Massachusetts Passes Lightning Bill to Delay Some PFML Dates–AND, the Final Regulations are Here!

Posted on: June 19, 2019 0

By Marti Cardi, Vice President Product Compliance

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.

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 ping@matrixcos.comAnd stay tuned here for more PFML information as it develops!

Massachusetts Announces Likely 3-Month Delay in Collecting PFML Premium Contributions

Posted on: June 12, 2019 0

By Marti Cardi, Vice President Product Compliance

June 12, 2019

 

Vast amounts of uncertainty and unanswered questions surround the Massachusetts Paid Family and Medical Leave program.  The law currently provides that employers participating in the plan administered by the Massachusetts Department of Family and Medical Leave (DFML) must start withholding contributions from employee paychecks as of July 1, 2019.

On June 11, Massachusetts Governor Baker and leaders of the Massachusetts house and senate announced an agreement to postpone the start of PFML contributions for 3 months, until October 1, 2019.  The change must be accomplished via an amendment to the PFML statute but all parties are on board to get this done.   This is welcome news for employers as they will have more time to get payroll arrangements perfected, decide whether to apply for an exemption from state coverage with a private plan, and otherwise implement.

The anticipated amendment to the PFML statute may also include technical changes to clarify program design.  Clarifications are expected to include amendments relating to intermittent leave, the definition of “serious health condition,” and closer alignment of the Massachusetts PFML law with the federal Family and Medical Leave Act.  (See aimblog published by the Associated Industries of Massachusetts, which was instrumental in advocating for the delay.)

In order to maintain the level of funding for the program that would be achieved if contributions commenced July 1, the combined employer/employee contribution of 0.63% of an employee’s wages will be increased to 0.75%, or from $872 to $1038 per year for an employee earning the state average weekly wage.  It is not yet known how long this increase will stay in effect.  At present, the law requires the DFML to adjust the contribution rate annually, depending on various economic factors, starting October 1, 2021, effective the next January 1.

Massachusetts PFML Reminders

Massachusetts employees and other covered workers can start receiving paid leave benefits January 1, 2021.  The law provides for annual paid leave up to 20 weeks due to an employee’s serious health condition, 12 weeks for family leave purposes (bonding, caring for a family member with a serious health condition, and military exigencies), and 26 weeks to care for a family member with a service-related illness or injury.  There is a 26-week cap on total annual leave benefits.

Over time we have published several articles on Massachusetts PFML.  You can take a look back at our overall summary and periodic developments by entering “Massachusetts” in the search box of this page.

Other Massachusetts PFML News

If an employer chooses to comply with the PFML through a private plan, the law requires the employer to either post a bond or provide benefits through an approved insurance company.  The DFML expects to publish an approved bond rom and instructions any day now.  Watch this blog and the DFML website for that development.

Also, the DFML is constantly updating its website with new information, so a periodic check-in just to see what’s new is worthwhile.  Of course, we will report any major developments here.

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 a sample private plan 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 ping@matrixcos.comAnd stay tuned here for more PFML information as it develops!

 

Good News for Massachusetts Employers – A Delay of Pending Deadlines (and a Word on Taxes)

Posted on: May 2, 2019 0

By Marti Cardi, Vice President Product Compliance

May 2, 2019

 

 

That’s right, yet another Massachusetts paid family and medical leave update! Today’s news will be welcomed by Massachusetts employers, especially those considering whether to adopt a private plan rather than use the state program.  Let’s be honest, though – it’s only good news because it backs off from some of the imminent deadlines that were going to be extremely difficult for employers to meet.

Here are the updates, quoted directly (in italics below) from the DFML announcements available on its website. See our comments and analysis below each DFML update.

Exemption Deadline Extended for Quarter 1
The Department’s current guidance requires that exemptions for private plans must be approved in the quarter prior to the quarter in which they will go into effect. For Quarter 1 only [July-September 2019], however, the deadline to file for a private plan exemption that will be in effect for first quarter contributions for paid family and medical leave has been moved from June 30th to September 20th, 2019. This will allow employers additional time to contemplate private plan options. Going forward, the Department will continue to accept applications on a rolling basis but applications must be approved in the quarter prior to the quarter in which they go into effect.

