Massachusetts recently passed the Paid Family Medical Leave Act (“PFML”). This comprehensive law allows many employees who work for Massachusetts employers to take up to 26 total weeks of paid leave for medical and family leave. Employees consent to payroll contributions and may contribute a maximum of $0.38 for every $100 earned. Employers who have more than 25 employees may contribute part or all of the employees’ share of the contributions.
What is the Massachusetts PFML?
The PFML applies to all Massachusetts employers, regardless of size, and allows employees to take paid family or medical leave. For family leave, employees may be eligible for up to 12 weeks of paid leave. For medical leave, employees may be eligible for up to 20 weeks of paid medical leave. The maximum total combined leave is 26 weeks. It applies to any employee who, while working for Massachusetts employers, has earned enough money over the preceding year to meet the financial test for unemployment benefits. The family leave may be taken to care for domestic partners, parents of a spouse or domestic partner, grandchildren, grandparents, and siblings. If your company has multiple locations, please note that the requirement for employers to comply with PFML will be based on tax identification numbers.
Employer’s responsibilities under PFML
Beginning on October 1, 2019, Massachusetts employers will be responsible for:
– Reporting wages paid, payment for contract services rendered;
– Determining contribution amounts for its work force and for any contribution due from employer;
– Making deductions to cover worker contributions from payments you make to your workforce, either as wages or as payments for services for Massachusetts 1099-MISC contractors.
Determining an employer’s total workforce
An employer will report total workforce numbers, but will only be responsible for submitting contributions on behalf of the workforce who are covered individuals under the PFML law. Total workforce includes all Massachusetts W-2 employees (full-time, part-time or seasonal). Employees do not need to reside in Massachusetts to be covered. W-2 employees are always considered covered individuals.
It also includes all Massachusetts 1099-MISC contractors who perform services as an individual entity, live in Massachusetts, and perform services in Massachusetts. Massachusetts 1099-MISC contractors count toward an employer’s total number of covered individuals only if they make up more than 50% of employer’s total workforce.
Each quarter, the employer will be required to remit the required employee contributions for all covered individuals in the workforce. Employer may deduct all or part of the required employee contribution from amounts employer pays to covered individuals. If the workforce has fewer than 25 covered individuals, employer is not responsible for employer’s contribution and there are some exclusions as to who is counted as part of your workforce. The total combined contribution rate is 0.75% of employee qualified earnings.
9/30/19 – Employer must complete notification to employees about PFML
10/1/19 – Payroll withholdings begin
1/1/21 – Most benefits are available
1/31/20 – Complete quarterly filings and submit contributions through MassTaxConnect
7/1/21 – All benefits will be available.
What should you be doing now to get ready for PFML?
Before the payroll withholdings being in October, it is imperative that you notify your employees of the PFML by displaying the PFML workplace poster in a highly-visible location. You should provide written notice of contributions, benefits, and workforce protections to Massachusetts W-2 employees and 1099-MISC contractors and collect signed acknowledgements of receipt of notice from W-2 employees and 1099-MISC contractors.
There are some exemptions available for employers such as those who offer their own private paid leave benefits. Employers have until 12/20/19 to file for an exemption.
As always, NDS is here to answer any questions you may have about this new law and your obligations as an employer in Massachusetts.