Paid Family and Medical Leave Coming to Massachusetts
In June 2018, Massachusetts took the step of passing legislation aimed at providing paid family and medical leave for employees. Becoming effective in 2021, the Massachusetts Paid Family and Medical Leave Program (“PFML”) will provide for up to 12 weeks of paid family leave and 20 weeks of paid medical leave per year. This benefit is provided directly by the State, funded by contributions from covered employers. With the collection of these contributions set to begin July 1, 2019, the Massachusetts Department of Family and Medical Leave has issued draft regulations governing administration of the PFML. Now it is important for employers to grapple with precisely what the change will mean for them.
The legislation itself constitutes a significant departure from the federal Family Medical Leave Act (“FMLA”). The obvious difference is that the PFML provides for paid leave rather than the unpaid leave of its federal counterpart. More striking is the fact that the new PFML applies more broadly as well. Under the law, employers of as few as a single employee must participate.
Given that the law applies to essentially all employers, it is natural to ask what the cost will be to employers for this paid leave.
Employers with more than 25 employees
Employers with more than 25 employees are required to contribute 0.63% of each employee’s salary. This amount covers the employer’s contribution for both family and medical leave (guidance on the Massachusetts Department of Family and Medical Leave Website indicates that that this amount is to be apportioned .52% and .11% respectively). However, these employers are not required to bear the entirety of this contribution. They are allowed to deduct from their employees pay 40% of the cost for family leave and 100% of the cost for medical leave.
Employers with Fewer than 25 employees
Employers with fewer than 25 employees must still contribute to family and medical leave. But they are allowed to deduct up to the full amount of the cost of both family and medical leave.
Employers with Preexisting Family and Medical Leave Programs
Although the PFML imposes costs on many employers, it does recognize employers who had plans for family and medical leave prior to the institution of the PFML. To this end, the PFML and its proposed interpretive regulations allow employers with preexisting plans to maintain their plans without cost as long as the plan in question is at least as generous as the 12 weeks and 20 weeks for family leave and medical leave respectively.
Ultimately, determining an employer’s responsibility for payments under the law are contingent on the employer’s personnel and the precise terms of any offered paid leave programs. Detailed considerations as to the definition of what constitutes an employee can and will affect employers’ treatment under the PFML. Great caution in properly categorizing employees is warranted in determining one’s responsibilities under the law.