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Massachusetts Paid Family and Medical Leave (PFML or Program) is set to take effect October 1, 2019. The Massachusetts Department of Family and Medical Leave (the Department) recently released the final PFML regulations, which is set to take effect July 1, 2019. Below are some MA PFML frequently asked questions based on the final regulations.

FAQs

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 October 1, 2019 and eligible individuals can apply for benefits starting January 1, 2021.

Which employers are subject to MA PFML?

All MA employers and out-of-state employers with at least one MA employee.

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 should determine the number of covered individuals they had on an annual basis.

  • Employers with more than 25 covered individuals will be required to remit the full 0.75% contribution to the Trust, up to the Social Security limit ($132,900 for 2019). Employers will be able to deduct up to 40% for medical leave (employers responsible for the other 60%) 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.

How do employers determine which individuals they must remit contributions for?

Employers are responsible for remitting contributions for “covered individuals” that perform services localized in MA. W-2 employees (including full time, part time and seasonal employees) are always “covered individuals.” 1099-MISC Contractors may be “covered individuals” (individuals for whom an employer files an IRS Form 1099-MISC). Whether an individual is a “covered individual” 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 (W-2 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 (W-2 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.

For more information on determining workforce count, see Employer Tool on Calculating Workforce Count. For more on how to determine covered individuals, see the Department’s web page, “Who’s a covered individual under the PFML law?”

How do I remit contributions?

Employers must file reports and 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 covered individual’s wages. The contributions owed must be remitted by the end of the calendar quarter. Contributions for October 1 to December 31, 2019 are due to the Department on January 31, 2020.

Private Plan Exemption FAQs:

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 the Program if they offer benefits that are at least as generous as those under MA PFML. Employers can apply for an exemption to family leave coverage, medical leave coverage, or both.

If an employer’s plan is approved by the Department, the employer does not need to collect, remit and pay contributions to the Program. Exemptions are valid for one year and must be renewed annually.

How do I qualify for a private plan exemption?

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. The Department has published a list of approved insurance carriers that can provide a declaration of insurance that complies with PFML standards. If the plan is self-insured, the employer must furnish the Department a bond in an amount determined by the Department.
  • Employers must retain all reports and records related to the private plan for at least three years and must furnish documents to the Department upon request.

IMPORTANT NOTE: Benefits offered under an employer’s approved private plan do not need to begin until January 2021.

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.

When do employers need to apply for a private plan exemption?

The deadline to file for a private plan exemption for the first contribution is December 20, 2019. This means that employers who apply for an exemption by December 20, 2019 do not need to make payroll deductions and contributions that start on October 1, 2019. However, if an employer’s exemption application is denied, the employer must make contributions from October 1, 2019 forward.

The Department 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.

Notice, Acknowledgment and Posting Requirements FAQ

Do employers need to provide notice of the Program to their employees?

Yes, employers are required to notify their workforce about the Program and must:

  • Display the PMFL mandatory workplace poster in a highly-visible location. The poster must be available in English and any primary language of 5 or more individuals of the employer’s workforce (posters in several languages are provided by the Department); and
  • Provide a written notice of contributions, benefits and workforce protections to W-2 employees and 1099-MISC contractors (as applicable) and collect signed acknowledgments from them by September 30, 2019 (notice may be provided electronically). For samples of these notices, please see the question below.

Does the Department provide templates to fulfill the notice and signed acknowledgment requirements?

The State has published the following notices and acknowledgment forms that employers can use to satisfy requirements (for both W-2 employees and for 1099-MISC contractors):

For W-2 Employees:

For 1099-MISC Contractors:

If an employer’s workforce consists of more than 50% MA 1099-contractors, the employer is also required to provide the MA 1099-contractors with notice and collect signed acknowledgments, which are linked below:

Do I need to submit the signed acknowledgments to the Department?

Employers do not need to send the signed acknowledgements to the Department but must retain them for their records.

What if I notified my employees and 1099-MISC contractors prior to the July 14, 2019 changes in the Program?

If employers provided written notices prior to the July 14 delay, employers must provide an updated rate sheet explaining the updated dates and contribution rates. See 2019 Updated rate sheet for 25 or more covered individuals and 2019 Updated rate sheet for fewer than 25 covered individuals.

For more information on MA PFL, see our blog post, “Massachusetts Paid Family and Medical Leave Employer Deadlines Delayed and Final Regulations Released.”

Additional Resources:

General

Private Plan Exemption

Notice and Poster Resources

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.

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.