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 September 30, 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).
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:
- 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;
- 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 is defined by the Law as 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 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 .75% on covered individuals’ earnings up to a certain limit, to be established annually by the Social Security Administration ($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 to the Department of Family and Medical Leave through the Department of Revenue’s MassTaxConnect system.
- The .75% payroll tax consists of two types of contributions that respectively fund paid family and medical leave: the medical leave contribution (.62% of the payroll tax), and the family leave contribution (.13% of the payroll tax).
- Employers or covered business entities with a workforce of 25 or more in Massachusetts:
- Must contribute at least 60% of the medical leave contribution for each covered worker. The employer or covered business entity can require the worker to contribute the remaining 40%.
- Employers or covered business entities with a workforce of less than 25 in Massachusetts: must submit contributions on behalf of their covered workers through payroll deductions but are not required to contribute the employer portion of the medical leave contribution. Because they are not required to pay the employer share of the medical leave contribution, the total contribution amount is effectively reduced to .378% of eligible wages.
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?
The payroll tax deductions begin October 1, 2019. Contributions for October through December 2019 are due January 31, 2020.
How does an eligible individual request leave?
Eligible individuals filing a claim 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. After the Department determines a person is eligible for benefits, the Department will begin paying leave benefits within 14 calendar days.
What should I consider if I need to terminate an employee who takes leave?
Employers may not retaliate against an employee for taking paid family or medical leave or for filing a complaint related to the Law.
Under the Law, any adverse action taken against an employee during or within six months of their protected leave or the end of a proceeding they participated in related to the Law, will create a rebuttable presumption of retaliation. This means a court will presume the employer retaliated against the employee. Overcoming this presumption requires clear and convincing evidence that the action was not taken 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 participating in a proceeding related to the Law.
This is a difficult standard to overcome. Accordingly, employers should avoid 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.
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).
July 1, 2019:
- Final regulations issued.
September 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.
December 20, 2019:
- Apply for a private plan exemption.The deadline to apply for a private plan exemption for first quarter contributions is December 20.Employers who believe they are exempt from contributing to family leave, medical leave, or both, will need to submit an annual approved plan application to the Department. The electronic approved plan application is currently available through MassTaxConnect. Employers can find more information on applying for an exemption here.
January 31, 2020:
- First quarter contributions are due. Employers must remit contributions through their MassTaxConnect account for the previous calendar quarter (October through December 2019).
January 1, 2021:
- Eligible individuals may begin taking most types of protected leave. Eligible individuals may begin taking leave: (i) to bond with a new child; (ii) due to a qualifying exigency arising out a family member’s active duty status or impending call to active duty; (3) to care for the individual’s own serious health condition; or (4) to care for a covered service member.
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: This alert was revised as of September 4, 2019.