To make up for the lost quarter of contributions due to the three-month delay in the contribution start date, the Department increased the contribution rate from 0.63% to 0.75% on all wages up to the Social Security maximum (for 2019, $132,900). The new contribution rate, which will be adjusted annually, is divided as 0.13% for family leave and 0.62% for medical leave. Assuming the employer will seek the maximum payroll contribution from its employees, the employer share of the medical leave will be 0.372% and the employee share will be 0.248%. Employers may charge employees up to 100% of the 0.13% allocated to the family leave contribution.
Updated Employee Notices
The Department also updated its website with additional guidance in response to the amendment and issued the following new notices for distribution:
Workplace Poster: The newly updated workplace poster (available here) must be posted in English and any other language that is the primary language of five or more employees.
Written Notice: By September 30, 2019, all Massachusetts employers must distribute written notice that includes updated contribution amounts and effective dates. The Department has issued two separate notices (available here) depending on the size of the employer’s workforce.
Updated Rate Sheet: The Department has issued 2019 Updated Rate Sheets, reflecting the increased contribution rate. There are two rate sheets (available here), depending on the size of the employer’s workforce. Employers that have distributed written notices prior to June 14, 2019 are not required to distribute new PFML notices. Additionally, employers are not required to collect acknowledgments of receipt of the Updated Rate Sheets from the covered workers.
Within days of the three-month extension to the PFML, the Department also released the much-anticipated final regulations for the PFML. The final version of the regulations provides additional clarity where gaps previously existed. Among the most helpful and significant changes are:
Potential for Employer Refund
Employers will be eligible for a refund of any contributions paid by or on behalf of an employee, covered contract worker, or self-employed individual, if the contribution remitted was greater than that required by statute. The process for requesting and receiving the refund has not yet been released.
Deduction Percentage Can Vary
The final regulations allow employers to deduct different percentages from the wages of different categories of covered individuals, provided employers do not deduct more than the maximum percentages authorized by statute (that is, 40% of the required medical leave contribution and 100% of the required family leave contribution) from any covered individual. For example, employers may deduct a different percentage of the family leave or medical leave contribution from exempt employees than it deducts from non-exempt employees. Similarly, employers with a unionized workforce may deduct different percentages from their unionized and non-unionized workforce (up to the maximum permitted contribution amount).
The regulations permit employers to specify a minimum time period for PFML-approved intermittent leave, provided the minimum period does not exceed four consecutive hours. The final regulations also clarify that the initial seven-day waiting period for intermittent leave or reduced schedule leave is seven consecutive calendar days, not the aggregate accumulation of seven days of intermittent leave.
Penalty Waiver for Good Cause
The final regulations authorize the Department to waive any penalty for an employer’s or covered business entity’s failure to comply with the statute, if the entity can show good cause for noncompliance.
Private Plan Exemption
The regulations specify that an employer receiving a private plan exemption approval from the Department must implement that plan no sooner than the start of the quarter immediately following the date of approval. In addition, an employer may apply for a private plan only once a quarter. If the Department rejects the plan, the employer may request a supplemental review of the same plan. Companies can seek a private plan exemption through a fully insured or self-insured plan. Companies seeking a private plan exemption through a self-insured private plan must satisfy the bond requirement using a surety company authorized to transact business in Massachusetts.
Given the Department’s right to audit companies granted a private plan exemption, employers and covered business entities with approved private plans must retain all “reports, information, and records” concerning the approved private plan for three years.
Employers and covered business entities must maintain or renew a private plan approved by the Department for the future payment of leave benefits scheduled to begin on January 1, 2021. Non-compliant employers will be required to make retroactive contributions to the state PFML Trust Fund. The regulations further specify that benefits under the approved private plan must be maintained until the effective date of the termination of the private plan or non-renewal of the plan. An employer or covered business entity must notify its workforce and the Department within 30 calendar days of the date of termination of the approved plan if it does not intend to renew the private plan.
An employee covered by an approved private plan exemption and denied leave, can appeal that decision to the Department. Employees must provide simultaneous notice to the employer when filing the appeal with the Department.
Medical Certification and Claim for Benefits
The final regulations provide that an application for benefits must include a medical certification specifying the leave is for a qualifying reason. Significantly, if the Department determines that a medical certification is inaccurate, not authentic or otherwise lacking in specificity, the Department may contact the health care provider directly and request that it verify, supplement or adjust the information in the certification.
The final regulations also explain that if a worker is approved for state benefits, but chooses to use employer-provided vacation, sick, or other paid time off instead, the worker will not receive PFML benefits for any period paid under the employer’s policy.
Quarterly Report and 1099-MISC contractors
The final regulations clarify that quarterly reports need not include the earnings of 1099-MISC contract workers unless the contract worker has elected coverage under the public PFML program, or if the employer is a covered business entity (i.e., more than 50% of the employer’s Massachusetts workforce is comprised of 1099-MISC contract workers).
Exception to Job Protection
The PFML requires employers to return employees who return from leave to either their prior position or to an equivalent position with the same status, pay, benefits and seniority, except in instances where economic conditions have forced the employer to restructure its operations. The final regulations provide an exception for employees who are hired for a specific term or only to perform work on a discrete project. If the term or project ends during the employee’s leave of absence, the employer does not need to reinstate the employee after leave.