Massachusetts Delays Payroll Tax and Notification Requirement

Massachusetts has announced a three-month delay to the new Massachusetts Paid Family and Medical Leave (PFML) law tax.  Payroll contributions are now scheduled to begin October 1, 2019.

What is Staying the Same

Beginning January 1, 2021, employees who meet certain financial requirements (have earned at least $4,700 during the last four completed calendar quarters, and 30 times the weekly benefit amount they are eligible to collect) will be eligible annually for:

  • Up to 12 weeks of paid leave in a year for the birth of a child, to bond with a child after birth, or after the placement of the child for adoption or foster care, or to care for a family member with a serious health condition
  • Up to 20 weeks of paid leave for the employee’s own medical condition
  • Up to 26 weeks of paid leave for certain military connected events

Also, beginning July 1, 2021, employees will be eligible for up to 12 weeks of paid leave to care for a family member with a serious health condition

How is paid leave calculated?

The weekly benefit is calculated as a percentage of earnings up to a maximum benefit of $850/week.  Paid medical leave is capped at 20 weeks per year, and paid family leave is capped at 12 weeks per year.  The maximum combined family and medical leave that an employee may take is capped at 26 weeks per year.

Who does the new law apply to?

The law applies to all employers with one or more employees working in the State of Massachusetts.

Can employers opt out of offering Family and Medical Leave?

If an employer offers a private plan option that is at least as generous as what is required under the law, the employer can apply for annual exemptions.  If an exemption is granted, employees will not be covered by the state PFML plan.  The deadline to file for a private plan exemption for first quarter contributions is currently September 20, 2019, but this may be extended based on payroll contributions beginning October 1, 2019, and first quarter taxes due in January 2020.

What is Changing

What are the employer’s responsibilities?

Beginning October 1, 2019, employers will be responsible collecting and reporting a payroll tax from employees, expected to be .75% of wages based on the employee’s first $132,900 in wages. The premium is split between the employer and employees.  If the current ratio for the split continues, then .62% will apply to medical leave and .13% will apply to family leave. 

Employers with fewer than 25 employees in the State of Massachusetts are not obligated to pay the 60% employer portion and only payroll deduct the employee portion of 40%.  Employers with 25 or more employees in Massachusetts will pay 60% of the total medical leave contribution, and 0% of the family leave contribution (employees will pay 40% and 100% respectively; the exact apportionment will be confirmed before October 1, 2019).

Notice Requirements

Employers are also required to post a notice.  A model notice can be found on the MA PFML website.

Employers were also required to provide a written notice of the PFML benefits, contribution rates and other provisions to all employees, and collect an acknowledgement on or before June 30, 2019.

The new notification date is expected to be September 30, 2019.  Employers who have previously notified employees will need to send out new notifications with the updated contributions one the split between medical leave and family leave has been confirmed.

 

For more information:

The Paid Family Leave regulations are expected to be published by July 31, 2019.  For more and updated information, please see the employer guide, employer FAQs, the employee FAQs and the proposed regulations

 

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