What Do I Need to Know About Paid Family and Medical Leave in Massachusetts?

Starting January 1, 2021, eligible Massachusetts workers will be able to take up to 26 weeks of Paid Family and Medical Leave (PFML) benefits. Or in other words, they’ll be able to receive paid leave to bond with a new baby or take care of themselves or a sick family member. 

Massachusetts-based workers and employers with 25 or more covered workers are both required to contribute to the PFML fund to finance the program. Both workers and employers started paying into PFML benefits in October of 2019.

If you have 24 or fewer covered workers, you’re exempt from the employer contribution requirement. However, you’re still responsible for sending all worker contributions to the state. (If this sounds too complicated, know that Gusto can handle the PFML premium collections for Massachusetts employees and employers.) 

Read on for details of the program and what you, as a Massachusetts employer, need to know about your PFML requirements and deadlines.

What are the key dates for the Massachusetts Paid Family and Medical Leave program?

• December 20, 2019: Deadline to file a private plan exemption request for the first quarter of contributions. This only applies to employers that already provide benefits equal to or greater than what the PFML law requires. 
• January 1, 2021: Covered workers may begin taking, per year:
  • Up to 20 weeks of paid medical leave for their own serious health condition
  • Up to 12 weeks of paid family leave relating to the birth, adoption, or foster care placement of a child
  • Up to 12 weeks of paid family leave relating to a qualifying need due to a family member’s active duty in the military
  • Up to 26 weeks of paid family leave to care for a family member who is a covered servicemember with a serious health condition
• July 1, 2021: Covered workers may begin taking, per year, up to 12 weeks of paid family leave to care for a family member with a serious health condition.

For one or more of the reasons above, a worker’s total leave under the Massachusetts PFML law is capped at 26 weeks per benefit year. Benefit amounts are based on average weekly earnings, and the maximum weekly benefit is $850.

Do you already offer paid family leave benefits? If you offer a qualifying private plan with benefits greater than or equal to the benefits provided by the PFML law, you can apply for an exemption from collecting, remitting, and paying PFML contributions.

What definitions do I need to know?

Covered workers

• W-2 employees who work in Massachusetts, whether they are full-time, part-time, or seasonal
• Self-employed workers who work in Massachusetts
• 1099-MISC workers who work in Massachusetts, do not qualify as independent contractors, and who make up more than 50% of their employer’s workforce

As with FMLA, it’s illegal for you to discriminate or retaliate against a worker who is exercising their rights granted by the PFML law. 

Similarly, a worker who takes PFML is generally entitled to return to the same position, or one equivalent in terms of status, pay, employment benefits, length-of-service credit (which can affect things like vacation accrual and pension benefits), and seniority. Some exceptions apply in the event of a change in economic or operating conditions.

Covered employers

With few exceptions, employers with covered workers (see above) are covered by the family leave law in Massachusetts. 

But if your team has fewer than 25 covered workers, you aren’t responsible for paying the employer contribution. Your workers will still have to pay their premiums, however, and you’re still responsible for making sure those payments get to the state. (Some payroll providers can help with this.)

Your total team includes:

• Massachusetts-based W-2 employees (full-time, part-time, or seasonal). If you’re required to report a W-2 employee’s wages to the Department of Unemployment Assistance (DUA), those employees should be counted for PFML purposes, even if they don’t live in Massachusetts. If you’re a W-2 employee of your own business, include yourself in the count.
• Massachusetts-based 1099-MISC contractors who are not independent contractors, as defined by the three-part test set out in Massachusetts unemployment law. Generally, a MA 1099-MISC contractor is an individual or sole proprietor who resides and performs services in Massachusetts. Therefore, you’re required to report payment for their services on IRS Form 1099-MISC. 

Professional corporations (PCs), limited liability companies (LLCs), single-member LLCs, partnerships, and corporations are not individuals and are not included in your count, even if you pay them using the 1099-MISC form. 

Independent contractors

A 1099-MISC contractor is considered an independent contractor under Massachusetts law only if the person is “free from control and direction” in the work they do for you, performs a service that is outside your usual course of business, and has an established business doing the type of work they’re doing for you. 

If you run a software business, for example, the person you hire to wash your windows might qualify as an independent contractor, but the coder you hire to work in your office probably wouldn’t. 

