Massachusetts Paid Family and Medical Leave Act (PFML)

* * * There have been a number of updates to Massachusetts Paid Family and Medical Leave since this blog post was published. Please reference our updated blog for correct contribution percentages and deadlines. * * *

On June 28, 2018, a bill was signed affecting all employers in the Commonwealth of Massachusetts by creating a paid family and medical leave program funded by a state payroll tax.

Employer and covered individuals obligations to the program will begin on July 1, 2019, however the individual eligibility will not begin until January 1, 2021. A covered individual can be either W-2 employee or 1099 contractor.

Beginning in 2021, eligible individuals will be allowed to take the following job-protected leave in a benefit year:

up to 12 weeks of paid family leave
up to 20 weeks of paid medical leave
up to 26 weeks of paid family leave to care for a covered service member A covered individual may not take more than 26 weeks in aggregate in a benefit year.

Who does PFML apply to?

All businesses with one or more employees are required to comply with PFML, with the exception of self-employed individuals. Self-employed individuals are allowed to opt into PFML.

Eligibility

To be eligible to claim the benefit, individuals must meet the financial qualifications for receiving unemployment compensation under Massachusetts state law. All individuals in the workforce must contribute, regardless of eligibility.

Employee Claims

Covered individuals must provide employers with at least 30 days notice of anticipated start date of leave, length and type of leave, and anticipated return date. A claim for these benefits must be filed with the Department of Family and Medical Leave using approved forms. All PFML benefits require a minimum level of certification supporting the need for leave.

A benefits calculator is available on the state website to determine eligibility of claims.

Contribution Split

Employers with 25 or more employees will be required to remit a contribution of 0.63% of eligible payroll. This amount will support both types of leave.

The payroll tax of 0.63% that will fund the PFML program will apply to the first $132,900 of an employee's annual earnings. The allocation of this percentage will be determined annually by the Department of Family and Medical Leave.

Of the total 0.63% payroll tax: 0.52% of payroll deductions will be allocated towards medical leave, 0.11% will be allocated towards family leave contributions.

Family Leave: Up to 100% of the family leave contribution can be deducted from employee wages

Medical Leave: Up to 40% of the medical leave contribution can be deducted from employee wages. Larger employers are responsible for contributing the remaining 60%.

Employers with fewer than 25 employees must remit contributions, but are not responsible for remitting the employer's share.

Employers with 25 or more Employees

Employers with fewer than 25 Employees

Contribution Split less than 25 employees

Reporting and Calculating

Beginning on July 1, 2019, each calendar quarter, employers will be required to file an earnings report and remit contributions through the Department of Revenue's MassTax Connect system. On-Time Payroll will remit and file these contributions on our clients' behalf once employers provide the necessary information regarding their workforce.

***UPDATE*** Deduction for PFML has been delayed until October 1st, 2019.

What you need to do:

Employer Check List

Determine the size of your workforce
Determine contribution amount for Family and Medical Leave
Provide written notice to all individuals in your workforce + collect a signed acknowledgement from each individual
Post the Paid Family and Medical Leave poster at your workplace
Notify On-Time Payroll with size of your workforce, contribution amount, or, if you have applied for exemption

Step 1: Determine the size of your workforce.

Workforce includes all full-time, part-time, seasonal, and temporary employees, as well as all independent contractors during each pay period.

Workforce count is determined by using different methods to calculate annual workforce averages for employers and businesses that employ W-2 employees and/or 1099 independent contractors.

There are a couple of steps involved in finding the size of your workforce.

1. First, determine the # of W-2 employees per pay period in 2018 and/or

Determine the # of 1099 contractors per pay period in 2018.

2. Calculate the Average # of EEs + Average # of 1099s

To find the average:

ADD # of Employees every pay period and DIVIDE by Total pay periods in a calendar year.

ADD # of Contractors every pay period and DIVIDE by Total pay periods in a calendar year.

Frequencies:

Weekly: 52 pay periods per year

Bi-Weekly: 26 pay periods per year

Semi-Monthly: 24 pay periods per year

Monthly: 12 pay periods per year

Step 2: Determine the contribution for Family and Medical Leave.

The employer share of the contribution is based on the size of their workforce.

After workforce size has been calculated, the employer is ready to plug the numbers into the Contribution Calculator.

This will help estimate the contribution amount.

The Mass.gov website supplies this very handy calculator to help calculate this liability and provides detailed explanations for each contribution type.

