Massachusetts Paid Family Medical Leave (PFML) begins October 1st

September 20, 2019
Massachusetts Paid Family Medical Leave (PFML) begins October 1st

This message is being sent to all of our corporate clients (C and S corporations, partnerships and multi-member LLCs) as well as those who operate Schedule C businesses either as single member LLCs or sole proprietorships.  We wanted to make sure you are aware that the Massachusetts Paid Family and Medical Leave (PFML) program will take effect on October 1, 2019.  If your business is registered with MassTax Connect, you should have received email notications already.

The link to the PFML website is included below.  We suggest you visit this website for in depth information regarding benefits and employer obligations.

https://www.mass.gov/orgs/department-of-family-and-medical-leave

Beginning on January 1, 2021, covered individuals may be entitled to certain paid medical or family leave benefits.  Beginning October 1, 2019, MA employers will be required to deduct payroll contributions from a covered individual's wages or other earnings to fund PFML benefits.  While we are not experts in this area, we wanted to make our clients aware of their obligations to:

1. Notify all covered individuals of the PFML law by September 30, 2019.
2. Begin payroll deductions for MA W-2 employees on October 1, 2019.
3. Remit PFML contributions for covered individuals for Q4 2019 (this includes MA W-2 employees and, in certain instances, individual Form 1099-MISC contractors performing work in MA) by January 31, 2020.

For your reference, we've inlcuded links to the following documents that are available on the PFML website:

• PFML Employer Contribution Fact Sheet
• PFML Workplace Poster
• Editable PFML Employer Notice < 25 covered workers
• Editable PFML Employer Notice 25+ covered workers 

Whether an employer is required to contribute to the PFML depends upon the number of covered workers.  If the employer has less than 25 covered workers, the employer is NOT required to contribute.  Rather, the covered worker is responsible for paying 100% either via payroll withholdings or via reductions in 1099-MISC payments.  If the employer has greater than 25 covered workers, the employer is required to pay 60% of the medical leave contribution component.

We believe the payroll service providers are ready to implement the new PFML withholding tax effective October 1, 2019.  We also believe that if you are an employer with less than 25 covered workers, the payroll service provider will assume the employer is NOT going to voluntarily cover any portion of the PFML contribution.  If you as an employer wish to cover a portion of the PFML contribution, you should contact your payroll service provider now to inform them of the company's desired contribution rates.  You should also notify your employees via the editable notice link above.

While the applicability of the PFML to MA W-2 employees is rather straight forward; that is not the case for MA individual 1099-MISC independent contractors.  If you pay 1099-MISC contractors in your business, we suggest that you review the section on the PFML website entitled 'Counting MA 1099-MISC contractors as covered individuals'.  While the Commonwealth has indicated additional guidance is forthcoming in this area, to our knowlege none has yet been issued.  Questions in this area should be directed to the Massachusetts Department of Family and Medical Leave.

The Team at Sechrest & Bloom, LLC