As most Massachusetts employers are now aware, paid family and medical leave will be available to workers in Massachusetts starting in 2021 under the Paid Family and Medical Leave law (“PFML” or the “Law”). Employers should be aware, however, that their compliance obligations begin much earlier, starting May 31, 2019. The following is an overview of the Law and a brief guide to employer compliance.
Which employers are covered by the Law?
The Law applies to virtually all employers in Massachusetts, as that term is defined in G.L. c. 151A, § 1 (i.e., “any employing unit” subject to the unemployment statute). The Department of Family and Medical Leave (the “Department”), however, has indicated that even those employers who are exempt from the unemployment statute, such as religious organizations, are covered for purposes of paid family and medical leave.
Note: The Law also applies to covered business entities, a business or trade that contracts with self-employed individuals for services and is required to issue IRS-1099s for more than 50% of its workforce.
Who is eligible for benefits?
Employees of Massachusetts employers are eligible for benefits if they meet certain financial eligibility requirements (i.e., in the 12 months before filing a claim for benefits they earned at least 30 times the weekly benefit amount, totaling at least $4,700).
The following individuals are also eligible for paid family and medical leave:
- Independent contractors who work for an employer that issues IRS-1099s to more than 50% of its workforce and would meet the financial eligibility requirements described above;
- Former employees who met the financial eligibility requirements described above at the time they were separated from their employment and who have been unemployed for less than 26 weeks; and
- Self-employed individuals who opt into the program and meet certain criteria.
What types of leave can eligible individuals take?
Beginning January 1, 2021, eligible individuals may begin taking:
- Family Leave: up to 12 weeks of leave to 1) bond with their child within the first 12 months after birth or adoption/foster care placement or 2) due to a qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call to active duty in the Armed Forces;
- Medical Leave: up to 20 weeks of medical leave for the individual’s own serious health condition; and
- Up to 26 weeks to care for a covered service member.
- On July 1, 2021, eligible individuals may begin taking up to 12 weeks of leave to care for a family member with a serious health condition.
Serious health condition means an illness, injury, impairment or physical or mental condition that involves 1) inpatient care in a hospital, hospice, or residential medical facility; or 2) continuing treatment by a healthcare provider.
Eligible individuals can take up to a total of 26 total weeks of paid leave per benefit year.
Who is paying for this?
Paid leave will be funded through a payroll tax of up to .63% on covered individuals’ earnings up to a certain limit ($132,900 in 2019). Employers with 25 or more workers will be required to contribute a portion of this amount. Contributions will be submitted quarterly through the Department of Revenue’s MassTaxConnect system.
- The .63% payroll tax consists of:
(1) the medical leave contribution (.52% of the payroll tax), and;
(2) the family leave contribution (.11% of the payroll tax).
- Employers or covered business entities with 25 or more workers in MA must contribute at least 60% of the medical leave contribution for each covered worker.
- Employers or covered business entities with less than 25 workers in MA are not required to contribute the employer’s share, but must remit employee contributions through payroll deductions.
Further details of the contribution rates can be found here.
Are employers who offer such benefits exempt?
Maybe. Employers that offer benefit plans to all workers that are at least as generous as the PFML may apply for an exemption for either or both family or medical leave contributions. Information on how to apply for an exemption can be found here.
When will payroll deductions begin?
Employers must begin taking payroll tax deductions July 1, 2019. Contributions for July through September 2019 are due to the Commonwealth on October 31, 2019
How does an eligible individual request leave?
Individuals who apply for benefits with the Department must provide their employer with:
- At least 30 days’ notice of the leave’s anticipated start date (or as soon as practicable if the delay is for reasons outside the employee’s control);
- The type of leave taken;
- Anticipated length of their leave; and
- Expected return date.
The Department will notify the employer within five business days after a claim for benefits has been filed and will notify applicants of their eligibility or ineligibility within 14 days of receipt of their claim. The Department will begin paying leave benefits within 14 calendar days after a determination of eligibility.
What should I consider if I need to terminate an employee who takes leave?
Retaliation for taking leave is prohibited: Employers may not retaliate against an employee for taking paid family or medical leave or for filing a complaint related to the Law.
The Law provides that any adverse action against an employee during or within six months of their protected leave will create a rebuttable presumption that the adverse action was in retaliation for taking leave. Overcoming this presumption requires clear and convincing evidence that the action was not retaliatory, the employer had sufficient independent justification for taking action, and the employer would have otherwise acted at the same time regardless of the employee’s use of leave or participation in a proceeding related to the Law.
The presumption is a difficult standard to overcome. Accordingly, employers should be cautious about taking any adverse action against an employee during or within six months of their leave (or their participation in a proceeding related to the Law), unless their reasons for doing so are compelling and well-documented.
What are the other key takeaways from the Law?
- The Department, not the employer, will calculate and pay the benefit amount. A covered individual’s average weekly earnings will determine their benefit amount, up to a maximum weekly benefit of $850.
- Under the proposed regulations, taking leave will not affect an employee’s right to accrue vacation time, sick leave, bonuses, or other employment benefits upon reinstatement. The employer must also continue to provide for and contribute to the employee’s employment-related health insurance benefits, if any.
- Paid family and medical leave runs concurrently with leave taken under other applicable state and federal laws including the Parental Leave Act, Earned Sick Time Act, and the federal Family and Medical Leave Act, when the leave is for a qualified reason under those acts.
- Upon return from leave, the employee must be reinstated to their previous position or to an equivalent position with the same status, pay, employment benefits, and seniority as of the date of leave, unless certain economic changes have occurred during the employee’s leave.
- Employees have three years to file a civil action against their employer for violations of the Law. Courts may award employees who bring successful actions against their employers: reinstatement of their position, benefits, or seniority; treble damages for any lost wages or other remuneration, and any accrued interest; and reasonable attorney’s fees.
- In some circumstances, employers may be able to require employees use any available disability or family care leave.
What Deadlines Do I Need To Know?
May 31, 2019:
- Post workplace notice. Employers must post a notice prepared or approved by the Department in a conspicuous location. A copy of the Department’s poster is available here. The notice must be in English and any other language that is the primary language of five or more employees (if such translations are made available from the Department).
June 30, 2019:
- Issue written notices and collect signed acknowledgments. Employers must also provide detailed written notice to every new employee within 30 days of hire and must have employees sign a written acknowledgment of receipt. A sample written notice can be downloaded here.
- Employers should also consider updating their employment handbooks to incorporate the Law’s notice requirements.
July 1, 2019:
- Payroll deductions begin.
- Final regulations issued. Before the regulations are issued, employers may review and comment on the draft regulations here if they are unable to attend one of the public hearings.
September 20, 2019:
- Apply for a private plan exemption. The deadline to apply for a private plan exemption for first quarter contributions is September 20. Employers can find more information on applying for an exemption here.
October 31, 2019:
- First quarter contributions are due. Employers must remit contributions through their MassTaxConnect account for the previous calendar quarter (July through September 2019).
January 1, 2021:
- Eligible individuals may begin taking most types of protected leave.
July 1, 2021:
- Eligible individuals may begin taking all types of protected leave. This includes leave to care for a family member with a serious health condition.
Note: The information provided in this alert is based in part upon the guidance provided by the draft regulations published on March 29, 2019. This information may change following publication of the final regulations on July 1, 2019.