Updated June 17, 2019:
The start of the required payroll contributions has been delayed for 90 days, but members should be prepared for implementation on 10/1. The notice form and contribution amount may change before then, so be alert for additional information from your HR and payroll providers!
While the Grand Bargain Law that was signed almost a year ago drew significant attention around the increase in the minimum wage, it also included a reform to the existing Family and Medical Leave Act. The new law significantly expands who can access FMLA benefits and increases the coverage for employees making a claim. As the deadline to begin making contributions looms, employers are now scrambling to get up to speed to ensure they comply. We have sought input on the employer requirements from Megan Taylor of Taylor HR Group, LLC and have discovered that nearly all EM NARI members will be impacted by the new law.
In short, employees will have an additional 0.63% taken out of their gross wages beginning on the newly extended date of October 1st to fund the program. If your company averages fewer than 25 employees, no employer contribution is required. (In some cases, however, employers may elect to remit the payroll contribution rather than passing it along to their employees. This is at the discretion of the employer.) Companies that average more than 25 employees will be required to pay a portion of the medical leave contribution.
Included in the law is a reference to a private plan exemption. Because of the scope of the benefits offered in the PFMLA program, creating a self-funded plan that would meet or exceed the state program would be far more costly than participating in the program.
Example Employee:Employee Gross Wages: $1,000/week Employer: 7 employees (Less than 25 employees, so no employer contribution required) Total Contribution Amount: $6.30/week ($5.20 for medical leave and $1.10 for family leave) Employee Amount Owed: $3.18/week ($2.08 for medical leave (40% of $5.20) and $1.10 for family leave) Because employer is less than 25 employees, they are not required to pay the remaining 60% of the medical leave amount Annualized amount due from employee: $165.36
Allow us to share the information from Megan Taylor regarding the impact:
As part of the so-called Grand Bargain Law that was passed last fall, the Massachusetts Paid Family & Medical Leave act is being enacted to provide paid leave for certain qualifying leave. The paid leave will be funded by a payroll deduction starting Oct. 1, 2019. A state-administered claim program will start on January 1, 2021.
- Starting Oct. 1, 2019, employers are responsible for sending family and medical leave contributions to the Department of Family and Medical Leave on behalf of their Massachusetts W2 employees and certain 1099 MISC contractors.
- The total payroll for covered individuals is 0.63% of gross wages.
- Of the total payroll contribution, 0.52% is for medical leave and 0.11% is for family leave.
- If your workforce included an average of 25 or more covered individuals last year, you are required to pay:
- 60% of the medical leave contribution (0.52% of gross pay)
- 0% of the family leave contribution (0.11% of gross pay)
- You can deduct the rest of the remitted contribution from covered individuals’ wages.
- If your workforce included an average of fewer than 25 covered individuals last year, you are not required to pay the 60% of the medical contribution and you can deduct of the rest from the covered individuals’ wages.
- You must post the attached poster and provide the attached written notice to all covered individuals by Sept. 30, 2019.
- You must obtain a signed acknowledgment from each covered individual.
- You must notify your payroll provider of the appropriate contributions to be taken in the first payroll on or after Oct. 1, 2019.
- Remember to update Employee Handbooks and leave policies in late 2020 to adjust for the implementation of the MA PFML benefits in 2021.
Certain employers may be exempt from collecting, remitting and paying contributions if they provide benefits that are greater than or equal to the PFML law. However, remember that group plans such as Short or Long Term Disability may not provide benefits for all types of leave required under the PFML law. The overall cost for providing a private plan may, in fact, be higher than making the required contributions, particularly if you have less than 25 employees. A contributor calculator may be found here to help is estimating your contributions: https://calculator.digital.mass.gov/pfml/contribution/?emp1099=0&payW2=1000000&w2=8
Employer Tools are attached:
- PFML Poster – must be posted by Sept 30, 2019 (Click here for Spanish)
- PFML Notice – must be completed, provided to and signed by all employees by Sept 30, 2019 (Click here for Spanish)
- Basic Contribution Fact Sheet for Employers
HR Consultant and Attorney
Taylor HR Group, LLC
phone: +1 978 880 5091 P.O. Box 7028 Beverly, MA USA 01915