Withholdings to Fund Massachusetts Paid Family and Medical Leave Set to Begin October 1
After an initial delay, payroll and wage withholdings to fund the Massachusetts paid family and medical leave program are set to begin on October 1. The Massachusetts Paid Family and Medical Leave Act (PFMLA) established a fund that will allow employees in the Commonwealth to begin taking paid leave in 2021 for their own serious health condition or to care for a family member with a serious health condition. Employers will contribute to the state created fund through a contribution of .75% of employee wages up to the social security cap, currently set at $132,900 per individual for 2019.
Employers can withhold up to .378% of employee wages to fund the contribution. Of that .378% withholding, .13% will be allocated towards funding family leave and .248% will be allocated towards funding medical leave. The remaining .372% of the contribution must come directly from the employer. Employers with fewer than 25 Massachusetts employees are exempt from the required employer contribution and only need to deduct and contribute the .378% of payroll withheld from employees.
Employers must make the required contribution to the Commonwealth through the MassTaxConnect system quarterly and contributions are due by the end of the month following the quarter close. The first contributions must be made to the state by January 31, 2020.
In addition to the contribution requirements, employers must take the following actions by October 1, 2019:
- Display the published PFMLA poster in a conspicuous place in the workplace;
- Distribute the notification of the law to all current employees and receive their acknowledgement of receipt (notice and acknowledgement of receipt can be provided electronically);
- Add the notification of the PFMLA to the existing on-boarding materials for new hires;
- Notify any labor unions in the workplace of the company’s intent to bargain over the employee portion of the contribution;
- Register the company with MassTaxConnect, if not yet registered;
- Prepare for quarterly reporting to the state through MassTaxConnect (employee names, SSNs, wages paid).
There are a few other deadlines to note in the coming months:
- If your company intends to apply for a private plan exemption, the application must be completed by December 20, 2019 to apply to the initial contributions;
- The initial payment for the first quarter of contributions must be made to the state by January 31, 2020.
This is a complex law with a number of moving parts, please reach out to your Jackson Lewis attorney if you have any questions regarding the new law or its administration.