UPDATE 6/14/19

The planned start of contributions (both employer and employee) to the Paid Family and Medical Leave program (#PFML) has been delayed to October 1, 2019. Employers also now have until September 30, 2019 to notify all covered individuals of their rights and obligations under PFML. See the attached notice to learn more about how this delay will affect you and your responsibilities under the law.
https://mailchi.mp/07a7c…/notice-to-massachusetts-employers…

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The Massachusetts Department of Family and Medical Leave, which oversees and administers the Massachusetts Paid Family and Medical Leave (PMFL) program, has just announced two important updates for employers regarding the July 1, 2019 implementation of the law. Both the workforce notification and employer exemption deadlines have been extended.

If you employ Massachusetts workers, you will have new responsibilities under PFML.  You must notify your workforce and remit contributions for covered individuals.

Covered individuals include your W2 employees and your 1099-MISC contractors if they makeup more than 50% of your workforce.  Keep in mind that employers with fewer than 25 covered individuals must submit contributions for their workers, but are not required to pay the employer share (but may choose to do so voluntarily).

Workforce Notification Deadline – June 30, 2019

Employers are required to display a workplace poster and to provide written notice of PMFL to their current workforce by June 30, 2019.  You must notify your Massachusetts W2 employees and Massachusetts 1099-MISC contractors who provide services to you.  Note that you should notify your 1099-MISC contractors, regardless of whether they will be considered employees under this law, because contractors are eligible to opt in to PFML voluntarily.

You may choose to use the Department of Family and Medical Leave notification templates or create your own.  You will find templates and guidance at https://www.mass.gov/info-details/informing-your-workforce-about-paid-family-and-medical-leave.

Remember, you must provide this written notification to your existing workforce by June 30, 2019.  Thereafter, you must provide notice to new employees within 30 days of their first day of employment (or when you enter into contract for services).

Employer Exemption Deadline – September 20, 2019

As an employer, you can apply for an exemption to opt out of the state PFML system (medical leave, family leave, or both) if you maintain disability or other insurance policies that provide benefits equal to, or better than, the state program.  Exemptions for private plans must be approved in the quarter prior to the quarter in which they will go into effect. However, for Quarter 1 only, the deadline to file for a private plan exemption has been moved from June 30 to September 20, 2019.

You are able to apply for this annual exemption through MassTaxConnect.

Please keep in mind that contributions to PFML still begin on July 1, 2019.  This 1st quarter extension to apply for exemption only impacts the contributions if/when the exemption is approved.

Tax Implications of PFML – under review

While the Department of Family and Medical Leave anticipates that employee contributions should be withheld from after-tax wages, the tax treatment of contributions (and benefits when they begin in 2021) is currently under review by the IRS.  A definitive rule will be available when the IRS concludes its review.  Until such guidance is issued, employers are encouraged to consult with their own tax advisors with any questions.

Resources Available

Draft regulations and toolkits, for both employers and employees, are available at mass.gov/dfml.  The Department of Family and Medical Leave continues to accept comments on draft regulations.

Stay tuned for more information.

If Pfautz Consulting Group, LLC and help you as you prepare for implementation of this new law, please contact us.

Submitted by Deborah M. McCormick