Back in October, we wrote about the incoming Paid Family and Medical Leave (PFML) Law and its associated Security Trust Fund as part of the ‘Grand Bargain Deal‘ signed by Massachusetts Governor Baker. As these changes come into effect soon, it’s time to start preparing.
What is the Paid Family and Medical Leave Law?
Beginning in 2021 the PFML law will allow Massachusetts employees and many contractors the ability to take up to 12 weeks of paid family leave and 20 weeks of paid medical/disability leave. Payments to employees will be a calculated percentage of their average weekly wage to a maximum of $850/week. The law also carries a provision that would grant the ability to return to the same or equivalent position and benefits.
Medical leave covers employees with serious health conditions; family leave covers bonding with children in the first 12 months after birth, adoption, or fostering, active duty or notification of impending active duty of a family member, caring for a family member who is a covered service member, or caring for a family member with serious health condition(s). (‘Family member’ includes domestic partners, parents-in-law, parents of domestic partners, grandchildren, grandparents, and siblings.) The law applies to most private employers in Massachusetts; self-employed individuals may opt in if they cover 100% of the payroll tax contributions.
These paid weeks will come from the Family and Employment Security Trust Fund (or “Trust Fund”), which opens officially October 1st, 2019 to begin receiving quarterly payments from employers. These payments may come from employee payroll tax deductions, employer contributions or a combination of both. Employers with 25 or more employees will be responsible for contributing a portion of the required payments. Employers should begin deducting the employee share of contributions (if any) for both medical and family leave costs beginning with payrolls issued on or after October 1, 2019.
On or before September 30th 2019, employers must notify employees of the percentage to be deducted from their earnings and what shall be covered by the employer. Additionally, MA employers must display a workplace poster regarding the PFML Law.
If more than 50% of the workforce is made up of contracted 1099 workers, the employer is required to inform them of the PFML benefits and protections; if they make up less than half the workforce, employers are not legally required to inform them of the PFML law, although it is encouraged to give contractors the opportunity to opt in. Failure to provide these notifications may result in consecutively increasing fines.
Examples of the PFML Notifications for W-2 and 1099, Workplace Posters and an Employer Fact Sheet may be found here.
Come October 1st, companies with 25 or more employees will be obligated to send a contribution equal to 0.75% of employee wages to the Trust Fund at a rate of 82.5% toward medical leave and 17.5% toward family leave. Employers will be required to pay at least 60% of the medical leave contribution and may allot the remaining 40%. Companies with less than 25 employees will be obligated to send a contribution equal to 0.378% of employee wages to the Trust Fund at a rate of 65.6% toward medical leave and 34.4% toward family leave. These employers are not required to contribute toward medical or family leave and can deduct 100% of the contribution from employee earnings. A visual breakdown of the required contributions and payroll deductions can be found here.
Applications to the Fund will be accepted beginning January 1st, 2021 for Medical Leave, and July 2021 for Family Leave.
Contact us here at the HR Engineers with any questions or concerns!