Clubs and Organizations
September 6, 2019From: United Regional Chamber Of Commerce
As you may recall, the State delayed the deadline for Employers to provide written notice to their workforce of the withholdings required in connection with the new Paid Family and Medical Leave (“PFML”) Law to September 30, 2019. On or before September 30, 2019, Employers and Covered Business Entities are required to provide written notice to their current workforce of the PFML benefits, contribution rates, and other provisions of the new law. A different notice should be used byEmployers who have a “workforce” of 25 or more workers as opposed to Employers who have a “workforce “ of less than 25 workers.
As a result of the delay, the amount paid to the State and the forms of notice to use have changed. Now, .75% of eligible wages (.62% for medical leave and .13% for family leave) must be paid to the State via payroll deductions for Employers who have a “workforce” of 25 or more workers. The payroll deductions apply to wages or other qualifying earnings up to the social security cap, which is currently $132,900 per employee. The cap may change year to year.
NOTICES AND DEDUCTIONS FOR LARGER EMPLOYERS
Employers who have a “workforce” of 25 or more workers should use the form (the “Notice”) found at:
For this group of Employers, the per worker contribution of .75% consists of two parts - .13% of employee pay for “Family Leave” and .62% for “Medical Leave”. The deduction is broken down this way because there will be two funds, one for Family Leave and the other for Medical Leave, from which workers may seek payment in the future. Paid leave benefits will not be available to employees until 2021.
For this group of Employers, the Employer must pay a minimum of 60% of the medical leave contribution. The Employer may deduct the remaining 40% of the medical leave contribution from the employee’s wages and all of the family contribution from the employee’s wages. Obviously, Employers are allowed to be more generous and pay more than is required. The Employer must complete the Notice, including the amounts that will be withheld from the employee’s wages and the amount that the Employer will contribute on page 5 of the Notice.
NOTICES AND DEDUCTIONS FOR SMALLER EMPLOYERS
Employers who have a “workforce” of less than 25 workers should use the form (the “Notice”) found at:
For such “smaller” Employers, there is no requirement that the Employer contribute. Instead, smaller Employers must withhold from the employees - .13% of employee pay for “Family Leave” and .248% of the employee’s pay for “Medical Leave”.
For all Employers, large and small, the Notice, which may be provided electronically, must include the opportunity for an employee or self-employed individual to acknowledge receipt or decline to acknowledge receipt of the information. The Employer can receive these acknowledgments in paper form or electronically. Please contact me if you need assistance completing the Notice or if you have any questions.
Please retain the Notice forms according to your internal document retention policy. Do not send the Notice forms to the Department of Family and Medical Leave (“DFML”).
In the event that an employee or self-employed individual fails to acknowledge receipt, DFML shall consider an Employer or Covered Business Entity to have fulfilled its notice obligation if it can establish that it provided to each member of its current workforce the notice and the opportunity to acknowledge or decline to acknowledge receipt.
Please use your Federal Employer Identification Number (FEIN) as your Employer ID Number on the written Notice forms.
Determining Your Total Workforce
Calculating whether you have 25 or more “workers” is not simple under the PFML Law. Workers who are not employees may be included. Also, the calculation is based on your prior year workforce, not the current year workforce. As an Employer, you are responsible for making an accurate calculation. You can find a calculator provided by the State at:
Contributions under the PFML Law also depend on the makeup of your workforce. To make sure you’re remitting the correct amount, it’s important that youâ€¯properlyâ€¯report the size and makeup of your Massachusetts workforceâ€¯to DMFL through MassTaxConnect.
The definition of “wages” for the PFML program has been aligned with the Massachusetts Unemployment Statute’s definition of wages. There are numerous types of employment that are excluded under the Massachusetts Unemployment Statute. Consistent with the Massachusetts Unemployment Statute, DFML will apply those same exclusions with respect to determining whether an Employer is required to remit contributions on behalf of its employees.
In general, your total “workforce” would include:
All Massachusetts W-2 employees (full-time, part-time or seasonal). Generally, if you withhold contributions and remit through MassTaxConnect for a W-2 employee that performs services in the Commonwealth, they should be counted toward the total workforce.
