Published on: July 3, 2019
By Jennifer Barnett and Dawn McDonald
With the passage of the Paid Family Medical Leave Act (PFMLA) in 2018, Massachusetts became one of only six states (plus the District of Columbia) that now require employers to offer paid leave to employees who have serious medical problems or who need time to care for family members with serious medical problems. Benefits for Massachusetts workers will begin to phase in starting in January of 2021, but employers will have to begin addressing the financial and administrative requirements of this complex legislation immediately. Businesses with more than one employee, including condominium associations and management companies, must comply. These questions and answers summarize the law’s key features and (we hope) address many of the questions employers are likely to have about it.
Who is required to comply?
Any entity with more than one employee is required to comply with the reporting requirements, but only companies with 25 or more employees are required to pay the employer portion of the premiums for family and medical leave.
What kind of paid leave does the law require?
The law mandates paid medical leave to care for an employee’s own serious health conditions and paid family leave for four purposes:
- To care for a family member who has a serious health condition
- To bond with a new-born, newly adopted or foster-placed child
- To care for a family member who is on active duty
- To address “exigencies” related to a family member who is on active duty or who has been notified of an impending active duty assignment
What workers are eligible for the leave?
Full-time, part-time and seasonal workers and independent contractors are all entitled to medical and family leave. Former employees are entitled to family leave, if requested within 26 weeks of the date their employment ended.
How much leave must employees receive?
When the law is fully implemented, employees will be entitled to an aggregate amount of 26 weeks of paid medical and family leave every year. These benefits phase in over a two-year period.
Effective Jan. 1, 2021, employees may receive annually:
- Up to 20 weeks of paid medical leave to deal with serious medical problems that make it impossible for them to work.
- Up to 12 weeks of paid family leave related to the birth, adoption or foster care placement of a child, or because of a “qualifying exigency” related to the service or prospective service of a family member on active duty in the Armed Forces.
- Up to 26 weeks of paid family leave to provide medical care for a family member who is in the armed services.
Effective July 1, 2021, employees may receive annually:
- Up to 12 weeks per year to care for a family member with a serious health condition.
Who qualifies as a “family member?”
Family members for whom an employee may request leave include:
- A spouse or domestic partner
- A biological, adopted or foster child, or a child for whom the employee has been named the guardian
- The employee’s parents, or parents of the employee’s spouse or domestic partner
How much of their salary will employees receive while on leave?
The benefit amount is based on the employee’s earnings and capped at $850 per week. For employees whose average weekly earnings are equal to or less than 50 percent of the state average weekly wage, the benefit will be 80 percent of weekly earnings; for employees whose average weekly wage is more than 50 percent of the state average, the benefit will be 50 percent of weekly earnings. The benefit amount will be adjusted annually.
Who pays for the leave?
The leave program is structured like unemployment benefits, in that the benefits are paid by a state agency (the Massachusetts Department of Family and Medical Leave – MDFML) but funded by a payroll tax paid partly by employers and partly by employees.
How is the payroll tax calculated?
The MDFML will set both the payroll tax rate and the allocation formula (the portion applied to medical and family leave) annually. For this year, the per employee payroll tax contribution rate will be 0.75% applied to the first $132,900 of earnings. (Note: When lawmakers approved a two-month delay in the start of payroll deductions, they increased the contribution rate, which had been set initially at 0.63%, to ensure full funding when leave benefits become available in January of 2021.
Employers with more than 25 employees are required to pay 60 percent of the medical leave portion, with the balance deducted from employee pay. Employees are required to cover the entire family leave contribution, although employers may cover all or part of that amount, if they choose. Employers with fewer than 25 employees are not required to pay the employer portion of the medical leave contribution, but they are required to make the required employee payroll deductions and they must comply with the statutory reporting requirements, detailed below.
How does the payroll tax collection process work?
Every quarter, employers must submit a report detailing the earnings for all qualified employees. Full-time, part-time, and seasonal workers and independent contractors all must be included in this tally, but temporary employees are not part of the required head count. The quarterly report must include: The name, social security number, and wages or other earnings paid to each worker. The MDFML will calculate the payroll tax contribution owed, which employers must pay within 30 days after the end of the quarter. Under the revised implementation schedule, employers must begin withholding employee contributions on October 1, 2019; they must remit the contributions for the first quarter (October 1 – December 31) through MassTaxConnect by January 31, 2020. Earnings reports are also submitted through MassTaxConnect. You can follow this link to create an account if you don’t have one. You can find a tutorial explaining the sign-up process here.
How does the PFMLA relate to other federal and state laws mandating varying types of leave?
- Leave taken under the PFMLA will usually run concurrently with leave taken under other programs. So, for example, an employee could not take 12 weeks of leave for the birth of a child under the PFMLA and then take another 8 weeks of unpaid leave under the Massachusetts Maternity and Medical Leave Act.
Employees may collect both short-term disability benefits and PFML benefits concurrently, as long as the combined total does not exceed the employee’s average weekly wage. If the total exceeds that limit, the PFML benefits would be reduced accordingly.
It is important to note that employers may not require employees to take accrued sick, vacation or personal time during a PFML leave period.
Who is responsible for explaining PFML benefits to employees?
Employers. By September 30, employers must display a poster provided by the MDFML (you can find it here) and send a written notice to all covered workers, detailing the benefits, the employee contribution rates, the employer contribution rates (if required) and employee rights under the law. The notice should include a request for the employee to acknowledge (in writing) receipt of the information. The notice and employee acknowledgments can be delivered electronically. Whatever notification format you use, be sure to document your compliance with the notice requirement. The Department will accept this documentation as evidence of compliance even if employees do not return a signed acknowledgment form.
Can employers opt out of the state-mandated leave program?
Yes, but you should consider carefully whether you want to do so. The requirements for a privately-funded plan are extensive, a private plan may not be less expensive, and opting out of the state plan won’t exempt you from its administrative and reporting requirements. Among other requirements, the private leave plan you offer must:
- Cover the same workers as the PFMLA and offer benefits equal to or greater than those provided by the state law.
- Not require employees to pay any more than they would pay under the state program.
- Be insured by a Massachusetts insurance carrier
- Offer the same rights and protections as the state law, including:
- Continued employer contributions to employment-related health insurance benefits during the leave period at the same level provided when the employee was not on leave;
- Job protection – the right to return to the same job when the leave period is over; and
- The right to appeal a denial of benefits to the state MDFML or to district court.
Employers offering privately funded plans must also apply annually to renew them and must notify the department of any changes in an approved plan. Under the revised implementation timetable, employers will have until December 20, 2019 to apply for an exemption from the PFML program. Anyone thinking about creating a private plan should do so and submit it to the MDFML as soon as possible.
What should I do immediately?
- Review this summary of the new law
- Identify all covered employees and calculate the required employer and employee contributions.
- Establish an account with MassTaxConnect, if you don’t already have one.
- Begin planning for a private family medical leave program if you intend to seek an exemption for one.
- Contact legal counsel to make sure you understand the new law and are taking all necessary steps to comply with it.
- Identify and prepare to meet critical deadlines, primary among them:
September 30, 2019
Send the required notice to employees summarizing PFMLA benefits and employee rights.
October 1, 2019
Begin withholding employee contributions.
December 20, 2019
Deadline to apply for exemption from PFMLA.
January 31, 2020
Remit employer and employee contributions to MassTaxConnect for first quarter (October 1 – December 31).
One final point
Employers should take this law seriously and address it proactively. The law is complicated, reporting requirements are extensive, and penalties for noncompliance are painful. They include:
- For failure to send the required notice to employees: A fine of $50 per individual for the first violation and $300 per individual for subsequent violations.
- For failure to make required contributions: A fine based on the applicable payroll tax contribution rate assessed against the employer’s total annual payroll for every year the contributions aren’t made, plus an amount equal to the benefits paid to covered individuals for whom the employer failed to make the required contributions.
Potential liabilities don’t end here. The courts can award an array of damages for retaliating against or unfairly terminating an employee who requests leave, including up to triple the amount of lost wages and benefits plus attorneys’ fees and court costs, and a requirement to restore the employee to his/her previous position.
Equally important: The PFMLA doesn’t exist in a vacuum. It intersects with and overlaps other laws – the Americans with Disabilities Act and FMLA, for example – that have their own requirements and penalties. Employers who violate the PFMLA – for example, by refusing to grant leave to which employees are entitled – may also be violating other measures, potentially resulting in a 10-count complaint and hundreds of thousands of dollars in penalties for a single violation.
If you have questions about the law or want advice on implementing it, please email Jennifer Barnett (email@example.com) or Dawn McDonald (firstname.lastname@example.org) or call either of them at 781-843-5000.