Recently enacted legislation (HB 4640) in Massachusetts requires the establishment of a state paid family and medical leave insurance program and incremental increases to the state minimum wage up to $15 ($6.75 for tipped employees) per hour over the next five years. (News release, Massachusetts Governor Charlie Baker's office, June 28, 2018.)

The Raise Up Massachusetts coalition announced a few days prior to enactment that the coalition would drop its minimum wage increase and paid leave ballot questions if the governor signed HB 4640 into law.

The bill is considered a "grand bargain" alternative by employers, business groups, labor unions and the community to the more costly ballot initiatives that are scheduled to be voted on in November 2018.

"I am thankful that all parties came together, compromised and found common ground to produce a better set of policies than what the ballot questions represented,"?said Governor Charlie Baker.?"The Massachusetts workforce continues to grow with more and more people finding jobs and our administration is committed to maintaining the Commonwealth's competitive economic environment."

The current state minimum wage of $11 per hour ($3.75 for tipped employees) will initially increase to $12 ($4.35 for tipped employees) per hour effective January 1, 2019.

Bill establishes a paid family and medical leave program

Similar to other states (i.e., New Jersey, Rhode Island) that provide for a state disability insurance plan, the bill will establish the Massachusetts Family and Employment Security Trust Fund, into which employees, employers and self-employed individuals will pay family and medical leave insurance contributions.

Effective January 1, 2021, eligible individuals will be able to take paid leave for up to 12 weeks a year to care for a family member or bond with a new child, 20 weeks a year to deal with a personal medical issue, and up to 26 weeks to deal with an emergency related to deployment of a family member for military service.

Weekly benefit amounts will be calculated as a percentage of the employee's average weekly wage, with an initial maximum weekly benefit of $850.?Self-employed persons may opt into the program.?For the law to apply to municipal employees, the city or town involved must vote to accept participation in the program. As is the case for unemployment insurance benefits, individuals will be required to serve a one-week waiting period before starting to collect benefits (waived for childbirth).

Employers can, upon approval, opt-out of the state plan by offering a private paid family and medical leave plan that gives the same or better rights, protections and benefits provided to employees under the state plan.

The program will be administered out of a new Division of Family and Medical Leave of the state's Department of Labor & Workforce Development.

Employer/employee contributions for family and medical leave insurance

Effective July 1, 2019, employers must begin withholding and paying family and medical leave contributions at an initial rate of 0.63% (adjusted annually) of each employee's wages up to the applicable Social Security wage base. An employer with 25 or more employees must pay at least 60% of the medical insurance, and withhold from employees' wages up to 40%. Employers may withhold from employees' wages up to 100% of required contributions for family leave.

Employers with less than 25 employees are not required to pay the employer portion of family and medical leave.

An employer or a covered business entity with a workforce that has more than 50% self-employed individuals for whom the employer must report the payment for services to such individuals on IRS Form 1099-MISC shall include those self-employed individuals as employees.

Employees on family or medical leave must be restored upon return to their previous or equivalent position, with the same status, pay and benefits. Further, the employer must continue to provide and contribute to health insurance and the leave cannot affect an employee's right to accrue vacation, sick leave, bonuses, etc.

Employers must post in a conspicuous place a medical and family leave workplace notice prepared or approved by the Division, and provide written notice of specific information on the state plan to each employee not more than 30 days from the beginning date of the employee's employment. A notice of specific information regarding medical and family leave benefits must also be provided to each self-employed individual with whom the employer contracts, at the start of such contract. Failure to provide these notices can result in civil penalties.

The Department must by March 31, 2019, publish proposed regulations establishing procedures for the collection of family and medical leave contributions and the filing and timely processing of claims for benefits.

SHRM survey reports an increase in employers providing paid family leave

The Society for Human Research Management (SHRM) reports that a recent survey indicated that an increasing number of employers are providing paid family leave:

"The availability of paid parental leave increased significantly between 2016 and 2018 for every type of parental leave surveyed. Paid maternity leave increased from 26% in 2016 to 35% in 2018. Paid paternity (21% to 29%), adoption (20% to 28%), foster child (13% to 21%) and surrogacy (6% to 12%) leave also increased from 2016."

For more information on state family and medical insurance, see our special report.

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