Please note that contributions to PFML begin on July 1, 2019 and the September 20, 2019 extension of the exemption application deadline only impacts the contribution requirements if the exemption request is approved. If the exemption request is denied the impacted business will be responsible for remitting the full contribution amount from July 1, 2019 forward. Therefore, DFML recommends that businesses in the Commonwealth consult with their tax advisors as to the implications associated with applying for a private plan exemption that may or may not be approved.

Employer Notice to Employees
The deadline for employer notice to employees has been extended from May 31 to June 30, 2019. 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.

Please Note: The Department of Family and Medical Leave is continuing to accept comment on draft regulations regarding paid family and medical leave and is planning to host two additional listening sessions in May which will be announced shortly.

What does this mean for employers?

Under the prior rule, if a plan was not approved by June 30, the employer would owe the employer and employee contributions to the Commonwealth for all of the quarter (July-September 2019); and this amount could not be recovered even if a private plan was later approved. Now if your private plan is approved by September 20, 2019, you will not have to pay over the July-September 2019 premium contributions to the Commonwealth but rather can keep those for funding your own private plan benefits payments.

Here is a quick rundown of upcoming dates and obligations:

  • All employers will continue to have reporting obligations for every quarter, including Q1 of the program
    (July-September 2019). The DFML has stated it will issue more reporting guidelines prior to July 1
    so that employers know what data they need to be ready to provide after the close of Q1, probably
    in October 2019.
  • All employers will need to post the required notice for workers in the workplace.  See our prior post
    here for more details
  • Individual notices. All employers will need to send individual notices to every employee and
    contractor and receive an acknowledgement or refusal to acknowledge signed by the worker, but the
    deadline has been moved to June 30, 2019.  More details are available
    here and here.
  • Applications for private plan approval can be filed at any time after April 29, 2019. However, the
    application will need to include a copy of the private plan, a copy of the required bond (see our
    blog post
    here), and if Matrix is applying for your company, a signed authorization for Matrix to
    act on your company’s behalf.

A Word on Taxation Issues

On May 1 the DFML also issued a notice that addresses the taxation question – sort of.  We have received several questions about tax treatment of premiums paid by employees and benefits.  Matrix cannot answer those questions, as we are not tax advisors.  Apparently, the Commonwealth of Massachusetts isn’t either.  Here is their notice:

Tax Information
The tax treatment of PFML contributions for both state and federal purposes is governed by federal tax law. The Commonwealth has requested guidance from the Internal Revenue Service on this question and others related to the tax implications of PFML contributions and benefits. Until IRS guidance is issued, individuals and businesses are urged to consult with their own tax advisors on these questions. Based on its own review of federal rules and following consultation with the Massachusetts Department of Revenue, the Department of Family and Medical Leave anticipates that the IRS will conclude that employee contributions should be withheld from after-tax wages. A definitive rule for proper tax treatment of contributions will be available once IRS guidance is issued.


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 private plan option.  These include developing a sample private plan for use by our clients, and an employer guide to the private plan decision and application process.  If your company is interested in the private plan option for Massachusetts PFML, contact your Matrix/Reliance Standard account manager or send us a message at ping@matrixcos.comAnd stay tuned here for more information about Massachusetts PFML as it develops – we’ll bring it to you daily, if necessary!

 

Massachusetts Announces PFML Private Plan Bond Requirements

Posted on: April 30, 2019 0

By Marti Cardi, Vice President Product Compliance

April 30, 2019

 

It seems like just yesterday (it was!) that we reported on significant new information and resources from the Massachusetts Department of Family and Medical Leave that were released on Friday.  No sooner was our article posted when more news came from DFML:  Details on the private plan bond requirement.

The new information is quoted below in full, and can be found on the DFML website here.

Bond requirements

In addition to the leave benefits explained below, self-insured plans must include the following bond amounts to be eligible for exemptions.