All Massachusetts 1099-MISC Contractors. A Massachusettsâ€¯1099-MISC contractor is an individual who residesâ€¯andâ€¯performs services in Massachusetts. In addition, for the contractor to be covered, you must be reporting payments for the individual’s services on the IRS Form 1099-MISC.
It is important to note that 1099-MISC contractors count toward your total number of covered individuals if they make up more than 50 percent of your total workforce (W2 employees and 1099-MISC contractors combined).
In addition, employees performing certain types of employment are excluded under the unemployment statute are also excluded under the PFML program, including:
-Services provided by real estate brokers/salespeople and insurance agents/solicitors in commission only jobs
-Employment by churches and certain religious organizations
-Services of work-study students, student nurses and interns, work trainee programs administered by non-profit or public institutions
-If under 18, services performed for one’s father or mother
-Employment in the railroad industry
This is a partial list of employment excluded. Please refer to this link to find the full list of exclusions:
Revised Employer Notification Forms Available
Employers who have already completed the notification process prior to the delay will need to provide employees with a rate update sheet explaining the new dates and contribution rates. The rate update amendment does not need to be signed by the employee and can be sent electronically, but you will need to keep a record of its distribution. This process will need to be completed each time that the rate changes.
The revised Notice forms as well as the updated rate sheets can be found at:
The Notice forms are provided in English and additional languages.
Quarterly Employer Contributions Based on Date Wages Paid
October 1, 2019 marks the beginning of the first quarter of payroll and wage withholdings. The withholdings, and in some cases Employer payments, will be remitted to the Department of Revenue 30 days following the conclusion of each calendar quarter. This timeframe is the same as the schedule for making Unemployment Contributions.
By January 31, 2020, Employers must complete quarterly filings and submit contributions through MassTaxConnect for the previous calendar quarter (October - December). Previously, the interpretation was that contributions would be due for services performed by an employee on or after October 1.
Withholdings apply to any wages paid on or after October 1st and are not dependent on the date when the wages were earned. DFML has determined that withholdings will be based on the date that wages are paid (commonly referred to as ‘employee paycheck date’) irrespective of the date the employee performed those services. For example, if an employee receives a paycheck on or after October 1, 2019 where some of those wages were for services performed prior to October 1, 2019, then all of the wages in the paycheck will be subject to contributions.
Employers employing H-2A visa holders are exempt from remitting contributions to the DFML. All other temporary foreign worker visa programs, however, are subject to the contribution requirements and those workers will be considered covered individuals, assuming all other criteria for being a covered individual have been satisfied.
Summary of What Employers Should Do To Prepare
A. Required Notices to Employees.
Prior to September 30, 2019, each Employer should:
(i) provide written Notice of contributions, benefits, and workforce protections to Massachusetts W2 employees and Massachusetts 1099-MISC contractors. There are different Notice forms for Massachusetts W2 employees and Massachusetts 1099 MISC contractors. These Notice forms can be found at:
(ii) Collect signed acknowledgments of receipt of such Notice from Massachusetts W2 employees and Massachusetts 1099-MISC contractors;
(iii) If you provided written Notices to your workforce prior to the June 14 delay announcement, provide them with a rate update sheet explaining the new dates and contribution rates. This sheet does not have to be signed by the covered individual, but you will need to keep a record of its distribution.
(iv) display the “Paid Family and Medical Leave” workplace poster in a highly-visible location. The poster can be found at:
The poster must be available in English and each language which is the primary language of five (5) or more individuals in your workforce, if these translations are available from DFML.
B. Make sure that your business is registered with the Massachusetts Department of Revenue and has a MassTaxConnect account. You can register for a MassTaxConnect account at:
C. Prudent Employers should begin reviewing their existing leave policies to determine what they will need to make their own policies compliant with the PFML Law. Among other things, you should consider policies addressing if various leaves will run concurrently. We urge you to update your employee handbook to address the PFML Law.
You may access State forms and other information at our Firm's website: https://ddcrwlaw.com/