to obtain an exemption from making contributions. You can utilize your MassTaxCollect account to apply for exempt status. Employers may research private plans and apply for an exemption no later than December 20, 2019, which will apply for required payroll contributions for the quarter from October 1, 2019 – December 31, 2019.
- QUALIFIED LEAVE – PFML provides employees varying levels of leave based upon the type of leave required (ranging from to 12 weeks of paid family leave, 20 weeks of paid medical leave, or up to 26 weeks of other types of leave) for requests covering:
- an individual to seek treatment for his/her own critical medical condition.
- the care of a family member with a serious medical issue.
- bonding with a child during the first 12 months after birth, adoption or placement via foster care.
- the employee to care for a family member with a serious illness or injury who is a service member.
- dealing with a family member being on or who is called to active service duty by one of the Armed Forces.
- MAXIMUM BENEFIT – The maximum weekly benefit starting January 1, 2021, will be $850 per week and is based on a percentage of income at the time of leave.
- EMPLOYEE QUALIFICATIONS FOR LEAVE – Most employees will be eligible for Massachusetts PFML. In order to qualify, a worker must have approximately 15 weeks or more of earnings and should have earned at least $4700 over the 12-month period prior to applying for leave.
CheckmateHCM’s Leave Management solution can be configured to help employers manage their compliance with the Massachussett’s Paid Family Medical Leave program in addition to their FMLA requirements. Our solution can also provide alerts when your workforce is close to reaching defined thresholds for employee counts, etc. which trigger additional requirements. And with our payroll processing services, you can easily administer necessary withholding from employee paychecks.
To learn more about our solution and services:
To learn more about Mass PFML, click here: https://www.mass.gov/info-details/paid-family-medical-leave-for-employers-faq
The DFML has also created a Mass PFML quick reference fact sheet for employers and has a timeline of critical PFML dates.
Disclaimer: This article was written for general information purposes only and does not constitute legal, tax or other financial advice for an individual or specific company. Each individual’s and entity’s specific legal, tax and/or financial circumstance can vary greatly. As such, we advise consulting with your attorney, CPA and/or other professional advisors to ensure you are following and complying with all necessary guidance and regulations based on your specific circumstances and/or internal policies, procedures and corporate structures.