For every 25 employees covered by a business, DFML requires a bond value of:

    • $19,000 for qualifying family leave plans
    • $51,000 for qualifying medical leave plans
    • $70,000 for qualifying plans for both family and medical

Examples

Family leave plans

    • You have 12 employees and you’re applying for an exemption from family leave.
      Your required bond value is $19,000.
    • You have 85 employees and you’re applying for an exemption from family leave.
      Your required bond value is $57,000.

Medical leave plans

    • You have 12 employees and you’re applying for an exemption from medical leave.
      Your required bond value is $51,000.
    • You have 85 employees and you’re applying for an exemption from medical leave.
      Your required bond value is $153,000.

Both family and medical leave plans

    • You have 12 employees and you’re applying for an exemption from both family and
      medical leave. Your required bond value is $70,000.
    • You have 85 employees and you’re applying for an exemption from both family and
      medical leave. Your required bond value is $210,000.

 

If your company is interested in the private plan option for Massachusetts PFML, contact your Matrix/Reliance Standard account manager or send us a message at ping@matrixcos.comAnd stay tuned here for more information about Massachusetts PFML as it develops – we’ll bring it to you daily, if necessary!

Hot Off the Presses: Yet Another MASS-ive Update!

Posted on: April 29, 2019 0

By Marti Cardi, Vice President Product Compliance

April 29, 2019

I had just exhaled after presenting our Massachusetts Paid Family and Medical Leave (PFML) webinars on April 23-24
when the Massachusetts Department of Family and Medical Leave unleashed a barrage of new information, guidance, and resources.  You may have heard my plaintive cry, “Make it stop!”

But it hasn’t stopped and so here we are with more updates for you.  If you
missed our webinars, you can get up to speed from our prior blog post,
which includes a link to our webinar deck.

CLICK ON MR. RADAR TO VIEW APRIL 24, 2019 BLOG

Counting workers for the under-25 exemption from employer premiums

Employers using the public plan to provide PFML benefits and with fewer than 25 Massachusetts covered workers are exempt from
paying the employer share of medical leave premiums to the Commonwealth’s trust fund.  If your workforce is near this number,
it is important to know how to count your workers for this exemption. The draft regulations (section xx.05) direct you to count the number of employees on the payroll “during each pay period and dividing by the number of pay periods” but do not state over what period of time to do this averaging.

New materials released by the Department of Family and Medical Leave (DFML) on Friday now clarify that you consider your number of workers per pay period to get an annual average, based on the prior calendar year for the current calendar year.  And remember, covered workers for this count includes both regular employees and 1099-MISC workers if those contractors constitute more than 50% of your total workforce.

The new posting from the DFML can be found at https://www.mass.gov/info-details/counting-the-covered-individuals-in-your-workforce-under-the-pfml-law.

Private plan exemptions

Also in the new materials released by DFML is an entire page with ancillary materials devoted to the private plan exemption, whereby employers can apply for approval of their own paid medical and/or family leave plan rather than having employee leaves administered by DFML. The new resources include a walk-through of the application process complete with a video demonstration of an online application.  Important points to note:

  • You will need to log on to MassTaxConnect to start the application process. If you don’t already have an account,
    there is a link for registering.
  • After providing basic company and contact information, you will answer a series of yes/no questions.  The
    questions are designed to determine whether your plan is compliant with the PFML requirements.
  • Next is an opportunity to upload any supporting documents.  Interestingly, the tutorial and the online application
    (to the extent I could read it!) does not specifically require a copy of your plan but certainly the plan itself would
    constitute supporting materials.  The application website allows you to upload more than one document so
    if your plan is contained in multiple documents you have the ability to include all. If you are having a TPA
    such as Matrix submit the application for you, a signed statement providing the necessary authority would
    be important to include.
  • After completing your application, you will be notified within 1-2 business days of the status of your plan.  If
    the plan is not approved, you will have a chance to request further review by the DFML.

