MassTLC published a version of this piece on May 8, 2019. This version has been updated by the authors to reflect recent amendments to the Paid Family and Medical Leave (PFML) Law.
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Last year, the Massachusetts legislature passed a new Paid Family and Medical Leave (PFML) law. Under this law, employees and certain independent contractors and self-employed individuals can take up to 26 weeks of leave, paid for by contributions from the state. Portions of this law go into effect September 30, 2019. (This date was recently extended by the legislature, from June 30, 2019.)
This article provides answers to some frequently asked questions about this new law.
What Businesses Are Covered by the PFML Law?
Any business in Massachusetts with one or more employees is subject to the PFML law, as is any business whose workforce is more than 50 percent independent contractors paid on a 1099-MISC. Self-employed individuals can also choose to participate in the leave program, but are not required to do so.
What Are the Notice Requirements?
The notice requirements are the first part of the law to take effect. Starting on September 30, 2019, Massachusetts businesses have to provide a written notice to employees and to covered independent contractors about their rights under the law. After that, all new hires must be given this notice as well. Failure to provide notice can lead to a fine of up to $300 per person. Businesses also must display a poster about the law by September 30, 2019.
A template notice and poster can be found on the Department of Family and Medical Leave’s website (https://www.mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical-leave).
How Is the PFML Funded?
The PFML program is funded by a new mandatory payroll tax. The tax rate is currently set at 0.75 percent on all wages to employees and payments to covered independent contractors, up to the Social Security maximum (for 2019, $132,900). (The rate was recently increased from 0.63 percent.) This 0.75 percent rate may be adjusted annually.
As illustrated in the chart below, the contribution rate is divided between 0.62 percent for medical leave, and 0.13 percent for family leave. Businesses are permitted – but not required – to deduct some of these payments from compensation paid to employees or covered independent contractors: up to 100 percent of the 0.13 percent family leave contribution, and up to 40 percent of the 0.62 percent medical leave contribution.
Businesses with fewer than 25 employees or covered independent contractors in Massachusetts do not have to pay the business share of the medical leave contribution (that is, the 60 percent of the 0.62 percent medical leave contribution).
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Payroll Tax Contribution Rates |
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Business with 25 or More Covered Workers: 0.75 percent total |
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| Category | Total Contribution | Maximum Division of Total Contribution | Net Percentage of Wages |
| Medical Leave | 0.62 percent | Business: 60 percent of 0.62 | 0.372 percent |
| Individual: 40 percent of 0.62 | 0.248 percent | ||
| Family Leave | 0.13 percent | Business: 0 percent of 0.13 | 0.00 percent |
| Individual: 100 percent of 0.13 | 0.13 percent | ||
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Business with Fewer Than 25 Covered Workers: 0.378 percent total |
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| Category | Total Contribution | Maximum Division of Total Contribution | Net Percentage of Wages |
| Medical Leave | 0.62 percent | Business: 0 percent of 0.62 | 0.00 percent |
| Individual: 40 percent of 0.62 | 0.248 percent | ||
| Family Leave | 0.13 percent | Business: 0 percent of 0.13 | 0.00 percent |
| Individual: 100 percent of 0.13 | 0.13 percent | ||
Self-employed individuals who choose to participate in the PFML program have to pay the full 0.75 percent themselves. However, if another business also pays the contribution for the person, the full amount is refunded to the individual.
When Does a Business Have to Begin Contributions and Deductions?
If a business chooses to deduct some portion of the contribution from payments to employees or covered independent contractors, that deduction should begin on October 1, 2019. The first notice provided to workers by September 30, 2019 must communicate if this deduction will be taken.
Beginning in January 2020, all businesses covered by the law are obligated to file quarterly reports with the Department of Revenue’s MassTaxConnect system. These reports include the name, Social Security number, and wages paid or other earnings for each employee or covered independent contractor. Based on the quarterly report, the Department of Revenue will calculate the contribution for the business, which must be paid within 30 days of the close of the quarter.
What Leave Are Individuals Entitled To?
Starting January 1, 2021, individuals covered by the PFML law can take leave as follows:
- Up to 12 weeks off for birth, adoption, or foster care placement of a child;
- Up to 12 weeks off for a qualifying exigency involving a family member in the armed forces;
- Up to 20 weeks off for one’s own serious health condition; and/or
- Up to 26 weeks off to care for the serious health condition of a family member in the armed forces.
Starting July 1, 2021, individuals may also take up to 12 weeks off to care for a family member’s serious health condition. An individual cannot take more than 26 weeks of PFML in total during the year.
Employees can also request, and be granted, either reduced schedule leave or intermittent leave (for instance, leave taken occasionally for medical appointments, or leave taken several days at a time spread over a period of months).
Individuals apply to the state for this leave. While the individual needs to give notice to his or her employer, the Department of Family and Medical Leave alone decides whether the leave is approved. The Department may, but is not required to, ask for information from the employer. If the leave is approved, the state will provide the individual with payments equal to a percentage of his or her regular pay (up to $850 per week).
Individuals denied leave by the Department may appeal that determination. However, businesses have no right to challenge an individual’s request for leave.
PFML leave can run concurrently with other leaves, such as FMLA, state sick leave, or state parental leave. However, the PFML is significantly broader than many other leave laws. Therefore, an individual could take PFML leave that would not be covered by another leave law, and take leave under another law later in the year.
What Rights Do Employees Have Under the PFML?
While on leave, an employer must continue to provide an employee with health insurance. Other benefits such as paid time off, sick time, vacation, or seniority do not have to accrue while the person is on leave.
Employees returning from leave must be restored to their previous position or to an equivalent position, with the same status, pay, employment benefits, and seniority as of the date of leave. (Employees who would have been laid off if they had not taken leave do not have to be restored.)
Retaliation against employees seeking or taking leave is prohibited. If there is any negative change to the terms and conditions of employment (such as demotion, pay cut or termination) while an employee is on leave, or for 6 months after the leave ends, there is a presumption that such action is retaliatory.
Are There Any Exemptions to the PFML Law?
There are essentially no exemptions to the PFML law; virtually every business in Massachusetts with employees or independent contractors will be covered.
Businesses can choose to provide PFML benefits through a private plan. Businesses that do so are excused from having to pay the 0.75 percent contribution to the state. However, the private plan has to exactly mirror all of the provisions of the PFML law.
What Should I Do Now?
Businesses should be deciding whether to take any deductions from employees’ or covered independent contractors’ pay to cover a portion of the contribution. Written notices, which must include any deductions to be taken, must be distributed no later than September 30, 2019. Businesses should also take steps to set up any deductions starting in October 2019, and to prepare to provide reports to the Department of Revenue and pay the contribution in January 2020.
This article provides only an overview of this complex new law. Businesses may wish to consider talking with their accounting, tax or legal professionals for more information.
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Stephen Melnick and Jennifer Duke are attorneys at Littler Mendelson PC. They can be reached at smelnick@littler.com and jduke@littler.com.
