Massachusetts Family and Medical Leave Law Tax Deductions

Tax Deductions under Massachusetts Family and Medical Leave Law become Mandatory on October 1, 2019


This Time, it appears the New Paid Leave Law will go into Effect as Planned.

The three-month delay is about over, and this time it appears the new Massachusetts Family and Medical Leave law will launch with mandatory payroll deductions to begin October 1, 2019. The delay means that, rather than an initial combined contribution rate of .63% of worker pay, employers will have to send up to .75% to the Department of Family and Medical Leave (DFML).

The mandatory employee withholdings begin with the first paycheck to employees and some independent contractors in October. By September 30, 2019, employers need to notify workers regarding the program via forms issued by the Department. They will also need to hang a poster that outlines the basics of the new law. In January 2020, Employers will submit withheld amounts to the Department along with reports on their workforce compositions.

The DFML was created under the new family leave law in 2018 to collect and manage the money needed to pay employees who take sanctioned leaves of absence. Leave eligibility commences in 2021. The Department will take applications and grant or deny leave, as the case may be, for workers who request it. Possible leave periods are 12 weeks/year for childbirth, adoption, foster care placement, or certain emergencies related to military service. Medical leave benefits of up to 20 weeks will be available for workers’ own incapacitating medical condition; they can take up to 12 weeks to care for a family member’s illness. Covered workers may also be eligible for 26 weeks of leave to care for family members injured during military service. There’s a 26-week cap on total annual leave, with pay to be based on earnings and capped at $850 weekly.

All Massachusetts employers of any size must comply with the leave statute. In addition to giving notices and making deductions, employers will be required to determine whether independent contractors are subject to the new law – they are if they make up at least half of an employer’s workforce and live/work in Massachusetts. Companies with 25 or more covered workers need to make their own contributions to the DFML that are roughly equal to the contributions made by their workers. Regardless of company size, payments for covered workers of about half of the .75% rate must be made. Employers may, of course, make those payments on behalf of their workers rather than deducting them, but are not required to do so.

For questions, forms or additional other information, email Jack Merrill (jmerrill@ksrlawfirm.com) or Lloyd Sanders (lsanders@ksrlawfirm.com).