Massachusetts has enacted a paid family and medical leave law. In order to finance this paid benefit, the Commonwealth will begin collecting contributions on July 1, 2019 from employers, employees and self-employed individuals at an initial rate of .63 percent of wages. Beginning in January of 2021, employees will be entitled to receive up to 20 weeks of paid medical leave and up to 12 weeks of paid family leave per year. Action steps required for implementing the new program are coming up quickly and are set out below as is information that should help employers understand their responsibilities.
ACTION STEPS TIMELINE
June 30, 2019 - Provide Notice To Employees (Click here for Model notices)
July 1, 2019 - Begin Deductions from Wages and Post Notice (Click here for Model notice)
October 2019 - Submit Reports and Deductions to MassTaxConnect
January 1, 2021 - Employees May Receive Payments for Covered Absences
1. Guide for Employers. A new state agency, the Massachusetts Department of Family & Medical Leave ("DFML"), is responsible for implementing the law. The DFML has published an online Guide on the actions employers must take. The Guide can be found here.
2. Registration & Reporting. Employers must register and file quarterly employment and wage detail reports with Department of Revenue's MassTaxConnect system. First quarterly reports will be due via MassTaxConnect in October 2019.
3. Approval of Private Plans. Employers providing paid family and medical leave plans to their workforces with benefits greater than or equal to those provided by the PFML can seek exemption from the required contributions. Applications for exemptions should be filed with MassTaxConnect beginning on April 29, 2019.
4. Deductions from Wages for Contributions. Starting on July 1, 2019, employers should begin making deductions from wages to fund the quarterly contributions. Contributions will be submitted through MassTaxConnect in October 2019.
5. Assessment of Contributions & Covered Individuals. Employers must report total workforce numbers, but will only need to submit contributions for employees who are W-2 employees AND 1099-Misc contractors if those contractors make up more than 50 percent of the employer's total workforce. Each quarter, the employer must submit contributions for all covered individuals. Only employers of less than 25 covered individuals are not responsible for submitting a share of these contributions.
The DFML guide provides an online calculator for a breakdown of contribution rate splits for employers with 25 or more employees. While total contributions will initially be .63% of maximum taxable earnings established by the Social Security Administration (currently $132,900) for each covered individual, this contribution will be divided into a .52 % payroll contribution attributable to individual employee medical leave and an .11% payroll contribution attributable to family leave. Up to 100% of the family leave contribution may be deducted from employee wages, and up to 40% of the medical leave contribution may be deducted from employee wages, with the employer is responsible for the remaining 60%.
Employers with fewer than 25 covered individuals must remit contributions to the DFML but are not responsible for paying the employer share of the contributions.
6. Notices to Employees and 1099-Misc Independent Contractors. DFML template notices may be used to fulfill the notice requirement to employees and 1099-Misc independent contractors under the law. The notice covers the benefits, contribution rates, and entitlements under the new law. Employers must provide the notice to employees by June 30, 2019 (recently extended from May 31, 2019), and are also required to retain an acknowledgement signed by the employee/contract worker. The Employer Notice to Employee can be downloaded here and The Employer Notice to Self-Employed Individual can be downloaded here (versions in multiple languages are available on the DFML website: Mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical leave).
The Notice to Employees must be provided to all workers in the first 30 days of employment or the working relationship. Both the notices and evidence of receipt of the Notice may be received electronically. Acknowledgements of receipt of the Notice should be maintained in each employee's personnel file. Should an employee fail to return the signed acknowledgement, the employer may fulfill its obligation by showing that it provided the notice and opportunity to acknowledge or decline to acknowledge receipt of the notice to each current employee.
7. Notice Posting. As of July 1, 2019, employers are required to post a notice of the benefits available under the law in a conspicuous place on each of its premises. The DFML model Notice of Benefits Available Under MGL Chapter 175M fulfills this obligation and can be downloaded here.
Please note that the information provided above is a summary of the law and the regulations most recently published for review. The final regulations on the PFML have not yet been approved. Further information will be provided to clients upon notice of the approval of those regulations. For additional information, please contact counsel.
Stoneman, Chandler & Miller LLP can help you address these recent developments. If you have any questions on the above, please do not hesitate to contact us.
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