Being a small business owner can be extremely rewarding – it can also be extremely onerous dealing with the many laws, regulations and compliance issues that are sure to present themselves. Some you have to do once a year, once a quarter, once a month, weekly or at times even daily. Some you can outsource and simply monitor, some you can delegate to employees, and some fall only on your shoulders.
So what’s one more to deal with?
Enter the new “Paid Family and Medical Leave Act” as enacted into law by our lovely Commonwealth of Massachusetts. This goes into effect June 30, 2019 (from a compliance standpoint) and benefits will be available to those covered beginning January 1, 2021 (for most covered reasons) and on July 1, 2021 (for all covered reasons). Did I mention that our lovely Commonwealth created a brand new Department to administer this new law? This new law, while talked about for a while, came into force pretty quickly. The draft regulations were released at the end of January 2019 and were made available for public comment at the end of March 2019 and just a few weeks later we are going full speed ahead.
- So who does this apply to: every business in the commonwealth which has a “workforce”.
- So what is a “workforce”: a MASS W2 employee, and very possibly a MASS 1099-Misc contractor (if they make up over 50% of your total workforce (MA employees + MA contractors) by count, not by dollar amount).
So essentially every business and every individual as even self-employed’s can opt in.
Executive Summary
If your workforce count is 25 or greater, as an employer you have to contribute a portion of the new tax, if your workforce count is less than 25 then as an employer you still have to collect and remit the employees (and 1099s if applicable) share, but you don’t have to contribute. The rate is 0.63% of the gross wages or other payments to all covered individuals in your workforce – this caps at the social security wage base limit, currently $132,900 – this will be remitted through the Department of Revenue’s MassTaxConnect.
In addition to the payment and funding portion – there is also “Job Protection” – which, generally, an employee who has taken paid family or medical leave must be restored to the employee’s previous position or to an equal position, with the same status, pay, employment benefits, length-of-service credit, and seniority as f the date of leave. Kind of a big deal.
Types of leave that start January 21, 2021
- Covered individuals may be entitled to up to 20 weeks of paid medical leave in a benefit year they have a serous heal condition that incapacitates them from work.
- Covered individuals may be entitled to up to 12 weeks of paid family leave in a benefit year related to the birth, adoption, or foster care placement of a child.
- Covered individuals may be entitled to up to 26 weeks of paid family leave in a benefit year to care for a family member who is a covered service member with a serious health condition.
Type of leave that starts July 1, 2021
- Covered individuals may be entitled to up to 12 weeks of paid family leave in a benefit year to care for a family member with a serious health condition.
Here is a quick timeline:
June 30, 2019 – you must have notified all covered individuals, and received signed acknowledgement, of the new PFML law.
July 1, 2019 – payroll deductions for Q1 2019 begin unless PFML exemption has been approved.
October 31, 2019 -you remit PFML contributions for Q1 2019.
January 1, 2021 – benefits begin to become available.
July 1, 2021 – all covered individuals may take paid leave for all covered reasons.
For our business clients, we are hosting an information session for employers on May 29th at Cummaquid Golf Club at 9:30am.
Nice view, I’m buying breakfast, and you get knowledge to keep yourself out of hot water – not a bad deal!
We felt that this was an important issue and that our clients should be informed and armed with the information necessary to effectively carry out this mandate – particularly because it is not something that we will be readily able to fix at the end of the year.
If you’re interested in attending please let Jennifer know at frontdesk@spmandco.com or 508.775.0518
Good luck and God speed!
Here are some resources: