The Massachusetts Department of Family and Medical Leave (DFML) has extended the deadline for employers to submit a private plan exemption application to September 20, 2019. Employers who are not exempt must begin payroll deductions on July 1, 2019 and must remit their first quarter contributions by October 31, 2019. Employees can start applying for benefits under the Massachusetts paid family and medical leave law (MA PFML) starting January 1, 2021.
To comply with MA PFML employers must:
- Implement payroll deductions by July 1, 2019 or implement a private plan and apply for an exemption by September 20, 2019;
- Provide notice to employees and 1099-MISC contractors and collect employee and 1099-MISC signed acknowledgements of receipt by June 30, 2019; and
- Display the mandatory MA PFML poster.
For more on employer requirements, see our blog article.
What options do employers have to comply with MA PFL?
MA PFL is funded through employee payroll deductions and employer contributions (for employers with more than 25 covered individuals, which includes MA W-2 employees and may include 1099-MISC contractors). Among other obligations, employers are responsible for collecting, remitting, and paying contributions. Employers can fulfill their obligation to collect, remit and pay contributions by doing one of the following:
- Implement payroll deductions by July 1, 2019 and remit quarterly contributions to DFML, beginning October 31, 2019;
- Offer a private plan with family leave and medical leave benefits at least as generous as those provided under MA PFL and apply annually for a private plan exemption from DFML; or
- Offer a self-insured plan with family leave and medical leave benefits at least as generous as those provided under MA PFL, apply annually for a private plan exemption from DFML, and post a bond (which is determined by the size of employer’s workforce).
How can employers apply for a private plan exemption?
Employers can currently apply for an exemption for the medical leave contribution and/or family leave contribution online through their MassTaxConnect account.
If the exemption is approved, DFML will request a copy of the private plan. If the employer implements a self-insured plan, DFML will request a proof of bond coverage.
When do employers need to apply for a private plan exemption?
DFML will accept applications on a rolling basis, but applications must be approved in the quarter prior to the quarter in which the exemption will take effect. This means that employers can stop making contributions starting on the first day of the quarter following the approval.
The deadline to file for a private plan exemption for the first quarter contributions only (July 1, 2019 to September 30, 2019) has been extended from June 30, 2019 to September 20, 2019. This means that employers who apply for an exemption by September 20, 2019 do not need to make payroll deductions and contributions that start on July 1, 2019. However, if an employer’s exemption application is denied, the employer must make contributions from July 1, 2019 forward.
Employer Next Steps:
- Determine whether to implement a private plan or self-insured plan. If the employer chooses one of these options, they should apply for an exemption via MassTaxConnect by September 20, 2019 (employers can later decide to implement a private or self-insured plan, but must implement payroll deductions and remit contributions in the interim);
- If employer does not implement a private plan, determine the appropriate contribution amounts from employees and from the employer (if applicable). The employer should work with their payroll department to set up employee deductions by July 1, 2019 and remit the first quarter contributions by October 31, 2019 via MassTaxConnect;
- Distribute written notice to employees and 1099-MISC contractors by June 30, 2019 and collect employee and 1099-MISC signed acknowledgements of receipt. Provide notice to newly hired employees within 30 days of hire. Please note: notice and acknowledgements may be provided electronically; and
- Post the mandatory MA PFML poster in a conspicuous place in employer’s workplace.
Private Plan Exemption Resources:
- DFML Employer Guide: Exemptions for Private Plans
- DFML FAQ on Statutory Exemptions
- DFML Employer Guide: How to calculate Bond Requirements
- MassTaxConnect Account
Notice and Poster Requirements:
- PMFL mandatory workplace posters
- Employer Notice to Employee and Acknowledgment
- Employer Notice to Self-Employed Individual and Acknowledgment
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.