20 February 2019 Massachusetts draft paid family and medical leave regulations released The Massachusetts Department of Family and Medical Leave released draft regulations aimed at clarifying the state paid family and medical leave insurance program that, effective January 1, 2021, will allow eligible individuals to take paid leave to care for a family member or bond with a new child and deal with a personal medical issue or an emergency related to deployment of a family member for military service. A payroll tax shared by employers and employees is set to begin July 1, 2019. (2018 HB 4640; Tax Alert 2018-1388.) The regulations confirm that effective July 1, 2019, employers must begin withholding and paying family and medical leave contributions at an initial rate of 0.63% (adjusted annually, not later than October 1) of each employee's wages up to the applicable Social Security wage base ($132,900 for 2019). Employers with 25 or more employees are allowed to withhold up to 40% of the medical leave portion of the contribution from employees' wages, and up to 100% of required contributions for family leave. The apportionment between family and medical leave contribution rates will be determined each year based on the Department's projected benefit costs for each benefit year. According to the Department's website, the first year's contribution breakdown will be published before July 1, 2019. An employer 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 must include those self-employed individuals as employees for purposes of the program. Employers with an average of less than 25 employees are not required to pay the employer portion of family and medical leave.??Employers must determine the average number of employees and members of its workforce by counting the number of employees (including full time, part-time, seasonal, and temporary employees) on the payroll during each pay period of the previous calendar year and dividing by the number of pay periods. If an employer contracted with self-employed individuals for services during the pay periods and is required to report the payment to such individuals on IRS Form 1099-MISC, those individuals must be included in the count. Employers that fail or refuse to make required contributions will be assessed 0.63% of its total annual payroll for each year it failed to comply as well as the total amount of benefits paid to covered individuals for whom it failed to make contributions. Beginning third quarter 2019, employers are required to file quarterly wage reports electronically through the state's MassTaxConnect system, reporting each employee's name, Social Security number and wages, and each employer's federal employer identification number and withholding tax account number. Based on the quarterly report filed by the employer, the system will calculate the total quarterly contribution amount owed. Contributions owed must be remitted within 30 days after the end of the calendar quarter. If an employer made payments to individuals for services during the calendar quarter that are required to be reported on IRS Form 1099-MISC, the employer must also report the names and Social Security numbers of those individuals, and the amounts of payments made to them. An employer with a private medical and/or family leave program may apply annually to the Department for a one-year exemption from the public plan. An employer may apply for exemptions from medical leave coverage, family leave coverage, or both. To be approved for an exemption, an employer's private plan must confer all of the same rights, protections and benefits provided to employees under the state's plan. Beginning January 1, 2021, covered individuals are eligible for up to 26 total weeks, in the aggregate, of family and medical leave. Covered individuals are eligible for up to 12 weeks of family leave in a benefit year for the birth, adoption, or foster care placement of a child, or because of a qualifying emergency arising out of the fact that a family member is on active duty or has been notified of an impending call to active duty in the Armed Forces. Beginning January 1, 2021, covered individuals are eligible for up to 26 weeks of family leave in a benefit year in order to care for a family member who is a covered service member. Beginning January 1, 2021, covered individuals are eligible for up to 20 weeks of medical leave in a benefit year if they have a serious health condition that incapacitates them from work. Beginning July 1, 2021, covered individuals are eligible for up to 12 weeks of family leave to care for a family member with a serious health condition. Under certain circumstances, employees will be able to take family or medical leave on an intermittent basis. Weekly benefit amounts will be calculated as a percentage of the employee's average weekly wage, with an initial maximum weekly benefit of $850 (thereafter, the maximum amount will be 64% of the state average weekly wage, to be determined by October 1 of each year).? The weekly benefit amount will be reduced by any wages or wage replacement amounts the employee receives. 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).? Employees on family or medical leave must be restored upon return to their previous or equivalent position, with the same status, pay, seniority 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.?
Document ID: 2019-0393 | |||||||
