Massachusetts Paid Family and Medical Leave: The Final Regulations and Related Tax Considerations

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From Morgan LewisDouglas T. Schwarz, Sean D. Callaghan and Mary B. Hevener provide an update on the final regulations for Massachusetts Paid Family and Medical Leave. Handy helped the company where I worked a number of years ago and was outstanding. They write:

The Massachusetts Department of Family and Medical Leave (the Department) published its much-anticipated final regulations on June 18. Employers should be aware of some material changes in the final regulations although the framework of the draft regulations remains intact.

KEY DEFINITION CHANGES – EMPLOYEE EXEMPTIONS, CHILDREN, AND INTERMITTENT LEAVE

Perhaps most notably, the final regulations adopted the definition of “employment” as used in the Massachusetts unemployment laws. As a result, 24 categories of employees are now exempt from the Massachusetts Paid Family and Medical Leave (“MPFML”). Of those 24 categories, among the most notable are: (1) 100% commission-based real estate brokers/salespeople and insurance agents/solicitors classified as W-2 employees; (2) students who perform work for a school, college, or university; (3) employees of churches or organizations operated primarily for religious purposes; and (4) student nurses working for a hospital or a nurses’ training school or interns working in a hospital, following a four-year course in a medical school.

The final regulations also modified the definitions of “child” and “intermittent leave.” As a result, under MPFML a covered individual may now take leave to care for an adult child. In addition, an employer may require that employees take intermittent leave in increments no smaller than a minimum amount designated by the employer (up to four consecutive hours).

FOREIGN VISA EMPLOYEES

The Department recently announced that employees working in the United States under foreign work visas (e.g., H-1B, H-2B, O-1, O-2, etc.) are covered by MPFML, and are subject to employee contributions if they otherwise qualify as a “covered individual.”

UPDATES TO THE NOTICE REQUIREMENT

As we noted in our most recent LawFlash, Three-Month Delay in Massachusetts Paid Family and Medical Leave Program Notifications, Deductions and Contributions, the Department delayed the written notice requirements to September 30, 2019. But, the Department did not similarly delay the requirement to display its poster notifying employees of MPFML. The July 1, 2019, notice deadline remains in effect for the poster requirement, and employers should immediately display this poster with other employment and labor law notices.

CONTRIBUTIONS

Employer deductions need not be uniform across the workforce. Employers may choose to deduct differing percentages from different groups of employees and covered individuals for medical leave contributions. However, employers may not deduct from wages or qualifying earnings more than 40% for medical leave contributions.

In a reversal of its earlier position, the Department recently announced that wage deductions apply to all wages beginning October 1, 2019, irrespective of when the employee performed the related services. Now, wages for services performed before October 1, 2019, but paid on or after October 1, 2019, are subject to withholdings. The Department previously communicated that only those wages for services performed on or after October 1, 2019 were subject to deductions.

JOB PROTECTION

While the final regulations maintain the generous protections afforded to covered individuals for job protection and anti-retaliation, the final regulations modified the job protection provision to make clear that an individual hired for a specific term or to work on a specific project is not entitled to the same rights to restoration if the employment term or project has concluded.

PENALTIES

Under the final regulations, the Department has given itself flexibility to waive or modify any penalty or assessment imposed as a result of an employer or covered business entity’s failure or refusal to remit contributions upon a showing of good cause.

Read the full update at  Massachusetts Paid Family and Medical Leave: The Final Regulations and Related Tax Considerations

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