by Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel
June 19, 2019
In a coordinated move so fast it makes your head spin, the Massachusetts governor and legislature have passed the promised bill to delay by 3 months the start of employer and employee contributions to the paid family and medical leave program, to October 1. The bill, MA S 2255, brings about some other modifications to the PFML law as well. What hasn’t changed is the date for commencement of benefits – still January 1, 2021.
In addition, the final Massachusetts PFML regulations have been posted on the Massachusetts Department of Family and Medical Leave (DFML) website here. The regulations are key to fully understanding and administering the Massachusetts PFML law. The DFML received many comments and suggestions for final revisions, and we will be studying the changes made from the 03-29-2019 draft.
In the interest of getting this article about the statutory delays posted timely, we are not including an analysis of the final regulations yet. Watch this blog for another article shortly.
THE CHANGES
Here is the content of the announcement sent by the DFML to Massachusetts employers on June 14, 2019, regarding the delays of prior PFML compliance dates, with Matrix’s observations in italics:
Required Withholding Now Starts October 1
“The start date for required PFML contributions is now October 1, 2019. On that date, employers must begin withholding PFML contributions from employee qualifying earnings. Employers will be responsible for remitting employee and (if applicable) employer contributions for the October 1 to December 31 quarter through MassTaxConnect by January 31, 2020.”
Matrix observations: Remember that (1) employers can elect to cover the employee share of contributions, regardless of whether they choose to use the public plan or a private plan to comply with the law; and (2) employers with a private plan approved by December 20, 2019, don’t have to remit any payments to the DFML. So to say the start date for “required PFML contributions” is now October 1 is a little misleading.
This delay in the start date for contributions may be less of a blessing for some employers than for others, if you have already programmed your payroll system to start the employee paycheck deductions on July 1. Now, any such deductions are not required by the law until October 1 (f at all) and so might be a violation of state or federal wage laws if initiated on July 1. Consult your employment counsel if this is an issue for you.
Contribution Rate Change
“The PFML law requires that the Department adjust the contribution rate to offset the shorter period for collections that will result from the three month delay. As a result, the total contribution rate has been adjusted from 0.63% to 0.75% of employee qualifying earnings. This adjustment will ensure that full funding will be in place for the commencement of benefit payments in January 2021.”
Matrix observations: The amendments do not specify how long this adjusted rate will remain in effect, but the law requires the Department of Family and Medical Leave (DFML) to review and adjust the rate effective each October 1, if needed.
The PFML statute requires the employee to pay 100% of the contribution attributable to family leave and the employee and employer to share the contribution attributable to medical leave on a 40% employee/60% employer split. This has not changed. The DFML advises that the 0.75% will be apportioned as follows:
- 0.13% to family leave, of which the employee pays all; and
- 0.62% to medical leave, of which the employee pays not more than 40%
You can see a graphic illustration of the new contribution rates on the DFML website.
Timeline Extended for Required Employee Notices
“Employers now have until September 30, 2019, to notify all covered individuals of their rights and obligations under PFML. Check the Department website at mass.gov/pfml in the coming days for updated notices to provide to your workforce.”
Matrix observations: What if you have already sent the notices that were previously required by May 31 June 30? The DFML has this guidance on its website:
“If you provided written notices to your workforce prior to the June 14 delay announcement, you will need to provide them with an addendum sheet explaining the updated program dates and contribution rates. This addendum will be provided by DFML during the week of June 17.”
If you haven’t sent the notices yet, just use the new DFML notice forms. You can find the updated notice requirements and templates (and the addendum once available) here.
As an aside, in my communications with the DFML I have confirmed that the poster and the individual notice templates available on the DFML website are examples and can be modified as needed to reflect accurately your own situation, as long as all the notice elements are covered. This will be particularly significant for employers with a private plan or those electing not to withhold contributions from employee paychecks.
