A collective sigh of relief could be heard across the Commonwealth yesterday as anxious business owners, insurers, and employment lawyers heard the news that Massachusetts government leaders had agreed to a three-month delay of the implementation of the first-in-the-nation Paid Family and Medical Leave law.
With a July 1 deadline to begin making payroll deductions looming, many questions remained about the law. Are the deductions pre-tax or post-tax? (We still don't know.) Which employees and independent contractors are covered? (It's complicated.) Should employers seek an exemption by adopting a private plan? (Maybe?) With the deadline now moved to October 1, legislators and employers have some much-needed breathing room to answer these and other questions about the law.
In a joint statement, the Governor, House Speaker and Senate President stated that the three-month delay in the collection of contributions is intended "[t]o ensure businesses have adequate time to implement the state's Paid Family and Medical Leave program," and that "technical changes" will be adopted "to clarify program design." The State leaders said that they "look forward to the successful implementation of this program this fall."
The text of the legislation to formally delay the implementation and amend the law has not yet been released, but the Associated Industries of Massachusetts ("AIM") is reporting that it will include changes to the rules on intermittent leave, clarification of what constitutes a "serious medical condition," and modifications to better align the state PFML law with the federal FMLA.
While the collection of contributions is being delayed by three months, the date on which employees can start accessing benefits, January 1, 2021, has not changed. In order to make up for the loss of three months of contributions, the payroll tax rate to fund the program will be increased from 0.63% to 0.75%, meaning that once the deductions begin in the fall, workers will see a larger chunk of money being taken from their paychecks.
The effort to delay the implementation of the law was spearheaded by AIM in May, and gained support from a number of groups, including, most notably, Raise Up Massachusetts, which was a major advocate for the adoption of the law. Up until Tuesday's announcement that an agreement had been reached, it was uncertain whether the law's implementation would be delayed.
While the delay is welcome news, employers shouldn't relax too much. October 1 will be here before you know it, and employers should use the extra three months to continue to monitor developments, educate themselves about the law, and prepare for implementation.
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