United States: Don't "Leave" It To The Last Minute—Deadlines For Massachusetts Employers Near

On May 24, 2019, the new Department of Paid Family and Medical Leave (the department) held a hearing on the proposed regulations implementing its namesake law. Passed almost a year ago, the Massachusetts Family and Medical Leave Act (MFMLA) will provide Massachusetts employees with paid leave to care for their own serious health conditions, for family members with serious health conditions, and for a recently born or adopted child. Yet, four weeks from the first deadline for employer action under the law, significant concerns remain regarding the lack of guidance for employers on how to comply with the MFMLA. 

At the hearing, community members raised important questions related to the implementation of MFMLA. These ranged from broad concerns about the contours of the private plan exemption, coordination with other laws and the lack of published regulations prior to the anticipated effective date of the law, to more specific questions about employee eligibility. 

Although such questions are likely to remain until the department publishes the final regulations and any additional guidance, this alert is intended to serve as a refresher about what is currently known about the MFMLA: the benefits provided under the law and their costs, upcoming deadlines, and important actions employers need to take in connection with those deadlines.

Who Is Covered and Who Is Paying? 

MFMLA covers any Massachusetts employee—long-term, short-term, seasonal, contract and former employees are included.  Moreover, unlike the federal Family and Medical Leave Act, which applies only to larger employers, the MFMLA will apply to all employers with more than one employee. This new law will permit a Massachusetts employee to take up to 20 weeks of paid medical leave for a serious health condition, as well as 12 weeks of paid family leave, for a maximum of 26 weeks in a single benefit year. For each type of covered leave, the maximum weekly amount that an employee is entitled to receive is $850.

As to who is paying for this benefit, the answer is a bit more complicated and depends in part on the size of the employer. The law requires employers with 25 or more employees to make certain contributions toward these leave benefits, while employers with fewer than 25 can shift the entire cost to their employees. Each year, the department will determine specified contribution rates for employers, with an initial rate of 0.63 percent of the first $132,900 of an employee's salary. Large employers can shift the entire family leave contribution rate to covered workers, but are required, at a minimum, to pay 60 percent of the medical leave contribution rate. For illustrative purposes, assuming a large employer pays the minimum amount required by law for an employee earning $132,900 or more, the employer's required annual contribution would currently be $414.65, while the employee's required contribution would be $422.62. If an employer fails to make its required contributions, it will be taxed 0.63 percent of its total annual payroll, as well as the cost of any benefits provided to its employees under MFMLA.

In lieu of making contributions to the department, an employer can apply for an exemption if it offers Massachusetts employees a private paid leave plan that meets or exceeds the MFMLA's requirements. As discussed later in this alert, employers seeking to avail themselves of an exemption from the MFMLA contributions need to offer employees benefits equivalent to or greater than those engrafted into the MFMLA (i.e., up to 26 weeks in the aggregate of paid leave), and ensure that its plan provides the procedural protections and benefits set forth in the MFMLA. 

What Is the Timeline?

Although many of the specifics regarding MFMLA's implementation are still uncertain, a few deadlines  are fast approaching: 

  • June 30, 2019: All employers in Massachusetts must provide employees with a notice of rights under the new law.
  • July 1, 2019: Employers must begin making deductions from wages or payments for services to fund quarterly contributions to the department.
  • September 20, 2019: Employers interested in obtaining an exemption from the MFMLA's contribution requirements must file for the exemption. 

What Should I Do Next?

Whether these deadlines remain as scheduled or are pushed back, employers can, and should, take certain actions to comply with the new law. Specifically, employers should: 

  • Provide notice to employees. The department has provided a workplace poster, which must be displayed in locations where it can be easily read. It must be available in English, as well as in each language that is the primary language of five or more individuals in an employer's workforce. In addition, employers are required to provide written notice to their current workforce by June 30. This notice may be provided electronically, but it must include the opportunity for an employee to acknowledge or decline to acknowledge receipt of the information. Finally, an employer is required to provide notice to employees not more than 30 days from the beginning date of the employee's employment.
  • Determine who is covered. With any luck, we will soon have more guidance from the department as to who should be considered a "Massachusetts employee" for purposes of the MFMLA, and specifically with respect to remote workers. For now, an employer should assume that an employee will be deemed a Massachusetts employee if he or she 1) primarily works in Massachusetts, 2) provides services in two or more states with a "base of operations" in Massachusetts or 3) resides in Massachusetts. As a further note, for Massachusetts companies whose workforce is more than half made up of independent contractors (paid on a 1099 basis), those contractors will be functionally treated as employees for purposes of the MFMLA. 
  • Decide whether to apply for an exemption. Employers that provide benefits at least as generous as those required under the MFMLA can apply for an exemption, which must be renewed annually, for the paid family leave contribution or the medical leave contribution or both. In order to qualify for this exemption, an employer's private plan (whether self-funded by an employer or obtained through an insurance carrier licensed in Massachusetts) must provide the required amount of job protected leave discussed above, cover all employees, provide benefits in certain circumstances to former employees, require continued employer contributions to health insurance benefits during leave and provide certain procedural rights. If an employer chooses the "self-insured" route (rather than purchasing a "fully insured" plan from a Massachusetts licensed insurance company, which plans have not yet been made available to employers), the employer's plan must be bonded. 

Footnotes

1 Note, however, that there is still uncertainty as to who is a Massachusetts employee.

2 The Associated Industries of Massachusetts, with the support of employee groups, recently submitted a letter to Governor Baker, House Speaker DeLeo and Senate President Spilka requesting a three-month delayed start to this program. Commenters raised this development at the recent department hearing; however, as of this post, neither the department nor the legislature has responded.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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