Massachusetts Employers Face Looming Deadlines Under New Paid Family And Medical Leave Law
Employers throughout the Commonwealth will soon be required to offer paid family and medical leave to their employees (and, in some cases, independent contractors) under the Massachusetts Paid Family and Medical Leave ("PFML") statute. Since Governor Charlie Baker signed the so-called "Grand Bargain" into law last June, the newly-established Department of Family and Medical Leave (the "Department") has published proposed regulations and notices, giving employers additional direction regarding their responsibilities under the new statute.
Though workers will not be eligible to take PFML until January 1, 2021 (or, in the case of leave to care for a family member with a serious health condition, July 1, 2021), employers will be required to comply with some of the law's key provisions starting in the very near future.
Most immediately, by no later than May 31, 2019, Massachusetts employers must provide written notice to employees and 1099 independent contractors of their rights under the PFML. Soon after that, by July 1, 2019, employers must begin making payroll deductions to support the paid leave program.
Overview Of PFML
Massachusetts employers should be aware of the following key provisions of the new PFML law, as detailed in the statute itself and in proposed regulations recently issued by the Department (with final regulations slated to be issued by July 1, 2019).
The PFML applies to all Massachusetts employers (excluding governmental entities) and employees, without any minimum requirements as to length of service or weekly work hours. However, within the 12-month period before an application for PFML, an employee must have received total wages from one or more Massachusetts employers (not necessarily his or her current employer) that (i) equal or exceed 30 times the employee's weekly benefit amount; and (ii) equal or exceed $4,700.
Former employees remain eligible for PFML, if the start date for leave occurs within 26 weeks following termination of employment.
If more than 50% of an employer's workforce consists of 1099 independent contractors (i.e., service providers to whom an employer is required to issue MISC-1099 income tax forms), those individuals are also eligible for PFML, provided they meet the minimum earnings thresholds outlined above.
Beginning in 2021, covered individuals will be eligible to take up to 26 total weeks of paid leave in a benefit year, as follows:
- Up to 12 weeks of family leave for the birth, adoption, or foster care placement of a child; to care for a family member with a serious health condition; or because of a qualifying exigency arising out of a family member's active military duty orders.
- Up to 20 weeks of medical leave for the individual's own serious health condition.
- Up to 26 weeks of family leave to care for a family member with a serious injury or illness incurred or aggravated in the line of military duty.
PFML may be taken intermittently for any covered purpose, except for bonding with a child following birth, adoption, or foster care placement.
Other Types of Leave.
PFML will run concurrently with other types of statutory leave (e.g., FMLA, Massachusetts parental leave), to the extent applicable.
Where the need for PFML is foreseeable, an employee must provide at least 30 days' notice before commencing and returning from leave. Where leave is not foreseeable, an employee must provide notice as soon as practicable.
Benefits During Leave.
Individuals on PFML will be paid from funds collected in a statewide trust fund (the "Trust Fund"). The weekly benefit amount for an employee on leave will be based on a formula that takes into consideration both the employee's average weekly wage and the average weekly wage throughout the Commonwealth. The initial maximum weekly benefit amount will be capped at $850, with this number to be adjusted annually based on the average weekly wage of all Massachusetts workers.
Employers are not required to allow employees to continue to accrue vacation time, sick time, or similar benefits during PFML.
As explained in more detail below, beginning on July 1, 2019, employers will be required to begin making contributions to the Trust Fund via payroll deductions. The initial rate will be .63% of each employee's wages. Employers will be obligated to make similar contributions for 1099 independent contractors if such individuals make up more than 50% of their workforce.
Employees taking PFML are entitled to job protection. Upon returning from leave, an employee must be restored to the same position or an equivalent position with the same status, pay, benefits, length-of-service credit, and seniority.
Further, employers are prohibited from retaliating against employees for exercising their rights under the PFML statute. Importantly, any negative change to an employee's seniority, status, employment benefits, pay, or other terms or conditions of employment during PFML, or within six months after leave, will be presumed to be retaliatory.
Massachusetts employers should take note of a number of upcoming deadlines under the new statute:
- Beginning April 29, 2019, employers whose current benefit plans offer benefits and protections at least as favorable as those provided by the PFML law may apply to the Department to be exempted from making either family leave contributions, medical leave contributions, or both.
- On or before May 31, 2019, employers must begin displaying a poster explaining PFML benefits. This poster is available on the Department's website.
- Also, on or before May 31, 2019, employers must provide all current employees and 1099-MISC independent contractors with written notice of their rights under the PFML. This written notice may be provided either electronically or in paper form and must be in the worker's primary language. Further, workers must be given an opportunity either to acknowledge receipt or to decline to acknowledge receipt of the notice.
- The proposed regulations provide that the personal notice must contain specific information regarding PFML benefits, contribution rates, information on how to file a claim, and contact information for the Department. As the information to be included in the written notice differs somewhat based on whether the recipient is an employee or an independent contractor, the Department has created separate templates for employee and independent contractor notices, both of which are available on the Department's website.
- Beginning July 1, 2019, employers will be required to begin withholding payroll contributions to be paid into the Trust Fund. Initially, the contribution rate will be .63% of all employee wages (or other qualifying earnings or payments). Again, an employer need not make contributions for 1099 independent contractors unless such individuals constitute more than 50% of its workforce.
- Contributions must be paid to the Trust Fund within 30 days after the end of each quarter. Going forward, the Department will set the contribution rate each October 1st for the upcoming year.
- Initially, the .63% payroll contributions will be allocated (i) .52% to fund medical leave benefits, and (ii) .11% to fund family leave benefits. Employers with fewer than 25 employees can choose to deduct the entire .63% contribution from employees' wages. By contrast, employers with 25 or more employees may deduct the full family leave contribution but no more than 40% of the medical leave contributions from employees' wages.
- On October 31, 2019, employer contributions to the Trust Fund will be due for the quarter ending September 30, 2019. Employers must register with the MassTax Connect system and file quarterly reports and remit contributions for PFML through MassTax Connect. Quarterly reports must contain each employee's name, Social Security number, and wages or other earnings received, as well as federal identification numbers for the employer. Quarterly reports must also contain the names and Social Security numbers of any individuals classified as 1099 independent contractors, along with the amounts paid to all such workers.
Recommendations For Employers
Although Massachusetts workers will not be eligible to take paid leave under the new PFML law until 2021, employers should act now to ensure that they take the necessary steps by the compliance deadlines detailed above. Most pressingly, employers must provide written notice of the law to employees and 1099 independent contractors by no later than May 31, 2019, and begin making payroll deductions beginning July 1, 2019.
Employers should also ensure that their HR, payroll, benefits, tax, and accounting personnel are fully educated about the new law so that they can answer questions from employees and keep their organization in full compliance.
Finally, employers should be alert for the final PFML regulations and other announcements by the Department, as many questions concerning employers' responsibilities and employees' rights have yet to be clarified.
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If you have questions about the Massachusetts PFML law or your organization's responsibilities under it, please feel free to contact one of our experienced employment lawyers.