Timeline Extended for Exemption Applications
“Employers that offer paid leave benefits that are at least as generous as those required under the PFML law may apply to the Department for an exemption from making contributions. Employers will now have until December 20, 2019, to apply for an exemption that will excuse them from the obligation to remit contributions for the full period commencing with the October 1 start date.”
Matrix observations: The exemption referred to here is obtained adopting an approved private plan – one administered by the employer or a by third party such as Matrix or an insurance company rather than the state. See the end of this post for information about private plan assistance Matrix is ready to provide.
If the private plan application is filed by December 20, 2019 (and ultimately approved by the DFML) the employer can avoid paying employee and employer contributions to the state for the period October 1- December 31, 2019. The advantage is retaining those contributions to fund an employer’s own private plan and payment of benefits. Matrix recommends filing in advance of December 20 to ensure plenty of time for approval. Guidance from the DFML about the private plan exemption can be found on the DFML exemption page.
Note that there is no “deadline” to file an application for private plan approval. The DFML will accept filings on a continuous rolling basis, but a plan won’t be in effect until the first day of the quarter following approval, so the employer will have to pay to the state any employee and employer contributions accruing prior to that date. As a result, there is a financial incentive as described above to get your plan filed by December 20, 2019.
PFML Regulations Will Be Final and Effective on July 1, 2019
“The final regulations will be posted on the Department website at mass.gov/pfml on Monday, June 17, 2019. The regulations will be formally published under the title 458 CMR 2.00 DEPARTMENT OF FAMILY AND MEDICAL LEAVE.”
Matrix observations: And, they’re here! The regulations are key to fully understanding and administering the Massachusetts PFML law. The DFML received many comments and suggestions for final revisions, and we will be studying the changes made from the 03-29-2019 draft. In the interest of getting this article posted timely, we are not including an analysis of the final regulations yet. Watch this blog for another article shortly.
Other Provisions of the Amendments to the PFML Law
In addition to the above changes, the newly-passed amendments address some of the concerns expressed by employers and other stakeholders. The effect is to better align the PFML law with the federal Family and Medical Leave Act:
- Unable to perform: The definition of a serious health condition for which an employee may take medical
leave has been expanded to require that the condition “makes the covered individual unable to perform the
functions of the covered individual’s position.” The amendment further explains: “This provision shall be
construed consistent with the equivalent provision of the federal Family and Medical Leave Act of 1993,
codified at 29 U.S.C. 2612(a)(1)(D).” - Former employees: The amendment also explains: “A covered individual who is a former employee shall
be considered unable to perform the functions of the covered individual’s position if the covered individual
is unable to perform the functions of the covered individual’s most recent position or other suitable
employment as that term is defined under [the PFML law].” - Medical certification: The required contents of a medical certification to support leave are expanded to
include:- A statement by the health care provider that the covered individual is unable to perform the functions
of the covered individual’s position; - A statement of the medical necessity, if any, for intermittent leave or leave on a reduced leave schedule; and
- If applicable, the expected duration of the intermittent leave or reduced leave schedule.
- A statement by the health care provider that the covered individual is unable to perform the functions
Unfortunately, still missing is a requirement to provide an estimate of the frequency and duration of each episode of a condition’s flare-up requiring intermittent leave – an important bit of information to manage intermittent leave effectively.
Similar requirements relating to medical necessity and the duration of intermittent or reduced schedule leave have been added to the certification in support of leave to care for a family member with a serious health condition or covered servicemember.
MATRIX CAN HELP!
In addition to keeping you abreast of developments through these blog posts, Matrix is taking other steps to assist employers interested in the Massachusetts and Washington private plan options. These include developing state-specific sample private plans for use by our clients and a guide for our account managers to assist you with the private plan decision and application process.
If your company is interested in the private plan option for Massachusetts or Washington PFML, contact your Matrix/Reliance Standard account manager or send us a message at [email protected]. And stay tuned here for more PFML information as it develops!