On March 29, 2019, the Massachusetts Office of Labor and Workforce Development, Department of Family and Medical Leave (the Department) released revised draft regulations for the paid Family and Medical Leave Law (PFML).
Massachusetts (MA) passed PFML in 2018, which provides eligible individuals with wage replacement to care for a family member, bond with a new child, care for one’s own health condition, or to deal with exigencies from a family member being called to active duty.
Below are some FAQs arising from the revised proposed regulations.
What is MA PFML and when does it begin?
MA PFML requires all employers with at least one employee working in MA to remit contributions to the Family and Employment Security Trust Fund (Trust). Payroll deductions begin on July 1, 2019 and eligible individuals can apply for benefits starting January 1, 2021.
Which employers are subject to MA PFML?
Massachusetts employers who employ Massachusetts workers are required to comply with MA PFML.
Do employers need to contribute to MA PFML?
Employer contributions depend on the number of covered individuals the employer had in the prior calendar year.
- Employers with more than 25 covered individuals will be required to remit the full 0.63% contribution to the Trust. Employers will be able to deduct up to 40% for medical leave and up to 100% for family leave from employee wages.
- Employers with fewer than 25 covered individuals are not required to pay the employer portion of the premiums.
Contribution rates will be adjusted annually prior to October 1st.
Which individuals are employers required to remit PFML contributions for?
Employers are responsible for remitting contributions for “covered individuals” that perform services localized in MA.
Services are localized in MA if:
- Services are performed entirely within MA;
- Services are performed in MA and any services performed outside of MA are incidental to the individual’s services within MA (temporary or transitory in nature, or consists of isolated transactions); or
- Services are not localized in any state, but some part of service is performed in MA and the individual’s base of operation is in MA or directed or controlled from MA.
W2 employees (including full time, part time and seasonal employees) are always “covered individuals.” 1099-MISC Contractors may be “covered individuals” if the employer’s workforce consists of more than 50% of 1099-MISC Contractors (individuals for whom an employer files an IRS Form 1099-MISC).
How do employers determine which individuals I must remit contributions on behalf of?
Whether an individual is a “covered individual” (that the employer must remit contributions on behalf of) depends on the employer’s workforce count and the makeup of their workforce in the prior year.
- If in the prior year, the total individuals (W2 and 1099-MISC contractors) consists of less than 50% of 1099-MISC contractors:
- 1099-MISC are not counted towards the total workforce and
- Employer is not required to make contributions on behalf of the 1099-MISC contractors.
- If in the prior year, the total individuals (W2 and 1099-MISC contractors) consists of more than 50% of 1099-MISC contractors:
- Employers 1099-MISC contractors are included in the workforce count and
- Employer is required to make contributions on behalf of the 1099-MISC contractors.
The Department provides the following example:
Last year, employer’s MA workforce consisted of 24 MA W2 employees and 4 MA 1099-MISC contractors.
- Less than 50% of employer’s MA workforce was 1099-MISC contractors (because the total workforce is 28 and there are 4 1099-MISC contractors).
- Since less than 50% of employer’s MA was 1099-MISC contractors, the 1099-MISC contractors do not count towards the total number of covered individuals in employer’s workforce. The total workforce would be 24 covered individuals.
- Employer must remit contributions on behalf of their 24 MA W2 employees.
- However, since employer’s covered individual workforce is less than 25, employer is not required to pay the employer share of the PFML contributions.
For more information on determining workforce count, see Employer Tool on Calculating Workforce Count.
How do I remit contributions for MA PFML?
Employers must remit contributions quarterly through the Massachusetts Department of Revenue MassTax Connect System, which is likely handled by an employer’s payroll division. The quarterly reports contain information for each employees’ wages. The contributions owed must be remitted by the end of the calendar quarter. Contributions for July to September 2019 are due to the Department on October 31, 2019.
Is there a private plan exemption if I provide benefits that are just as good as those required under MA PFML?
Employers may apply for an annual exemption to PFML if they offer paid family and medical leave benefits through private plans with benefits that are at least as generous as MA PFML. Private plan exemption applications will be available through the Department online beginning April 29, 2019.
If an employer’s plan is approved by the Department, the employer does not need to remit contributions to the Trust. Exemptions are valid for one year and must be renewed annually. In order to qualify for an exemption, the employer’s private plan must:
- Confer the same or better benefits that are required under MA PFML;
- May not cost employees more than they would be charged if administered under PFML;
- Must afford equivalent or better rights and protections to employees as those provided under PFML, such as the non-retaliation and benefit protection provisions; and
- If the plan is provided through insurance, the policy must be issued by a MA licensed insurance company. If the plan is self-insured, the employer must furnish the Department a bond in an amount determined by the Department.
Are there other employer responsibilities under MA PMFL?
Employers are required to notify their workforce about MA PFML and they must:
- Display the PMFL mandatory workplace poster. The poster must be available in English and any primary language of 5 or more individuals of your workforce, which are provided by the Department;
- Provide a written notice of contributions, benefits and workforce protections to W2 employees and 1099-MISC contractors (as applicable); and
- Collect signed acknowledgements from W2 employees and 1099-MISC contractors that they received the written notice.
The above information is based on proposed regulations and are still subject to change. The final regulations are set to be released by July 1, 2019. For more on the MA PFML see our article, “Massachusetts Enacts Paid Family Leave.”
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