Mass. DFML on Contractors “25 Covered Individuals” Threshold

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From The National Law Review, Nancy L. Gunzenhauser Popper and Anastasia A. Regne discuss when independent contractors are included under Massachusetts Paid Family and Medical Leave Act. Nancy and Anastasia write:

The Massachusetts Department of Family and Medical Leave (“DFML”) has been providing on-going substantive and procedural regulations and guidance to effectuate the state’s Paid Family and Medical Leave program (“PFML”), which applies to employers with 25 or more “covered individuals” in the employer’s workforce. Most recently, the DFML issued further guidance (“Guidance”), to clarify when an employer should include 1099-MISC contractors and certain visa holders in their workforce count.

How to Determine if You Meet the 25-Covered Individual Threshold for Reporting

Identifying When a 1099-MISC Contractor Is a ‘Covered Individual’

The PFML requires Massachusetts employers to report their total workforce count to the DFML, but only employers with 25 or more “covered individuals” need to withhold and remit contributions to the PFML program.

The Guidance clarifies that, under the PFML program, an individual who meets the three-part criteria for being an independent contractor is not a covered individual. Further, even if a worker does not meet the State’s criteria for being an independent contractor because, for example the individual performs work in the usual course of the employer’s business, the person still should not be counted as a “covered individual” unless they: (i) perform services as an individual entity; (ii) live in Massachusetts; and (iii) perform services in Massachusetts. Notably, the DFML’s Guidance confirms that an employer is required to contribute on behalf of or to report on 1099-MISC workers only when such workers comprise more than 50 percent of the employer’s Massachusetts workforce.

Employers should anticipate that the DFML may continue to revise the rules for determining whether and how employers should count their 1099-MISC workers as part of their workforce total. We understand, for example, that additional guidance will be forthcoming, including how long a worker must have been employed each quarter to count as a covered individual. At this time, we conservatively suggest employers count any 1099-MISC Massachusetts-based workers as covered individuals for the purposes of calculating whether they meet the 25-covered individual threshold, as well as for withholding and remitting PFML contributions from such individuals.

Read the full story at Mass. DFML on Contractors “25 Covered Individuals” Threshold

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