The new materials can be accessed here:  https://www.mass.gov/info-details/exemptions-from-paid-family-and-medical-leave-for-private-plans

Employer Notices to Employees

With the upcoming employer notice requirements (posters and individual worker notices) came a lot of questions.
To recap:

  • Employers must post a general notice of employee and contractor rights and responsibilities under the PFML
    law in the workplace, meeting certain language requirements.  This posting should be done immediately.
  • Employers must provide individual notices to employees and contract workers in their primary language and
    receive an acknowledgment from each worker by May 31, 2019.  That last part is a new clarification – see
    the discussion below.
  • We provided more detail on these notices in our blog post here, including a link to our webinar deck.

Here’s what we have now learned from the DFML, via a response from the Director to my email questions:

  • The May 31 deadline applies both to giving the notice AND receiving the acknowledgements.  The PFML statute
    doesn’t address employers’ notice obligations to current individual employees, but the DFML has now set the
    May 31 deadline for employers to both provide the notice and receive the acknowledgments (or refusals) from
    existing employees.  This is 30 days in advance of when withholding from worker paychecks will begin on
    July 1 (if the employer is not covering the employee share of PFML premium contributions).
  • That acknowledgement form and the odd refusal to acknowledge. The statute requires employers to provide
    individual notices and an opportunity for workers to either acknowledge receipt of the notice or decline
    to acknowledge receipt in writing.  The DFML does not plan to provide a form for use if the employee refuses
    to acknowledge receipt of the notice.   Here is what came out of my brain to fill this requirement.
    (Note this is my best guess and I cannot promise whether the DFML would find it sufficient):


EMPLOYEE STATEMENT DECLINING TO ACKNOWLEDGE RECEIPT OF NOTICE
I decline to acknowledge receipt of the Employer Notice to Employee relating to my Rights and
Obligations under the Massachusetts Paid Family and Medical Leave Law, M.G.L. c.175M.
I understand my employer will retain a copy of this statement.

__________________________________________________________________________________________

Signature

__________________________________________________________________________________________

Print Name

__________________________________________________________________________________________

Date


  • Evidence of Employer Compliance.  The DFML declined to provide any guidance regarding what will constitute
    sufficient evidence that you provided the correct notice and opportunity to acknowledge or decline if the
    employee refuses to do either.  My suggestion is to use a reasonable means that is designed to get actual
    notice to each employee individually.   Consider:

    • Regular mail to the employee’s current home address with a log to substantiate the mailings (as we know,
      recipients often refuse to accept certified delivery)
    • Electronic delivery to the employee’s known functioning email with a means to produce a copy of the email
      sent (again, employees may decline to provide a read receipt)
    • Hand delivery to the employee by someone who keeps a log of date, time, and other facts of each delivery

Don’t just leave a stack of the forms in the lunchroom or tell all employees generally to check it out on your intranet.

  • Individual notice in employee’s primary language.  The DFML says this is a requirement even if it has not yet
    provided a translation in the language you need for an employee.  At the time of our webinars, the notices to
    W-2 employees and 1099-MISC workers were available in 5 languages plus English.  However, as of Friday the
    notices are now available in 13 languages on the DFML website here.
  • Compliance with posting notification for teleworkers.  There is no provision in the PFML statute for electronic
    “posting” as there is for electronic individual notices.  I asked the DFML, could the employer put the poster on its
    intranet accessible to employees, or email it to remote workers?  The DFML agreed these are reasonable
    options. Consistency with your process for other electronic employee notifications would be a good thing as
    long as it is an effective means of giving notice.
  • Changing your decision whether to withhold employee premium contributions from paychecks.  If an
    employer states on the notice form that it will not withhold contributions from employee paychecks, the
    DFML says the employer can change this decision later.  But, plan to provide a new individual notice to
    employees and contractors, including obtaining those acknowledgements or refusals.  Thirty days’ advance
    notice of the change sounds like a good plan to me, although nothing in the law requires that.  And the
    same applies if you initially withhold employee contributions and then decide you will no longer do so.

Matrix is on it!  Stay tuned to this blog for all the news on Massachusetts paid family and medical leave developments other in other states. And when time permits, we’ll cover some non-PFML issues, too!