As Prince Lobel has reported on extensively, the Massachusetts Legislature in 2018 enacted the most comprehensive and generous Paid Family and Medical Leave law (PFML) in the country. While paid leave under the PFML will not become available until 2021, there are imminent deadlines for employers under the new law, including notifications to both employees and independent contractors of their rights, and payroll deductions that will fund the paid leave. In addition, given the complex interplay between the PFML and other leave laws, employers should now begin reviewing and revising their manuals in order to coordinate their leave policies and ensure they are compliant with the new law
For a comprehensive discussion of the PFML, please read Prince Lobel Partner Laurie Rubin’s December 2018 Client Alert. The scope of the current alert is on upcoming deadlines and action items.
Posters and Notices of PFML Rights
By May 31, 2019, all Massachusetts employers must display the approved workplace poster. The poster is now available from the Department of Family and Medical Leave (DFML), the agency charged with administering the new law.
The poster must be available in English and each language which is the primary language of 5 or more individuals in an employer’s workforce, provided that the DFML makes such a translation available.
In addition, by May 31, employers are required to provide written notice directly to each employee and independent contractor. Employers must provide their workers the opportunity to acknowledge (or to decline acknowledgement) of the notice. Going forward, new employees must be provided with the notice (and opportunity to acknowledge receipt) within their first 30 days on the job, and independent contractors should be provided with the notice at the time of initial contracting. In all cases, the notice must be provided in the worker’s primary language. Approved forms of notice are available on the DFML website here.
Payroll Deductions
Like unemployment insurance, the new program is to be paid for by payroll deductions and employer contributions. The initial payroll tax is 0.63% (based on wages up to the Social Security cap, currently $132,900) and will be adjusted annually. The payroll tax is divided between medical (0.52%) and family (0.11%) leave. Employers are allowed to pass on some of these costs to employees – up to 40% of the medical and up to 100% of the family – or .318% overall. Employers with 25 or fewer employees are not required to contribute to the fund, but must deduct the full employee share of the payroll tax (0.318%) from their employees’ wages.
Employer and employee contributions commence as of July 1, 2019. Employers are required to report and remit contributions each quarter through the Massachusetts DOR’s MassTaxConnect beginning October 2019. Employers not registered with the MassTaxConnect can register here.
Whether an independent contractor is eligible for benefits under the PFML, and hence whether deductions/contributions are required with respect to that individual, depends on the percentage of the company’s work force that is comprised of independent contractors. Independent contractors who work for a company that issues 1099s to more than 50% of its workforce will be covered by the new law.
The DFML provides a handy tool for employers to determine whether independent contractors are covered under the new law and whether the employer is responsible for making employer contributions.
The DFML’s regulations are expected to be finalized before July 1, 2019, and will provide comprehensive guidance on the tax reporting and documentation requirements. An updated draft of the regulations was released on March 29, 2019, and a comment and revision period has ensued. The DFML plans to hold two public hearings on the draft regulations in the next month.
Given the complexity of the PFML deduction/contribution provisions, employers are urged to be in touch with their payroll service to prepare for the July 1 deadline.
Review and Revise Policies
As we reported in December, there are significant differences and potential conflicts in the coverage, eligibility and administration of PFML and other leave laws such as the FMLA, the Massachusetts Earned Sick Time law, and the Massachusetts Parenting Leave law. The parameters of some of these differences or conflicts will come into sharper focus once the DFML issues its final regulations. At that time, employers should begin to review and revise their policies. Employers may find it prudent to conform their leave policies as much as possible to the PFML’s requirements, as, generally speaking, the provisions of this new law are more comprehensive and exacting than other statutory leave schemes.
If you want to learn more about the Massachusetts Paid Family and Medical Leave law and what you need to do to prepare for it, please contact Employment Law chair Daniel Tarlow ([email protected] or 617.456.8013) or Laurie Rubin ([email protected] or 617.456.8020), the authors of this alert.
Update, May 3, 2019: More often than not, ground-breaking legislative changes, especially in the employment benefits or wage and hour context, result in chaotic implementation. The Massachusetts Paid Family and Medical Leave law is no different. Just a few days ago, Prince Lobel reported on the up-coming May 31 deadline for employers to provide notice of Massachusetts Paid Family and Medical Leave rights to employees. It seems that just as the proverbial ink was drying on Prince Lobel’s client alert, the Department of Family and Medical Leave extended the deadline to June 30 as a result of push-back from employers.
As previously reported, 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.
Prince Lobel will continue to monitor and report on important events with respect to the roll-out of this new law.