September 18, 2020

Volume X, Number 262

September 18, 2020

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Massachusetts Paid Family Medical Leave Quarterly Returns Due by January 31, 2020

Recently, the Massachusetts Department of Revenue (DOR) released guidance on how to report wages paid under the state Paid Family and Medical Leave Law (PFML) for employers’ fourth quarter 2019 PFML return. This guidance was released to ensure covered employers can properly and timely file and remit contributions in advance of the quarterly deadline of January 31, 2020.

Background

Beginning in January 2021, eligible Massachusetts employees will be entitled to receive:

  • Up to 12 weeks of paid family leave related to the birth, adoption, or foster care placement of a child

  • Up to 26 weeks of paid family leave in a benefit year to care for a family member who is a covered service member with a serious health condition

  • Up to 12 weeks of paid family leave to care for a family member with a serious health condition

  • Up to 20 weeks of paid medical leave per benefit year in accordance with the Massachusetts PFML program

The program is funded through a Massachusetts tax paid by Massachusetts employees, employers, and the self-employed. Unless an employer has applied for and received an exemption, Massachusetts employers will be required to file quarterly reports and remit quarterly contributions to help fund the program. Although PFML benefits will not be available until January 1, 2021, the Massachusetts Department of Family and Medical Leave (the administrator of the program) required employers to deduct payroll contributions beginning on October 1, 2019. The first deadline to file report wages and PFML contributions for the fourth quarter of 2019 is January 31, 2020.

Filing the Quarterly Report

Employers are required to submit quarterly reports and contributions electronically through MassTaxConnect. Upon filing, employers will be asked to provide the following information:

  • Information about each employee or independent contractor included in the return

  • The Social Security number or Individual Taxpayer Identification Number (ITIN) for each employee or independent contractor

  • The first and last name of each employee or independent contractor

  • The wages paid each employee or independent contractor

Employers can find informational videos and step-by-step instructions on the DOR website.

Additionally, in its recent guidance, the DOR provided the following clarifications to the reporting process:

  • Employers should only report wages for the fourth quarter of 2019 and not actual 2019 year-to-date wages on the return. This is because contributions were not withheld for the first three quarters of 2019, so the Social Security annual wage cap should only be applied against fourth quarter wages. When submitting future returns, employers will be required to report the actual year-to-date wages in the appropriate box.

  • If a company outsources W-2 payroll services to a third-party provider and handles reporting for independent contractors internally, there are some important rules to follow when filing returns. Essentially, the payroll service must file on behalf of W-2 employees before the company may file an amendment to the payroll service’s filing to report information on behalf of the covered independent contractors. Employers may want to communicate this information with their payroll provider to ensure the report is filed correctly.

Planning Ahead

In light of this new requirement under Massachusetts law, companies doing business in Massachusetts may want to determine whether reporting is required and, if so, begin calculating contributions and formulating a procedure for compliance. After this first filing due on January 31, 2020, all subsequent filings will be due on or before the last day of the month following a calendar quarter’s close.

© 2020, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.National Law Review, Volume X, Number 30

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About this Author

Alexandra L. Orsini attorney OgletreeDeakins executive compensation and employee benefits
attorney

Alexandra Orsini joined the Washington, D.C. office of Ogletree Deakins in 2017 as an associate in the executive compensation and employee benefits practice group.

Ms. Orsini focuses her practice on executive compensation and employee benefit matters, including drafting and implementing employee benefit plan documents, equity compensation documents and employment, severance, and other compensation-related arrangements for private and public companies and non-profit entities.  She also advises on other employee benefits and executive compensation...

202-263-0172
Michael K. Mahoney, Ogletree Deakins, employee benefits attorney
Associate

Mr. Mahoney is a member of the Employee Benefits and Executive Compensation group. He focuses on employment tax matters at both the federal and state levels, the review of labor and tax laws governing qualified plans, and the strategic design of executive compensation plans for a global workforce.

Mike advises employers on a multitude of fringe benefit issues including tax advantageous means of structuring such benefits. He routinely assists clients resolve payroll audits, working with federal and state authorities to reduce assessments on behalf of employers. In performing due diligence, he provides counsel through mergers and acquisitions to identify and quantify exposure resulting from, among other items, worker misclassification and accountable expense plan failures. He navigates employers through risk mitigation strategies during integration following an acquisition or merger, including the Voluntary Classification Settlement Program.

973-656-1600