By: Philip Qualo, J.D.
The commencement of the required contributions for the Massachusetts Paid Family and Medical Leave (“PFML”) program was scheduled for July 1, 2019, but on June 11, 2019, Massachusetts Governor, Charlie Baker, along with members of the Commonwealth’s House and Senate, issued a joint statement agreeing to postpone the start of required contributions for the PFML program by three months. While the legislature will need to pass an emergency bill before the delay is official, this announcement is welcome news for employers scrambling to comply with what was supposed to be a July 1 contribution start date. Adversely, this announcement also brings unwelcome news to employers and their employees because in order to maintain the amount of pre-funding and not reduce total contributions paid to the PFML trust fund, the total contribution rate will be increased from .63% to .75%of wages and will be deducted on October 1, 2019, the new start date for required contributions.
By way of background, the PFML law, enacted in 2018, provides a right to up to 26 weeks of combined family and medical leave in each benefit year, and pay during such leave, to eligible employees, former employees, and self-employed individuals in Massachusetts. The earliest that such leave and pay benefits will be available is January 1, 2021. Leave under the PFML is job protected and will require continuation of health benefits for the duration of such leaves. Pay during this leave is administered by the state and funded through employer and employee contributions that employers must remit to the state on a quarterly basis. Employers with more than 25 covered employees were required to contribute 60% of the medical leave portion on behalf of their employees. Covered employees’ contribution rate was initially established at 0.63% (0.52% for medical leave and .11% for family leave) of the covered individual’s gross wages or other payments to all covered individuals.
The Department of Family and Medical Leave (“DFML”) has yet to provide updated guidance on whether there will be a change in the medical and family leave allocation of the increased .75% contribution rate or any change in the required employer contribution. However, the DFML has confirmed that June 30th deadline for covered employers to comply with workplace poster and employee notification requirements has been extended to September 30, 2019. In the meantime, we recommend employers with employees based in Massachusetts continue to monitor the DFML website for updated guidance. To learn more about self-funded health plans click here.