By Catherine E. Reuben April 26, 2019
The new Massachusetts Paid Family and Medical Leave Act (PFMLA) requires that employers issue notices to both employees and independent contractors, providing them with information about their rights under the law. The agency that administers the law, the Massachusetts Department of Family and Medical Leave (DFML), recently released templates of the required notices. For employees, the notices must be received by May 31, 2019 or within 30 days from their start date, whichever is later. For independent contractors, the notices are due at the time the contract is made or by May 31, 2019, whichever is later. The template notices are available on the DFML website. Also available is a poster that must be posted by July 1, 2019.
The notice, which may be provided electronically, must include the opportunity for an employee or self-employed individual to acknowledge receipt or decline to acknowledge receipt of the information. The employer can receive these acknowledgments in paper form or electronically. The notices must be written in the employee’s primary language. The notice must include the employer’s DFML identification number, which the DFML has indicated will be the same as the employer’s Federal Employer Identification Number (FEIN).
Click here for more detailed information about the notice requirements and links to the poster and notices in various languages.
The notice explains to workers that, effective January 1, 2021, they may be eligible to take up to 20 weeks of paid medical leave, up to 12 weeks of paid family leave, and up to 26 weeks of paid military caregiver leave. This benefit, administered by the DFML, is funded through contributions from employers. The current contribution amount is .63 percent of the worker’s wages (not counting amounts over the Social Security base limit), with 82.5% of that amount allocated to medical leave, and 17.5% allocated to family leave. Employers with 25 or more employees in Massachusetts are required to pay 60% of the medical portion but can deduct the rest of the medical portion and all of the family portion from the employees’ wages. Employers with fewer than 25 employees are not required to pay the 60% of the medical portion and can deduct all of the rest from their employees’ wages. Payroll deductions begin on July 1. The contributions for July through September must be submitted by employers through the Department of Revenue’s MassTaxConnect system by October 31, 2019.
Click here for more information on the contribution requirements.
To comply with the notice provision, employers must first make two decisions. First, they must decide whether they are going to voluntarily fund a higher percentage of the contribution than the law requires or deduct the maximum amount that they can from employer wages. The notice form contains a spot where the employer can indicate what percentage of both the medical and family leave contribution will be paid by the employer, and what percentage will be deducted from the employee’s wages.
Second, employers need to decide whether they will be participating in the government program or offering a private plan instead. Employers that offer paid family and/or medical leave benefits that are equal to or greater than those offered under the law can apply for an exemption from collecting, remitting and paying the mandatory contributions. Employers will be able to apply for these annual exemptions through their MassTaxConnect account starting on April 29, 2019. Per the draft regulations, employers that seek to have a private plan approved must either submit a copy of an insurance plan or, if they are self-funded, post a bond. If the employer discontinues the plan, can be assessed a penalty equal to 0.63 percent of its total payroll plus be required to repay the trust fund for any benefits paid to its workers.
The DFML recently issued a new version of its proposed regulations for public comment. This new version is clearer and more comprehensive than the last version, but still does not address many of the questions that employers have, including the following:
1. Many employers have asked whether the deductions will be taken on a pre-tax basis and further whether the contributions are deductible for the employer. The DFML is purportedly planning to issue further guidance on that topic soon.
2. The law itself states that if an employer provides paid leave benefits to an employee that are equal to or exceed the amount to which the employee would be entitled under the PFMLA, the employer “shall be reimbursed” for the amount that the Commonwealth would otherwise have had to pay. The prospect of that reimbursement is an important factor for employers to consider when deciding whether to change any of their existing benefit programs in light of the PFMLA. To date, the DFML has not clarified how the reimbursement process will work.
Many employers were keen for more guidance on the extent to which they need to make contributions for workers who reside or work in other states. The answer under the law is that if an employee would be eligible to receive unemployment benefits in Massachusetts, they are also eligible for the PFMLA, and the employer must make contributions for them. The draft regulations simply cut and paste the language from the unemployment statute with respect to what it means for an employee to be performing services within Massachusetts. Long story short, some out of state workers may be covered, for example, a remote worker who performs some services in Massachusetts and reports in to a Massachusetts-based supervisor.
Employers are encouraged to visit the DFML website for more information. The website is updated frequently, so employers should keep checking it. (For example, the information above about electronic signatures and use of FEIN number was only recently posted.)
For more info about the PFMLA or for compliance assistance, feel free to contact any member of the HRW PFLMA team: