IMPORTANT UPDATE – THE ASSESSMENTS STARTING JULY 1 HAVE BEEN DELAYED BY 3 MONTHS. THE LEGISLATION IS NOT FINAL YET. WITH THE DELAY, THE TOTAL CONTRIBUTION AMOUNT WILL INCREASE FROM .63% OF WAGES TO .75%. MORE DETAILS TO FOLLOW ONCE THE LEGISLATION HAS BEEN FINALIZED.

The Paid Family and Medical Leave Act is a part of new legislation that will entitle most Massachusetts employees up to 12 weeks of paid family leave and up to 20 weeks of paid personal medical leave, with no more than 26 aggregate weeks of family and medical leave in a benefit year. These paid benefits will be funded by payroll contributions from employers and covered individuals. The benefits do not take effect until January 1, 2021, however, employers have deadlines under this new legislation that are well before 2021 and are now rapidly approaching.

Employers are required to notify employees and independent contractors of the benefits and required payments under the Act by June 30, 2019. The Massachusetts Department of Family and Medical Leave is requiring employers to display the mandatory workplace poster, which is provided by the Department, at each Massachusetts location in a highly visible spot. Written notice will also need to be provided to all employees and contractors. The notice can be provided electronically. The Mass.gov website provides a template which meets the requirement. Failure to notify can lead to a first-time penalty of $50 per employee and contractor, with subsequent failures subject to a $300 penalty per employee and contractor.

Starting on July 1, 2019, employers need to begin making deductions from wages or payments for contract services made to covered individuals in order to fund quarterly contributions to the Department. The total contribution amount is currently 00.63% of total earnings. This 00.63% contribution is split 17.5% as a family leave contribution and 82.5% as a medical leave contribution. If an employer’s workforce for the prior 12 months included an average of 25 or more covered individuals, the employer is required to pay 60% of the medical leave contribution, and 0% of the family leave contribution. The rest of the contribution can be deducted from the covered individual’s wages. If the workforce was less than 25 covered individuals, then there is no required employer payment and the contributions can all be deducted from the covered individual’s pay.

Covered individuals include all MA W-2 employees and MA 1099-MISC contractors ONLY IF they make up more than 50% of the total workforce. MA 1099-MISC contractors are defined as individuals (and Single Member LLCs) who reside in Massachusetts and who provide the services in Massachusetts.

Quarterly contributions must be remitted through the Department of Revenue’s MassTaxConnect, beginning by October 31, 2019. If an account has not yet been set up for the MassTaxConnect website, it is important to do so now. The option to add this tax to your registration should be available on your MassTaxConnect site as of July 1, 2019. It is also important to contact your payroll provider to communicate the percentage of employer/employee contributions.

Helpful Links:

PFML Workplace Poster

Employer Notice to Employees and Contractors

PFML Contribution Calculator

By Scott Simpson, Senior Tax Accountant at Katz, Nannis + Solomon, P.C. If you have any questions or would like to speak with one of our tax professionals, please contact our office at 781-453-8700.