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State Postpones Paid Leave Contributions. Now What?

July 1, 2019
The Massachusetts Legislature has passed, and Governor Charlie Baker has signed, legislation to delay the start of employer and employee contributions to the Department of Paid Family Medical Leave from July 1, 2019 to October 1, 2019.  The delay will not reduce total contributions paid to the new family and medical leave trust fund because the state will increase the contribution rate from .63 percent to .75 percent of wages. Here is what you need to know:
Now that the contribution rate and effective date have changed, how should we notify employees?
A revised Paid Family and Medical Leave (PFML) poster is now available on the Department of Paid Family and Medical Leave web site reflecting the October 1, 2019 effective date for PFML contributions. The poster must be available in English and each language that is the primary language of five or more individuals in your workforce if these translations are available from DFML.  The poster should be displayed in a visible location in your workplace now.  
Employers and Covered Business Entities are required to provide written notice to their current workforce on or before September 30.  The model PFML employee notice has been updated on the and is available in two versions: one for employers with fewer than 25 employees and one for employers with 25 or more employees.  If you issued a notification prior to the change in contribution rate and start date, you are required to provide a revised notice explaining the new date and rate.  This sheet does not need to be signed by the covered individual, but you should keep a record of its distribution.
What do we do with signed notification forms?
Signed acknowledgement forms are to be retained by the employer and may be placed in the employee’s file.  Electronic documentation and storage are also acceptable.  
We understand that the new contribution rate is .75 percent.  What is the breakdown between family and medical leave?  
Employers with fewer than 25 covered individuals are not required to contribute the employer share of the medical leave contribution.
When is the first quarterly filing through MassTaxConnect?
The first quarterly filing must be done through MassTaxConnect by January 31, 2020.  This filing will be based on contributions for the October 1, 2019 – December 31, 2019 period.
Is there clarification on who we count as an employee and independent contractor?
You must count all Massachusetts W-2 employees (full-time, part-time, seasonal, union-represented or not, any age). Generally, a MA W-2 employee is anyone for whom you do payroll withholding through MassTaxConnect.
You must also include 1099-MISC individuals (who live and work in Massachusetts) in the workforce count.  If an employer has 25 or more covered individuals (average employees plus average 1099-MISC individuals) for 2018, the employer is required to contribute towards the medical leave deduction as outlined in the chart above.  If the employer has fewer than 25 covered individuals, the employer is not required to make this contribution.
Has the deadline changed to apply for an exemption?
Yes, employers wishing to opt-out of the state plan now have until December 20, 2019 to apply for an exemption through MassTaxConnect.  
Additional questions?
Final regulations and more information are available on the Department of Paid Family Medical Leave web site effective Monday, June 17, 2019. 
Join AIM HR Solutions for a four-part webinar series to get answers to any of your remaining PFML questions.
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