The Massachusetts Department of Family and Medical Leave (“Department”) issued final regulations (“Regulations”) implementing the Massachusetts Paid Family and Medical Leave program (“MA PFML” or “Program”). The Regulations are effective as of July 24, 2020. It is anticipated that the Department will continue to issue additional guidance as we get closer to the start of benefits which begin in January 2021. This article provides a brief summary of the MA PFML and highlights key considerations in light of the updates to the Regulations.
MA PFML is a state-offered benefit program for anyone who works in Massachusetts. Covered individuals are eligible to take up to 12 weeks of paid family leave per benefit year, 20 weeks of paid medical leave for their own serious health condition, and up to 26 weeks of paid leave to care for a family member who is a covered service member. MA PFML is funded through a Massachusetts tax, and is separate from both the federally mandated benefits offered by the Family Medical Leave Act (FMLA) and from leave benefits that may be offered by employers. MA PFML benefits become available to covered individuals January 1, 2021.
Which Employers are Covered under MA PFML?
All Massachusetts employers and out-of-state employers with at least one Massachusetts employee are covered. Employer contributions depend on the number of covered individuals the employer had in the prior calendar year. For more information on determining workforce count, see Employer Tool on Calculating Workforce Count.
Who is a Covered Individual under MA PFML?
MA PFML is available to covered individuals who work in Massachusetts. Whether an individual is a “covered individual” depends on the covered employer’s workforce count and the makeup of their workforce in the prior calendar year.
Covered individuals include:
- W-2 workers who work in Massachusetts, whether they are full-time, part-time, or seasonal;
- Self-employed individuals;
- 1099-MISC workers who work in Massachusetts, do not qualify as independent contractors, and who make up more than 50% of their employer’s workforce. For more information about coverage of 1099-MISC workers, please see our blog post.
For more on how to determine covered individuals, see the Department’s web page, “Who’s a covered individual under the PFML law?”
Do Employers Need to Contribute to the Program?
Yes. 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 in the prior calendar year will be required to remit a contribution of 0.75% of eligible wages, up to the Social Security limit (which is currently set at $137,700 for 2020). 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 in the prior calendar year must remit an effective contribution rate of 0.378% of eligible wages. This contribution rate is less because employers with fewer than 25 covered individuals are not required to pay the employer share of the premiums, reducing the total contribution amount. These employers are responsible for remitting the funds withheld from covered individuals’ earnings but are under no obligation to contribute themselves. However, they may elect to cover some or all of the covered individuals’ share.
How do Employers Remit Contributions?
Employers must file reports and remit contributions quarterly through the Massachusetts Department of Revenue MassTax Connect System, which is likely handled through withholdings 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.
What are Qualifying Reasons for MA PFML?
Paid family leave may be taken to:
- Care for a sick family member
- Bond with a newborn child
- Bond with a child after adoption or foster care placement
- Manage family affairs when a family member is on active duty in the armed forces
Paid medical leave may be taken to:
- Manage a personal serious injury or illness
Can Employers Apply for an Exemption to MA PFML?
Yes. Employers have the option of providing equivalent benefits to their employees through an approved private plan or self-insurance. Those employers may apply for an annual “Private Plan Exemption” to the Program (and may avoid collecting and remitting contributions to the Program) by establishing a plan that has been approved by the Massachusetts Department of Revenue (DOR).
Exemption applications are accepted on a rolling basis and take effect the quarter following approval. This means that employers can stop making contributions starting on the first day of the quarter following the approval. For general information about the Private Plan Exemption and guidance released by the DFML, please visit our prior posts here, and here.
Do Employer Paid Leave Plans Qualify for Reimbursements through PFML?
An employer that has a private benefit plan, but has not otherwise received an exemption to the MA PFML program from the DOR, may be eligible to be reimbursed for those paid benefits (see M.G.L. c. 175M, Section 3(c)). The Department has indicated that more information about how to apply for reimbursements will be made available as we get closer to the start of benefits. For additional information about reimbursements please visit our prior article.
Key Updates to the Program Under the Final Regulations
Below is a non-exhaustive list of updates to the MA PFML program under the Regulations:
- Updates to Private Plan Exemption Requirements – In order for an employer to be exempt, all employees, covered workers and former employees must be included within the private plan. Private plans must also:
- provide an internal appeals process through the private plan administrator before the employee can exercise their rights to an appeal with the Department;
- provide notice to covered individuals, as part of any determination, of their rights under both the private plan and MA PFML;
- determine the weekly benefit amount based on the wages earned with the employer when an applicant applies for benefits.
- Applying for Benefits – The Regulations require that a covered individual provide notice to the employer prior to applying for state benefits.
- Availability of Benefits – Employees may qualify for MA PFML for substance use disorders that qualify as a serious health condition. The treatment must be from a healthcare provider or program that has been licensed or approved by the Massachusetts Department of Public Health. An employer cannot take adverse action against an employee because he or she has exercised the right to take leave for treatment of a substance abuse disorder. The Regulations also clarify that in the case of multiple child births within the same year, no more than 12 weeks of MA PFML leave benefits are permitted in a benefit year.
- Waiting Periods – The Regulations clarify that with each application for benefits an initial seven-day waiting period will be triggered except in the case of medical leave immediately following family leave during pregnancy or recovery from childbirth.
- Covered Employees with Multiple Employers – The Regulations clarify that covered individuals with multiple covered employers are not required to take leave from each employer concurrently. This means that for employers with a private plan exemption, the benefits available to an employee under their plan are not impacted by access or taking MA PFML through another employer.
- Categories of Wages that Will Reduce MA PFML Benefits – The Regulations add additional categories of wages or wage replacement benefits, in addition to unemployment or disability (state or federal), that will reduce MA PFML benefits. These categories include:
- benefits received from an employer through an approved private plan; or
- any wages received from “another employer or covered business entity or through self-employment.”
- Reimbursements through MA PFML – The Regulations confirm that reimbursement for benefits paid to employees is not permitted for an employer that has a private plan exemption.
Massachusetts employers should review these updates and understand how MA PFML benefits will be administered, calculated, and incorporated into their existing leave framework.
- PFML Final Regulations
- Employers Guide to PFML
- Basic Contribution Facts for Employers
- PFML Mandatory Workplace Poster
- PFML Mandatory Workplace Poster (translations)
- Sequoia Blog – Massachusetts Releases Paid Family & Medical Leave Exemption Guidance
- Sequoia Blog – Massachusetts Clarifies Requirements for PFML Reimbursement Program
- Sequoia Blog – Massachusetts Paid Family and Medical Leave Private Plan Exemption Update
- Sequoia Blog – Updated Guidance on Massachusetts Paid Family and Medical Leave and 1099-MISC Workers
- Sequoia Blog – Massachusetts Paid Family and Medical Leave FAQs
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved