Massachusetts Paid Family Leave Guide
As part of the Massachusetts “Grand Bargain,” paid family and medical leave (PFML) has been taking shape. The law will provide paid family and employee medical leave benefits for Massachusetts workers in 2021. Also, it will establish a Department and process for paid family leave of up to 12 weeks to care for a family member, and up to 20 weeks for an individual employee’s own ailment or disability.
The tax that will pay for these benefits will begin in July 2019, and paid leave benefits themselves will be available beginning in 2021. The initial contribution rate will be 0.63 percent of all wages (or other qualifying earnings or payments). This amount is anticipated to increase over time, however no set schedule for this has been communicated to employers.
Businesses that employ one or more individuals are subject to the PFML law and must submit contributions on behalf of workers and covered individuals. Employers with fewer than 25 employees must submit contributions on behalf of their employees to cover the portion of PFML contribution due from employees and covered individuals, however they are not required to pay the employer portion of the contributions for family and medical leave. The Department has stated that cities, towns, districts, and political subdivisions are exempt unless they decide to opt in.
Last week, the Massachusetts Department of Paid Family and Medical Leave published the proposed regulations on the new PFML laws, which can be viewed here. These proposed regulations were long awaited by HR professionals and business owners alike - however, the details leave many more unanswered questions.
While heavily repetitive from the original statute, here is a snapshot of what the proposed regulations provided:
- When determining whether an employer has fewer than 25 employees, they must count all full-time, part-time, seasonal and temporary employees on the payroll (effectively all active employees), as well as all contracted service providers. To make this determination, employers must take that headcount number during each pay period and then divide by the number of pay periods in the previous calendar year.
- Contributions will be paid quarterly, with the Department calculating the amount of contributions on the basis of the employer’s quarterly reports. The quarterly reports and contributions will be submitted through the Department of Revenue’s MassTax Connect System.
- Employers are able to “opt out” of the state program by implementing a private plan that is as generous, or more generous, than the Department’s PFML. In order to do so, employers must apply for approval of their plan through the Department. The application process or timeline will not begin in advance of the July 1 contribution collection start date, and it is not advised that any contributions collected in advance of a private plan approval will in any way be able to be refunded. Employers whose applications are approved will be approved for one year, and then they will have the option to submit an application for renewal each year.
- In the event of an employee filing a claim with the Department:
- The Department will notify the employer within five business days that a claim has been filed, and the notice will include the employee’s name, type of leave requested, expected duration, whether the request is for continuous or intermittent leave, and other pertinent information.
- The Department will notify the employee and the employer whether a claim is approved or denied. If approved, the Department will provide details on the reason for the approved continuous leave and its duration, and/or the frequency and duration of approved intermittent leave and the end date of the approved leave.
- The Department may request and require that employers provide any information or records they deem relevant to a claim, such as earnings, job descriptions, status information, weekly hours worked, prior requests and approvals for leave, the amount of paid leave already taken during the current “benefit year”, and any applicable paid leave policies the employer may have.
- Employees with approved PFML claims must still comply with their employer’s attendance policy and call out procedures, and they may also be subject to applicable discipline for neglecting to work during their agreed to shifts (if leave is intermittent) or not returning from their approved continuous leave when denoted as the official end date by the Department.
It is important to note that the proposed regulations were published with the intention of obtaining early public feedback, in advance of the final regulations due out on March 31. There are several listening sessions scheduled across Massachusetts in the next few weeks to collect this feedback and make an attempt to include answers to our most pressing questions in the final regulations.
Carly Fallon, CheckWriters' Director of HR, will be in attendance at select sessions to voice several of these lingering concerns, alongside area HR colleagues and MA business owners. Below are her thoughts on issues that need to be raised:
- How will the quarterly contributions be divided between the separate medical and family leave components? What percentage of the mandatory contributions (medical and family) may employers deduct from employee wages?
- Once the law identifies this more firmly, employers then need to understand the best approach for their organization; should we make employees responsible for the contribution portion allowable? How does this affect our budget? Should we invest in an external policy? If so, with employee contributions or without?
- The tax amount is being considered particularly insignificant by many, but what about budgeting cost for loss of productivity and incurred benefits during eligible leaves?
- What is the concrete definition of an “Employee of an Employer”? It is speculated that an Employee’s eligibility for MA unemployment may be a determining factor, however more clarity is needed on this for multi-state employers, or employers with folks working/living out of state.
- What is the taxability of claim earnings for employees on leave and receiving benefits under PFML?
- Employers must run applicable federal protections concurrently with MA PFML. In the cases that FMLA applies, what are the appropriate steps if FMLA is not able to be certified by the employer? Or, if FMLA is certified but the dates defined differ from the approved PFML claim dates, should employers be adjusting their FMLA certifications?
- Because all active employees at any stage of employment are eligible for PFML, and the definition of a “family member” is much broader than that under FMLA (extending beyond parents and children to siblings, grandparents, grandchildren, and in-laws; including those who are adopted, step and foster relatives), there is a higher probability that an employee may not qualify for FMLA. If an employee is not eligible for FMLA , should the employer be issuing ADA paperwork concurrently with a leave request under PFML?
- The proposed regs state that any illness, injury, impairment or physical or mental condition will qualify as a “serious health condition” if it involves inpatient care or continuing treatment by a healthcare provider, but there are no details on length of time or duration of care. With the qualifiers being ambiguous, it is hard to determine how to issue ADA paperwork in the event that FMLA is not applicable.
- While the proposed regs stating that PFML cannot affect the employee’s right to accrue vacation/sick or PTO, bonuses, or other benefits, it is unclear how this will be tracked when such benefits are tied to physical hours worked. Will employers need to adjust their accrual practices or will we be able to cease accrual for clearly defined benefits that are attached to hours worked specifically?
Stay tuned for more information as the listening sessions get underway. HR professionals and employers have fingers crossed that the definition will form from these sessions and clarity will prevail in advance of the July 1 contribution collection start date.
As budgetary, benefit, personnel practice, and HR policies and processes need to be firmly shaped in advance of PFML initiating on January 1, 2021, our HR consulting team will be diligent in helping our MA clients prepare and strategize. Additionally, our Benefits team is prepping via ongoing dialogues with carriers on private plan options that may satisfy the PFML requirements and help employers retain organization and control of employee leaves.