Note that 1099-MISC non-independent-contractor workers count toward your total number of covered workers for purposes of contributions and reporting only if they make up more than 50% of your total Massachusetts workforce (meaning MA W-2 employees and MA 1099-MISC workers combined). 

• If, for example, you have 50 full-time Massachusetts-based employees and 75 1099-MISC contractors who are not considered independent contractors, your workforce for PFML purposes is considered to be 125 people. 
• But if you have 50 full-time Massachusetts-based employees and 24 1099-MISC contractors who are not considered independent contractors, your workforce is considered to be 50 people for PFML purposes.

What are my PFML requirements?

Employers with 25 or more covered workers

Businesses with 25 or more covered workers are required to send a contribution to the Department of Family and Medical Leave of 0.75% of eligible wages. 

This contribution can be split between covered workers’ payroll or wage withholdings and an employer contribution. If you want to, you contribute some or all of the worker portion to ease the burden on your team. 

• Family Leave: Up to 100% of the family leave contribution can be withheld from a covered worker’s wages (0.13% of eligible wages).
• Medical Leave: Up to 40% of the medical leave contribution can be withheld from a covered worker’s wages (0.248% of eligible wages). Employers are responsible for contributing the remaining 60% (0.372% of eligible wages). 

Employers with 24 or fewer covered workers

Businesses with fewer than 25 covered workers need to send 0.378% of eligible wages to the state. 

This contribution rate is less than the rate for larger employers because small employers aren’t required to pay the employer share of the medical leave contribution, reducing the total contribution amount.

Small employers are responsible for sending in the funds withheld from covered workers’ earnings but do not have to contribute themselves. However, they may voluntarily choose to kick in some or all of their covered workers’ share to help them out.

• Family Leave: Up to 100% of the family leave contribution can be withheld from a covered worker’s wages (0.13% of eligible wages).
• Medical Leave: Up to 100% of the medical leave contribution can be withheld from a covered worker’s wages (0.248% of eligible wages).

How does the family leave calculation work?

Suppose you have an employee earning $100,000 in W-2 wages. If you have 25 or more covered workers, the contributions breakdown for this employee would look something like this:

If you have 24 or fewer covered workers, it would look like this:

How does PFML interact with other types of leave?

According to law firm Holland & Knight, PFML runs concurrently with employee leave taken under the federal Family and Medical Leave Act (FMLA), the Massachusetts Parental Leave Act, and the Massachusetts Earned Sick Time Law. 

You can’t require the use of sick, personal, or vacation time during PFML leave, or require that workers exhaust these banks before taking PFML.

How do I comply with the Massachusetts PFML law?

There are four main steps:

1. Register for PFML contributions

You need to register for PFML contributions, which you can do online:

• I have an existing MassTaxConnect account
• I do not have an existing MassTaxConnect account

2. Put up the PFML poster

All Massachusetts employers must display a workplace poster prepared or approved by the Department of Family and Medical Leave (DFML) that explains the benefits available to your team under the PFML law. 

The poster must be available in English and each primary language of five or more people in your company if the translations are available from DFML.

Here’s what the top of the English-version of the poster looks like:

3. Provide written notice to workers who are covered by the law

In addition to putting up the poster, you are required to provide written notice to your current covered workers. This notification (it can be an email or physical letter) must include information about:

• PFML Benefits
• Covered individual contribution rates
• Your employer contribution rates (if applicable)
• Job protections
• Other provisions outlined in the PFML law

These notices must be written in the covered individual’s primary language (DFML has provided some translated versions) and may be provided electronically. 

The notice must include the opportunity for workers to acknowledge receipt, or decline to acknowledge receipt of the information. You can collect acknowledgments in hard copy form or electronically.

Keep track of who you provide notices to so that you can establish that you fulfilled your notice obligation even if you have workers who don’t acknowledge receipt.

4. Sign up for an educational session (optional)

You can register for an optional session to help you educate yourself and your workers about paid family leave in Massachusetts.

Where do I go if I need help with PFML in Massachusetts?

Here are a few PFML resources for Massachusetts-based employers:

• Additional information about the PFML calculations 
• Employer contributions calculator 
• Calculator to help figure out the number of covered workers
• Some full-service payroll providers may be able to help with the payroll administration portion of PFML

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The new paid family leave law is a complicated requirement in a state that already asks a lot of employers. Learn more about how Gusto can help you stay compliant.