There are four possible scenarios:

1. Average W-2 workers + Contractors less than 25 (contractor less than 50% of the total)

Only W-2 workers are covered, Employer not liable

2. Average W-2 workers + Contractors less than 25 (contractor more than 50% of the total)

Both W-2 workers and Contractors are covered, Employer not liable

3. Average W-2 workers + Contractors more than 25 (contractor less than 50% of the total)

Only W-2 workers are covered, Employer liable if total # of W-2s are greater than 25, not liable if less than 25

4. Average W-2 workers + Contractors more than 25 (contractor more than 50% of the total)

Both W-2 workers and Contractors are covered, Employer is liable

Step 3: Provide written notice to all individuals in your workforce and collect a signed acknowledgement.

Prior to sending out the workforce notification, it is necessary for employers to choose whether they are going to contribute more than 60% for medical leave and more than 0% for family leave.

Note: Employers with more than 25 employees will be required to cover at least 60% of the employer's share of medical leave. Employers with less than 25 employees will not be required to contribute, but may opt to do so.

The purpose of the notice is to outline how much the employer is going to contribute. The form requires employers to notify employees the amount of this contribution and the deduction from employee earnings.

Is the employer going to contribute more than the required 60% for Medical Leave?

Is the employer going to contribute more than 0% for Family Leave?

The notice of contributions, benefits, and workforce protections must be provided to all individuals in your workforce.

The deadline to send out the notice is prior to June 1st, 2019. A signed acknowledgement must be collected from each individual.

For your convenience, the notice is available in 13 different languages:

This may be provided electronically, and must include the opportunity for the individual to acknowledge receipt or decline to acknowledge receipt of the information. The employer can receive these acknowledgments in paper form or electronically. The notice must be issued to each employee within 30 days of their first day of employment and must be written in the employee's primary language.

Penalties

Failure to provide the required notification may result in the following fines:

First violation: $50 per W-2 employee or 1099-MISC contractor

Subsequent violations: $300 W-2 employee or 1099-MISC contractor

Step 4: Post a copy of the Paid Family and Medical Leave poster in your workplace.

Copies are available online in several languages.

Step 5: Notify us.

Be sure to notify On-Time Payroll via email payroll@on-timepayroll.com with company workforce size, contribution percentage, or if you have applied for exemption.

Exemptions:

If a similar program is already provided to the employees, the employer may qualify for an exemption.

To apply for an exemption, the employer must submit an online application via MassTax Connect account.

Requests must be made prior to July 1st, 2019.

MA DOR conveniently provides a video tutorial on how to apply for exemption.

Frequently asked questions regarding exemptions may be found here.

Important Deadlines:

May 31, 2019 - Send out workforce notice to all current employees/contractors.
June 24, 2019 - Notify On-Time Payroll company size determination and contribution (or exemption).
June 28, 2018 - Deadline to apply for exemption through MassTaxConnect account.
July 1, 2019 - MA PFML contributions begin.
July 1, 2019- Workplace poster must be placed. The Department has recently granted the following extensions for employers:
June 30, 2019 - Deadline to provide notice to MA workers
September 20, 2019- Deadline to file for exemption Please keep in mind that On-Time Payroll will still need information by June 24th as contributions begin July 1, 2019.

If On-Time Payroll does not hear back via email regarding contribution percentage, we will automatically withhold the liability from the employer beginning pay date July 1, 2019.

***UPDATE*** Deduction for PFML has been delayed until October 1st, 2019.

Additional updates and deadlines can be found on our latest blog post here.

Additional Information

More answers to questions regarding the new law may be found in the links below.

Employers:

Employers FAQ for Massachusetts Paid Family and Medical Leave
FAQ for exemptions requests
A Guide to the Family and Medical Leave for employers can be found here.
Massachusetts Law regarding Employment Leave
Timeline of Paid Family and Medical Leave contributions and benefits
Basic Contribution Facts for Employers
Contact the Department of Family and Medical Leave directly by filling out the form here. Employer Tools:
Determine if you're responsible for employer share
Contribution Calculator Employees:
Employees FAQ for Paid Family and Medical Leave
A Guide to the Family and Medical Leave for employers can be found here.
Paid Family and Medical Leave as a Massachusetts worker.
Employee Benefits Eligibility

Due to extremely high call volumes, we strongly encourage all clients to email us at payroll@on-timepayroll.com for the best support and service. Alternatively, you may contact the Department of PFML directly, by using this form.