On June 28, 2018, Massachusetts Governor Charlie Baker signed landmark House Bill 4640, “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday,” affecting all employers in the Commonwealth. Effective January 1, 2021, Massachusetts will join the growing number of states (including California, New Jersey, New York, Rhode Island, and Washington) who have established mandatory paid family and medical leave programs. Specifically, Mass. Gen. Laws ch.175M as added by St. 2018, c.121 (hereinafter “the Law”):
- Creates a paid family and medical leave program funded by a state payroll tax;
- Increases the state minimum wage, and;
- Eliminates premium pay requirements for work performed on Sundays and certain holidays.
This article focuses exclusively on the Law’s establishment of a paid leave program, and highlights what will be required of employers over the next 5 years.
Applicability and Eligibility
The Law applies to all employers in Massachusetts, as defined in Mass. Gen. Laws ch. 151A, Sec. 1. While there are no minimum number of employees required to trigger employer coverage under this Law, municipalities, districts, and political subdivisions or their instrumentalities are not subject to the law unless voluntarily adopted. In addition, employers with less than 25 employees in the Commonwealth is not required to pay the employer portion of premiums for family and medical leave. An employer may apply for approval of a private plan which provides the same rights, protections and benefits. Approval of the private plan may be withdrawn if the terms or conditions of the plan have been violated.
A “covered individual” under this law includes (i) all employees working in Massachusetts, regardless of tenure, (ii) self-employed individuals who have elected coverage under the law, and (iii) former employees who have been separated from the Massachusetts employer for less than 26 weeks from the start of the former employee’s family and/or medical leave.
Employees who meet the financial eligibility requirements for unemployment compensation are eligible for MA PFML. That is, the employee must have earned 30 times the weekly unemployment benefit that the employee would be eligible to receive and must have earned at least $4,700 during the last four calendar quarters.
Qualifying Paid Family and Personal Medical Leave
Beginning January 1, 2021, Massachusetts employees will be entitled to the following in a “benefit year” (defined as the 52 consecutive weeks beginning on the Sunday immediately preceding the first day that job-protected leave … commences):
- Up to 12 weeks of paid family leave to (i) bond with the employee’s child during the first 12 months after the child’s birth or the first 12 months after the placement of the child for adoption or foster care with the employee, or (ii) care for a family member with a serious health condition;
- Because of any qualifying exigency arising out of a family member’s active duty or notification of an impending call or order to active duty in the Armed Forces;
- Up to 20 weeks paid medical leave related to the employee’s own serious health condition;
- Up to 26 weeks of paid family leave to care for a family member who is a covered service member or who has a serious health condition.
A family member is defined as a spouse, domestic partner, child, parent or parent of a spouse or domestic partner, a grandchild, grandparent, sibling, or a person who stood in loco parentis to the employee when he or she was a child.
An employee may not take more than 26 weeks in the aggregate in a benefit year. Upon return from leave, employees must be restored to the same or equivalent positions that they previously held. The employee’s accrual of vacation time, sick leave, bonuses, advancement, seniority, length of service credits, or other such benefits (including the employer’s contribution to pay health insurance premiums) cannot be reduced by taking MA PFML leave.
Benefits and Relevant Funding
Family and medical leave benefits are not payable to covered individuals during the first 7 calendar days of the leave, except in instances where an employee seeks medical leave during pregnancy or recovery from childbirth and such leave (1) is supported by documentation from a healthcare provider, and (2) immediately precedes family leave. Employees may use accrued sick, vacation, or other paid leave provided under an employer policy during the 7-day waiting period.
Following the 7-day waiting period, the weekly benefit amount for employees and self-employed individuals on family or medical leave shall be determined as follows: (i) the portion of an employee’s or self-employed individual’s average weekly wage that is equal to or less than 50 per cent of the state average weekly wage (currently $1,338.05) shall be replaced at a rate of 80 per cent; and (ii) the portion of an employee’s or self-employed individual’s average weekly wage that is more than 50 percent of the state average weekly wage shall be replaced at a rate of 50 per cent. The maximum weekly benefit provided under the Law may not exceed $850, although that amount will be adjusted annually.
The state leave program will be funded through a payroll tax of 0.63%, to be paid into the Family and Employment Security Trust Fund, established under the Law. Employers with 25 or more employees must remit full contribution initially to the Trust, and may deduct up to 40% of the contribution required for medical leave and up to 100% of the required contribution for family leave from an employee’s wages.
Next Steps for Employers
The Department of Family and Medical Leave will be established to administer this law. The Department will determine eligibility for benefits and a system for handling appeals of any denial of benefits. The Department will notify the employer within five business days after a claim has been filed. The Department is expected to publish proposed regulations and implementation guidelines in the coming months (no later than March 31, 2019), but Massachusetts employers should be aware of several important deadlines established under the Law. By July 1, 2019, Massachusetts employers must inform employees of their rights under the Law by (i) posting a notice of benefits in a conspicuous place on each of its premises, and (ii) begin providing written information regarding such benefits to new employees within 30 days of hire. Additionally, beginning July 1, 2019, employers must begin contributing the required payroll tax to the Family and Employment Security Trust Fund.
Over the next 5 years, employers must review their family and medical leave policies as well as update any notices to ensure compliance with the Law. Further, employers should evaluate their payroll systems and work with providers to implement mechanisms that will allow for the required deductions from employee payroll.