June Update: What does the new Massachusetts Paid Family and Medical Leave mean for your employees and your business?

It’s coming, Massachusetts paid Family and Medical Leave – here is what you need to know!

Note: This article has been updated to reflect the June 11, 2019 updates on effective dates issued by the state.  

Note: This is an update to our previous blog on the subject.

There’s a lot to understand in this particular piece of legislation, so we’re breaking it down to highlight only the most important info that you and your employees need to know now. 

What this means for your employees

Beginning in January 2021, Massachusetts employees — and in some special cases contractors and former employees — will be entitled to the following each year: * 

• A paid medical leave of up to 20 weeks for an individual’s health condition 
• A paid family leave of up to 12 weeks 
• Combined paid medical and family leave of up to 26 weeks. 

While on leave, Massachusetts employees will continue to receive a percentage of their average weekly wages – the exact portion depends on how much they earn relative to the state weekly wage average. 

The PFML program will be funded by premiums paid by employees, employers, and the self-employed and administered by the state. 

*Currently, paid family leave is restricted to the birth or adoption of a child and for family members in the military. As of July of 2021, it will expand to include other family members. For more information refer to this notice. 

Intermittent Time Off – The regulations now provide that PFML may be taken on an intermittent or reduced schedule for a few different scenarios: if mutually agreed upon between employer and employee; to care for a family member’s serious health condition; for an employee’s own serious health condition if medically necessary; and for certain situations involving armed service members. 

Employee contributions to the state fund will be contributed with post-tax dollars. 

What this means for your business

For businesses, PFML incurs extra costs and also creates some additional work: the draft regulations will require employers to file quarterly earnings reports (on employees and 1099 contractors) and to remit contributions owed through the Department of Revenue’s MassTaxConnect system.

The Department of Family and Medical Leave will begin collecting contributions on October 1, 2019*, and employers will be required to comply with the PFML’s posting and notice obligations by September 30th of this year (extended from the 6/30/19 deadline.)

Contributions will work as follows:

They are funded by a 0.75% increase in the state payroll tax, which pays directly into the trust fund. For employers with 25 or more employees, the contribution is shared, with the employer responsible for at least 60% of the medical portion only. Employers are not required to pay any part of the family leave portion.

Employers with fewer than 25 employees may deduct all of the employee contributions from employee wages (this will be further clarified in forthcoming regulations) and not required to contribute the employer share.

Who’s Paying What For Paid Leave?

For every $1,000 in pay, the state’s owed $7.50 for paid leave from businesses with 25 or more employees in Massachusetts.

These rates aren’t expected to last forever and may change in the fall of 2020.

Employers with 25 or more employees will be required to remit the employer and employee contributions to the DFML. This contribution can be split between employee payroll deductions and an employer contribution and will support both types of leave.

How can your business prepare?

The full PFML legislation can be read at this link. The poster and sample employee disclosure notices are available upon request and on the state website.

For more details on the PFML or the Pregnant Workers Fairness Act (April 2018), Equal Pay Act (July 2018), non-compete reform (October 2018), or the new limitations on permissible criminal history background checks (October 2018), please contact your Insource consultant or call our VP Saleha Walsh on 781-374-5103.