On June 28, 2018, Governor Baker signed, “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday” (referred to herein as the “Act”). The Act brings several sweeping changes to Massachusetts law. Most notably, the Act provides for paid family and medical leave (“PFML”) for many Massachusetts employees.
Payments issued under the Act will be made by a new state agency: the “Family and Employment Security Trust Fund”. The agency will be funded by a payroll tax of 0.63% (adjusted annually) on the first $132,900 of an individual’s annual earnings. Although the Act’s leave provisions do not begin until 2021, the payroll tax goes into effect on July 1, 2019.
Amount and Allowed Uses of Paid Family and Medical Leave
Beginning on January 1, 2021, covered individuals will be able to use PFML as follows:
- up to 12 weeks of PFML to care for a family member who has a serious health condition per benefit year;
- up to 12 weeks of PFML to bond with the employee’s child during the first 12 months after the child’s birth or the first 12 months after the placement of the child with the employee for adoption or foster care;
- up to 20 weeks of PFML to care for the employee’s own serious medical conditions;
- up to 26 weeks of PFML for any qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call or order to active duty in the Armed Forces.
Under the Act, covered individuals cannot take more than 26 combined weeks of paid leave in a single year. PFML is job-protected and may be taken continuously, intermittently or on a reduced workweek basis for most reasons. Employers may require employees to take PFML concurrently with certain other allowed forms of leave, including leave provided under the FMLA and the Massachusetts Parental Leave Law, provided the employer gives written notice of this requirement. Employers should consider updating employee handbooks to add that such leaves will run concurrently.
Payments by Employees and Employers
While employers are responsible for the payroll taxes, they may deduct from an employee’s wages an amount equal to 100% of the contributions for an individual’s family leave.
Similarly, employers may also deduct from employee’s wages an amount equal to 40% of the contributions for an individual’s personal medical leave. For the remaining 60% of personal medical leave costs, employers with 25 workers or more will be responsible for making the payments. For employers with fewer than 25 employees, the employer will not have to pay the employee’s portion of contributions.
Which Employers and Employees Are Covered Under the Act
The Act is meant to apply to nearly all employers in the Commonwealth. The only exemptions in the Act are for certain government bodies and municipalities. Also, the Act covers a wide range of workers in the Commonwealth, including:
- current employees “whose employment has been with an employer in Massachusetts,” regardless of the length of service with the employer or hours worked;
- self-employed individuals (i.e., independent contractors) who elected coverage under the Act and report required self-employment earnings; and
- former employees, assuming that the employee has not been separated from employment for more than 26 weeks at the start of the former employee’s family and medical leave.
Revenue Source for PFML Payments
The Family and Employment Security Trust Fund will be responsible for disbursing payments to individuals who use PFML. The payments will be in the form of a wage replacement from the Family and Employment Security Trust Fund. Covered individuals will apply for PFML payments and will receive the payments after a seven-day waiting period. The wage replacement will be capped at $850 a week (80 percent of the employee’s wages up to 50 percent of the state average weekly wage, plus 50 percent of the employee’s wages that exceed the average weekly wage until the maximum is reached).
How the Act Differs From FMLA?
Many of the Act’s PFML provisions are similar to the Federal Family Medical Leave Act (“FMLA”). However, the Act goes several steps beyond the FMLA in key areas. First and foremost, leave provided under the FMLA is not paid. Under the Act, workers will be paid during their leave. Also, as noted above, the FMLA caps leave at 12 weeks, where the Act affords more time for certain uses of PFML. Another key difference is that the FMLA does not provide a defined start or end to an employer’s benefit year. Under the Act, however, the benefit year extends for 52 weeks following the Sunday immediately preceding the date that a covered individual first uses PMLA.
What Employers Can Do To Prepare
As noted above, workers will not be allowed to use PFML until January 1, 2021. However, covered employers in the Commonwealth will begin making payroll contributions toward the Family and Employment Security Trust Fund beginning in July 2019. In the meantime, prudent employers should begin reviewing their existing leave policies to determine what they will need to make their own policies compliant with the Act.
Furthermore, employers who offer benefits that are greater than or equal to the paid leave benefits under the Act can seek permission to opt-out of paying the increased payroll tax.
This blog is for informational purposes only. It should not be considered legal advice. All those who read this blog should seek the advice of a professional before taking action based upon any information provided herein.
© 2019 Doherty, Dugan, Cannon, Raymond & Weil, P.C.