The Massachusetts Department of Family and Medical Leave has made several changes to the paid family and medical leave (PFML) program, as summarized below.

• The definition of wages upon which the PFML contribution rate applies is now the same as for state unemployment insurance (SUI) tax purposes. Also, types of employment excluded from SUI tax are now excluded from PFML (i.e., services performed by real estate and insurance agents in commission only positions). Go here for more information and see Section 6 of MGL c. 151A for a complete list of excluded employment.
• Employers will withhold at a rate of 0.75% of subject wages when those wages are actually paid to employees, and not when they are earned. For example, wages earned in September 2019 are not subject to withholding on the date earned, only those paid beginning on and after October 1, 2019.
• Wages paid to H-2A visa holders are exempt from PFML withholding and these employees are not considered to be PFML-covered employees. All other temporary foreign worker visa program employees (e.g., those holding F-1, OPT, J-1, and J-2 visas) are subject to PFML withholding if all other criteria for being a covered employee are satisfied. Go here for more information.

Program details

As previously reported (Tax Alert 2019-1125), emergency legislation was enacted and final regulations were released that delayed the effective date for collecting and remitting PFML contributions by three months. As a result, employers will begin withholding and paying PFML contributions on October 1, 2019 at an initial rate of 0.75% (up from the previous 0.63% that would have started July 1, 2019) of each employee's wages, up to the 2019 Social Security wage base of $132,900.

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 about their PFML benefits is September 30, 2019 and the deadline to apply for a one-year exemption from the public plan is December 20, 2019. The application is available through the employer's MassTaxConnect account. (Tax Alert 2019-1039 and Tax Alert 2019-1079.)

Effective January 1, 2021, 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

As we reported previously, based on the initial rate of 0.75%, the allocation of PFML contribution rates beginning October 1, 2019 is 0.62% for medical leave and 0.13% for 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 less 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.

Resources

• Guides for employers and workers.
• Frequently asked questions for employers.
• Videos that explain the PFML program are available here.
• For more information on the paid family and medical leave program, see the Department's website.

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