by Saleha Walsh, Insource Services
Massachusetts provided us with a summer break in delaying the implementation of the payroll taxes that will fund the new state paid leave program. Now it’s time to prepare to meet the upcoming deadlines that require employers to notify their employees of program benefits and to begin employer contributions and employee deductions.
As a reminder, key provisions of this new program include:
- Paid state-administered medical leave (up to 20 weeks) and family leave (up to 12 weeks, and more for covered service members) beginning in January of 2012. Leave is capped at 26 weeks per year.
- All Massachusetts workers (as defined in the law – employees and in some cases 1099 contractors) who work for covered entities are eligible for paid leave, limited exceptions exist.
- A payroll tax payable through MassTaxConnect beginning effective 10/1/19 and paid quarterly. The initial tax contribution rates is 0.75% of a worker’s wages (up to $132,900 of wages).
- To be eligible for benefits, an employee must have received earnings from present or former Massachusetts employers that are (1) at least 30 times his/her weekly benefit amount, and (2) at least $4,700 over the past 12 months.
- Former employees meeting this financial eligibility test are also eligible if the leave begins within twenty-six (26) weeks after employment termination.
To meet the October deadline, employers should:
- Determine if they are a covered business entity. While all employers must participate in the program, a covered business entity is one in which more than fifty percent of a business’s workforce is comprised of self-employed individuals (1099-eligible). A covered business entity is required to include all of the covered employees and contractors in the program.
- Determine the size of the workforce. Those organizations with fewer than 25 eligible workers must transmit the taxes deducted through payroll deduction on behalf of their employees, but are not required to contribute to the tax. Those organizations with 25 or more employees are required to contribute a portion of the tax for their employees.
- Consider seeking state approval of a private plan offering identical benefits and protections.
- Begin to plan for policy changes, if needed, to provide time off and job protection in accordance with the leave act.
- Submit quarterly wage reports on their workforce including 1099 contractors beginning in January 2020 for the last quarter of 2019.
- Begin employee payroll deductions effective 10/1/19 and transmit by January of 2020 for the 4th quarter of 2019. For those employers with 25 or more covered workers, the state guidelines require employers to pay 60% of the medical leave share of the tax and employees to pay the remaining 40% through payroll deduction (the medical contribution represents 0.62 of the 0.75 tax). Employers are not required to contribute to the family leave tax. (Employers with under 25 workers are not required to contribute at all but must collect and transmit employee deductions for both family and medical leave.)
- Display the MA Medical and Family leave poster where other employment posters are displayed, in multiple languages in some cases.
- Distribute workforce notices (by 10/1/19 and upon hire thereafter).
For more information or to obtain sample notices and templates, go to https://www.mass.gov/info-details/paid-family-medical-leave-for-employers-faq and/or contact Insource Services (www.insourceservices.com).
