As previously reported (EY Payroll Newsflash Vol. 20, #072), the Massachusetts Department of Family and Medical Leave announced that emergency legislation was enacted to provide for a three-month delay in the effective date for collecting and remitting contributions for Massachusetts' paid family and medical leave (PFML) program.

Now the Department has issued final regulations reflecting this change.

Effective October 1, 2019, employers must begin withholding and paying Massachusetts family and medical leave contributions at an initial rate of 0.75% (up from 0.63%) of each employee's wages up to the 2019 Social Security wage base of $132,900. Under prior law, the requirement for making PFML contributions was effective July 1, 2019.

Employers will begin remitting employee and employer contributions for the fourth quarter 2019 (October 1 to December 31, 2019) through MassTaxConnect by January 31, 2020.

The deadline for providing written notice to employees of the PFML benefits is extended again, this time to September 30, 2019 (from June 30, 2019) and the deadline to apply for a one-year exemption from the public plan is extended to December 20, 2019 (from September 20, 2019). The application is available through the employer's MassTaxConnect account. (EY Payroll Newsflashes Vol. 20, #070, 6-5-2019 and #072, 6-12-2019.)

The change is not expected to delay the starting date of January 1, 2021 that most workers in Massachusetts will be eligible to get up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave. On July 1, 2021, all benefits will be available.

Breakdown of employee/employer contributions

The Department has released the revised allocation of PFML contribution rates beginning October 1, 2019. Based on the new rate of 0.75%, 0.62% funds medical leave and 0.13% funds family leave.

Employers with 25 or more employees may withhold up to 40% of the medical leave portion of the contribution from employees' wages. Based on the medical leave rate of 0.62%, employers must calculate their contributions at a minimum of 0.372% and may withhold up to 0.248% of employees' wages up to the Social Security wage limit) and up to 100% of required contributions for family leave.

A calculator is available on the Department's website.

For example, an employer paying an employee annual wages of $100,000 calculates the minimum employer portion of medical leave contributions for the fourth quarter 2019 as $93 ($25,000 times 0.372%). The employee pays $62 for medical leave ($25,000 times 0.248%) and $32.50 ($25,000 times 0.13%) for family leave, for a total employee withholding of $94.50 for fourth quarter 2019.

Employers of fewer than 25 employees may withhold 100% of both the medical and family leave portions from employees. In both cases, the employer must report and remit employee/employer contributions on a quarterly basis.

The Department has posted guides for employers and workers to its website. See also the Department's frequently asked questions regarding the program. For more information on the paid family and medical leave program, see the Department's website.

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EY Payroll News Flash