Many employers are understandably preoccupied, putting out COVID-19-related fires and dealing with other workforce and operational concerns. But it’s important for employers not to let other regulatory matters fall by the wayside, such as their legal obligations related to Massachusetts Paid Family & Medical Leave (MA PFML).
The MA PFML program was established back in 2018 under Massachusetts Paid Family and Medical Leave Law (PFMLL); however, employees will become eligible for certain paid time off starting on January 1, 2021. In an effort to help employers prepare, we want to take a look at the program details and the steps you can take ahead of January 1st.
Employee Coverage & Eligibility
Beginning January 1, 2021, a covered individual is eligible, in a 12-month period, for:
- Up to 20 weeks of paid medical leave to address their own serious medical condition;
- Up to 12 weeks of paid family leave to bond with a child, whether biological, fostered, or adopted, during their first 12 months together;
- Up to 12 weeks of paid family leave to handle circumstances related to a close family member being called to active duty; and
- Up to 26 weeks of paid family leave to care for a family member who gets sick or injured while on active duty.
Beginning July 1, 2021, a covered individual is eligible, in a 12-month period, for:
- Up to 12 weeks to care for a sick or injured relative.
Recipients are subject to a 7-day, unpaid waiting period and may currently receive a maximum weekly benefit of $850. That number is recalculated every October, based on 64% of the MA average weekly wage. The income cap, which is also reevaluated annually, is set at $137,700 for 2020.
Individuals must have earned at least $5,100 in the previous 12 months to be eligible for benefits, and no more than 26 weeks of medical and family leave in aggregate may be taken in a 12-month period. If the employee is separated, the employee is still eligible if they remain unemployed and have not been separated from the employer for longer than 26 weeks.
Self-employed individuals must opt into the PFML program. Before applying for benefits, self-employed individuals must have made contributions for a minimum of 2 of the past 4 completed calendar quarters, have earned at least 30 times more than their eligible weekly PFML benefits, and they must remain enrolled in the program for a minimum of three years.
Employer’s Legal Obligations
Employer Contributions – If an employer calculates 25 or more covered individuals in their workforce, they are responsible for making employer contributions for covered individuals in their current workforce. You’re not required to make employer contributions for covered individuals in your current workforce if you calculate less than 25 covered individuals.
The required contribution for a covered individual is 0.75% of the worker’s gross wages. That breaks down as 0.62% for medical leave and 0.13% for family leave for 2020. If the employer has a contribution requirement (25 or more covered individuals), that amounts to 60% of each individual’s medical leave contribution; however, employers are never responsible for the family leave contribution. Any portion of a covered individual’s contributions not covered by the employer should be deducted from their wages. If you already offer employees a paid leave program of equal or greater generosity, you may apply for an exemption for a private plan.
Notification – Employers must have the Paid Family and Medical Leave poster clearly on display; give employees written or electronic notice about PFML benefits, contributions, and protections if employed on or after October 1, 2019, and within 30 days of hire; and request written or electronic confirmation of employee receipt for their files.
The Department of Family Medical Leave (DFML) has provided templates for notifying a workforce of 25 or more and a workforce of fewer than 25. If you choose to craft your own notification, it must include an explanation of benefits available for family and medical leave; the employee’s contribution amount and obligations, as well as yours as the employer; your name, mailing address, and FEIN; instructions on how to file a claim for family and medical leave benefits; and the DFML’s mailing address, email address, and telephone number.
If more than 50% of your workforce is made up of contractors who receive MA 1099-MISC, you’re required to inform them in the same manner listed above. The DFML has also provided contractor-specific notification templates for 25 for more and for fewer than 25. It’s a good idea to notify self-employed individuals regardless of the total within your workforce, as this also notifies them of the opportunity to opt-in.
Filing Obligations – As of October 1, 2019, Massachusetts employers have been responsible for deducting employees’ PFML contributions from payroll and remitting them to the DFML using the Department of Revenue’s MassTaxConnect every three months, even if they’re not required to pay a share of employees’ contributions. Employers with fewer than 25 covered individuals are still required to remit employee contributions, at a rate of 0.378% of the employee’s eligible wages (0.248% medical leave, 0.13% family leave), on their behalf.
Key Takeaways from Updated Regulations
The MA Department of Family and Medical Leave published finalized regulations on July 24, 2020. Many of the amendments focused on guidelines for private plans. An exemption for a private plan that only covers a portion of the workforce is prohibited, and private plans must provide covered individuals with an internal appeals process.
Employers must provide notice, as part of any determination for covered individuals, outlining employee rights under both the private plan and the PFML. The weekly benefit amount for private plans must be determined based on the wages earned with the employer at the time of the covered individual’s application for benefits. And these regulations also clarify that employers with private plan exemptions are not eligible for DFML reimbursement for benefits paid to employees.
The latest regulations also provide clarification of several definitions, a few of which are noted below. The “average weekly wage,” for example, will be calculated separately for each employer if an employee has multiple employers. “Base period” is now defined as the last four completed calendar quarters within the previous five. The PFML definition of “average work week” has been changed to the average number of hours worked by the employee in the two highest quarters of the year preceding his or her application for benefits. “Accrued paid leave” has been redefined to clearly state it does not include paid leave under the employer’s disability or paid and family and medical leave policies. And for “intermittent leave,” the minimum increment has been established at 15 minutes.
GAP coverage is a key topic within the updated regulations. Measures must be in place to ensure continuous coverage throughout a transition from a private to a state plan. State coverage, during a transition to a private plan, will also continue for the entire duration of leave.
Steps for Getting Ready
Employers that have already filed for a private exemption are required to renew filings and update the Declaration of Insurance each year. For 2021, private, self-funded plans should have been renewed with revised surety bond amounts submitted between August 30 and September 30, 2020, and private, fully insured plans must be renewed between November 30 and December 31, 2020.
Training for your HR personnel is key. They need a comprehensive, in-depth understanding of PFML regulations and compliance measures, as well as how these regulations interact with existing federal and state laws and regulations.
Employers should also ensure employee handbooks, policies, and procedures have been updated appropriately and that legal, notification, and filing requirements are being met. There’s a lot to digest here, so employers should consider obtaining experienced employment counsel.
There’s still a lot to learn about the MA PFML program. Join us for a live webinar on Thursday, October 22, 2020, from 1:00 to 2:00 PM, EST. Employment attorneys Liz Monnin-Browder and Ari Kristan of Hirsch Roberts Weinstein will provide further guidance on legal obligations, key takeaways from the updated regulations, and steps employers should consider taking now to get ready.
To learn more about the information in this article, or to discuss how Commonwealth can help you back key business decisions with real-time, comprehensive data you can count on, contact us today.
*The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information. This article contains links to other third-party websites provided only for the convenience of the reader.