Prepare for Paid Family and Medical Leave
As a Massachusetts employer, you’re likely going to have new responsibilities under the Paid Family and Medical Leave (PFML) law. This guide is intended to help you prepare for those responsibilities before the law’s effective date of Oct. 1, 2019, and through the first quarterly reporting due by Jan. 31, 2020.
Table of Contents
Step 1: Hang up your PFML poster
All Massachusetts employers must display a workplace poster prepared or approved by the Department of Family and Medical Leave (DFML) that explains the benefits available to your workforce under the PFML law. You must post this poster at your workplace in a location where it can be easily read. (We suggest you place the poster alongside other mandatory workplace posters you’ve displayed, like wage and hours laws, workplace discrimination, worker’s compensation, and workplace safety.)
The poster must be available in English and each language which is the primary language of 5 or more individuals in your workforce if these translations are available from DFML.
Step 2: Determine your 2018 Massachusetts workforce
Determining your 2018 Massachusetts workforce count will help you answer 2 important questions when it comes to your 2019 contribution responsibilities:
- Whether or not your 1099-MISC contractors are considered covered individuals
- Whether or not you’re responsible for paying a share of the contributions
Your contribution responsibilities depend on your average number of covered individuals from the previous calendar year (Jan. 1 – Dec. 31), which is why we’re looking to last year’s MA workforce numbers.
Defining your MA workforce
Your MA workforce is the average number of the following types of workers you employed during the previous calendar year:
- Massachusetts W-2 employees (full-time, part-time, or seasonal). Generally, DFML follows the same eligibility criteria as the unemployment insurance program in Massachusetts. If you are required to report a W-2 employee’s wages to the Department of Unemployment Assistance (DUA), those employees should be counted. These employees don’t need to reside in Massachusetts to be covered.
- Massachusetts 1099-MISC contractors. Generally, an MA 1099-MISC contractor is an individual or sole proprietor who resides and performs services in Massachusetts for whom you are required to report payment for services on IRS Form 1099-MISC. These individuals must be performing services in your trade or business or be regularly engaged to perform services for you.
Counting your MA workforce
- Add up the total number of MA W-2 employees you paid each pay period in 2018 and divide that number by the number of pay periods. This is your 2018 MA W-2 average.
- Add up the total number of MA 1099-MISC contractors you paid for services each pay period in 2018 and divide that number by the number of pay periods. This is your 2018 MA 1099-MISC average.
You’ll use these averages to calculate your number of covered individuals in step 3 below.
Step 3: Calculate your number of covered individuals
You’ll be required to submit contributions for all covered individuals in your workforce. Your MA W-2 employees will always be considered covered individuals, but that’s not always the case for MA 1099-MISC contractors.
Here’s an easy way to calculate whether or not your MA 1099-MISC contractors are considered covered individuals:
- If your 2018 MA 1099-MISC average is less than or equal to your 2018 MA W-2 average, only your MA W-2 employees are considered covered individuals
- If your 2018 MA 1099-MISC average is greater than your 2018 MA W-2 average, your MA W-2 employees and MA 1099-MISC contractors are considered covered individuals
Step 4: Understand your financial responsibility
Now that you know if your MA 1099-MISC contractors are considered covered individuals, you should have a final count of your 2018 covered individuals.
If that number’s less than 25, you won’t be responsible for the employer portion of the medical leave contributions.
No matter how many covered individuals you have, you may deduct part of the required contributions from their earnings. You may also elect to pay a portion (or all) of you covered individuals’ contribution shares.
Our contribution calculator can help provide you with an estimated breakdown of your contribution responsibilities.
Step 5: By Sept. 30, notify your covered individuals in writing of PFML law and benefits
On or before Sept. 30, 2019, you are required to provide written notice to your current covered individuals of PFML:
- Covered individual contribution rates
- Employer contribution rates (if applicable)
- Job protections
- Other provisions as outlined in M.G.L. c. 175M sec. 4
Note: Please use your Federal Employer Identification Number (FEIN) as your Employer ID Number on the “Employer Notice to Employee” and the “Employer Notice to Self-Employed Individual” Forms.
These notices must be written in the covered individual’s primary language. DFML has provided some translated versions.
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.
In the event that an employee or self-employed individual fails to acknowledge receipt, the Department shall consider an employer to have fulfilled its notice obligation if it can establish that it provided to each member of its current workforce notice and the opportunity to acknowledge or decline to acknowledge receipt.
If less than 50% of your workforce includes MA 1099-MISC contractors, you’re not required to inform them of PFML benefits, though it’s encouraged so those contractors are aware they may opt-in.
Step 6: Beginning Oct. 1, make payroll withholdings based on contribution rates
Oct. 1 will mark the beginning of the first quarter of payroll and wage withholdings. These withholdings, and in some cases employer payments, will be remitted to DFML 30 days following the conclusion of each calendar quarter and should begin with the first payment made on or after Oct. 1, 2019. Therefore, the withholdings could be for services rendered in September but paid for in October.
Step 7: By Jan. 31, 2020, complete quarterly filings and submit contributions through MassTaxConnect
You’ll need to complete your quarterly report and submit contributions for the previous calendar quarter (October – December) through MassTaxConnect.