Deduction Requirements under the new Massachusetts Family and Medical Leave Law are Set to Begin July 1

A delay in implementing the new Massachusetts Family and Medical Leave Law appears unlikely now, and the first major step in that process is set to start on July 1. That’s the date when virtually all employers in the Commonwealth must start making deductions from employee paychecks to fund the new paid leave programs. For employers with more than 25 workers, it’s also the day to start setting aside funding contributions of their own.

Under the statute passed last year, all employees in Massachusetts will be entitled to paid leave to care for newborns or adopted children; address their own serious health conditions or those of immediate family members; or address certain needs of family members who serve in the military. The maximum period of leave will be from 12 to 20 weeks per year with a cap of 26 weeks for the combined programs, but employees cannot begin to take it until 2021. For now, there a number of things employers need to know.

  1. The July 1, 2019 pay deduction rate is .63% of qualified employee earnings. This includes both employee and employer contributions, which will be split roughly evenly for larger employers.
  2. The .63% contribution is broken down as follows: .52% for medical benefits and .11% for family leave benefits. Employees cannot be required to contribute more than 40% of the medical benefits deduction, however. Employers with 25 employees pay the other 60%.
  3. Employers with fewer than 25 employees do not need to make any contribution to the program. They still must, however, collect and pay employee contributions. They can voluntarily take on all or part of the mandatory employee contributory amounts.
  4. There is no meaningful exclusion to the contribution requirement. Employers with as few as 1 worker must participate. Under some conditions, contributions for 1099 workers are also required. Information about 1099 workers must always be reported.
  5. The collected funds will be paid quarterly to the newly created Department of Family and Medical Leave (DFML), which will administer leave programs. Between now and 2021, the DFML hopes to collect enough money through contributions to fund the program. It will adjust contributions as needed. The first round of contributions is due by October 31, 2019.
  6. Employers must also report information about their employees, including names, social numbers, and wage information, each quarter.
  7. Only workers within the Commonwealth must participate. Employers with workers outside Massachusetts are not required to make contributions for them, and they will not, of course, be eligible for benefits.
  8. Written notice to workers is mandatory and was due June 1. The DFML has issued a form of notice for employees and independent contractors. It provides a program overview and requires an acknowledging signature from each worker.