Massachusetts Paid Family Medical Leave What Nonprofits Need
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Massachusetts Paid Family Medical Leave: What Nonprofits Need to Know and Should Be Doing Now June 19 th Webinar Presented by Insource Services Thanks for joining us! A few instructions before we begin: • You may join the audio by selecting the radio button for either “Telephone” or “Mic & Speakers. ” If you are using telephone, please dial in with the conference line and audio pin provided. • If you are having any technical issues, please let us know in the chat box. • We will have time for Q&A. Please enter your questions in the chat box at any time. • This webinar is being recorded, and we will distribute the recording after the webinar. Jenny Yuan Operation and Membership Coordinator www. massnonprofitnet. org
June 19, 2019 Massachusetts Paid Family Medical Leave: What You Need to Know and Should Be Doing Now Saleha Walsh, Vice President Insource Services, Inc. Elizabeth Adler, Partner Beacon Law Group, LLC Copyright © 2019 Insource Services, Inc. and Beacon Law Group All Rights Reserved.
Contact Information Saleha Walsh, Vice President Insource Services, Inc. [email protected] com 781 -374 -5103 Elizabeth Adler, Partner Beacon Law Group, LLC [email protected] com 617 -235 -8600
About Us: Insource Services, Inc. At Insource, we believe that HR, Finance & IT start with people
About Us: Beacon Law Group Presented by: Elizabeth Adler Partner, Beacon Law Group, LLC Boston, MA & Needham, MA Employment Law, General Business Law & Litigation
About Us: Insource Services, Inc. What We Do: • Full department outsourcing - generally part-time and long-term • “A la carte” services • Assessments • Trainings • Project/interim assignments How We Do It: • Seek to understand client businesses and mission • Experienced, expert senior account leaders • Account team with multiple skill levels; work is performed at the most costeffective level • Approximately 75 employees
Summary • Leave overview • Benefit highlights • Covered employers/business and eligible workers • Contributions • Transmitting requirements • Penalties • Private plan exemptions • What you should be doing now and going forward
Overview • Signed into law in June of 2018 by Governor Charlie Baker • Requires employers in MA to provide paid medical and family leave to employees who work in MA – through state program or self (or private) insurance • Paid state benefits go into effect in January and July of 2021 • Proposed regulations are not final – there will likely be provision clarifications (1099 contributions, etc. ) • Administered by the state – Department of Family and Medical Leave (DFML) – “unemployment like”
Benefit Highlights Family Leave: • To bond with the covered individual’s child during their first 12 months (birth, adoption, foster care placement) • To care for a family member with a serious health condition – effective 7/21 • In the event of a qualifying military call to duty • To care for a family member who is an injured service member NOTE – Broader definitions of family than federal unpaid family medical leave (FMLA) – also includes domestic partners, siblings, “in loco parentis” to employee, grandparents/child Medical Leave: • Due to employee’s own serious health condition
Benefit Highlights Continued Leave periods – annually – can be intermittent Medical (employee’s own condition) Family leave (bonding with child, family member with a serious health condition, military exigency) Family leave (injured service member) Maximum combined Family/Medical leave 20 weeks/year 12 weeks 26 weeks Note – benefit year is measured forward 52 weeks from the Sunday preceding the first day of the employee’s covered leave 7 day waiting period – exception for transition from childbirth to bonding
Benefit Highlights Continued Paid benefits: • 80% of the employee’s wages up to 50% of the state average weekly wage • Plus, any portion of the employee’s wages in excess of 50% of the state average weekly wage will be paid at 50% • Benefits for first year of program capped at $850/week • Current state average wage is $1, 383. 41/week - $71, 937. 32/year – adjusted annually
Benefit Highlights Continued Protections for the employee: • Continuous health insurance – employee pays their share • Upon return, no impact on vacation accrual, sick leave, bonuses, advancement, seniority, length of service, etc. • Job protection (certain restrictions), anti-retaliation, anti-discrimination • Time on leave need not be considered credited service for accruals (can stop accruals during leave) • Employer presumption of guilt for 6 month period following leave • Employer cannot require use of accrued time during leave UNLESS concurrent FMLA then can – “top offs” allowed
Covered Employers/Businesses and Eligible Workers Covered employers: • All employers with at least one MA worker – a person who performs work in MA • State or federal employees (not city, town or local municipalities unless opt in) Covered “employees”: • Individuals who meet the financial eligibility test – FT, PT, seasonal employees • Same as unemployment earnings requirement – 15 weeks or more of earnings and have earned at least $4, 700 (minimum base wage – adjusts) in the 12 month period before application for leave. Earned 30 x the weekly unemployment benefit they would be eligible for. • Certain former employees – if eligible when they left employment and within 26 weeks of termination • 1099 eligible independent contractors can opt in or may be covered workers if they work for a “covered business entity” • NOT temporary employees
Contributions • Due 1/31/20 (for October – December 2019) and thereafter quarterly • Payable through Mass. Tax. Connect – transmittal procedures vary by vendor • . 75% of an employee’s wages - 82. 5% for medical leave, 17. 5% toward family leave • Family leave employee funded (optional employer funding allowed) • Medical leave 40% employee funded, 60% employer funded (again, optionally employer can pay whatever it chooses) • (We recommend employer go with state provided contribution splits) • Rates apply to the first $132, 900 of wages
Checklist Examples Contribution Example – based on. 75% • Employee earning $72, 000 • $540 annual amount - $445. 50/medical leave, $94. 50/family leave • Per regulations, employee pays $94. 50 for family leave (100%) and $178. 20 toward medical leave (40%) annually • Employer pays $267. 30 toward medical leave (60%) annually
Transmitting Requirements Checklist Examples • All employers and “covered business entities” are required to submit contributions – employer and employee paid • “Covered business entities” are those where 1099 workers making up 50% or more of their workforce - the contractors are covered workers in the plan (involves an averaging approach) • If a company’s workforce is less than 50% 1099 workers, the company does not need to contribute or transmit for 1099 workers • Contribution requirements: • Fewer than 25 covered workers (PT, FT, seasonal) - submit employee deduction only, not required to pay an employer share – if a “covered entity” – count 1099’s. • Employers with 25 or more workers – must submit employer contributions and transmit the employee contribution through Mass. Tax. Connect - if a “covered entity” – count 1099’s.
Checklist Examples Calculating the Number of Workers • Count total number of employees per pay period in prior calendar year and divide by total pay periods • Count total number of 1099 s per pay period in prior calendar year and divide by total pay periods • Add the above two numbers (averages) to arrive at the total workforce average. If the 1099 average is more than 50% of the total workforce average, you are a “covered business entity. ”
Penalties Failure on Disclosures: • First violation - $50 per covered individual • Each subsequent violation - $300 per covered individual Failure to transmit fees: • . 75% of payroll for each year it failed to contribute • Repay the trust fund the total value of benefits paid out to their covered individuals Actions by employees: • Three year statute of limitations • Triple damages for lost wages or benefits • Attorney fees
Private Plan Exemptions • Medical and family contribution exemptions are available separately • Most experts are not recommending them at this point due to the complexity of process and uncertainty of insurance product market options • 30 claims have been submitted as of last month, 10 have been accepted, large groups paying full time off benefits for up to 26 weeks with all protections • Must offer at least the same level of benefits for cost equal to or less than the state benefit to workers and former workers • Annual application and approval process is rigorous • Plans must be bonded based on size of workforce
Important Dates 4/29/19 File private plan exemption applications on rolling basis 9/30/19 Employers must display poster and provide notice to “employees” of PFML benefits, contribution rates AND collect acknowledgements. Acknowledgements can be collected electronically or on forms, delivery or read requests do not count as acknowledgements – better than nothing 7/1/19 Final regulations issued 10/1/19 Employers begins to make employee withholdings – responsible for employer contributions 1/31/20 Contributions due for October – December 2019 and quarterly thereafter 1/1/21 Paid medical and most family leave becomes available 7/1/21 Paid family leave for family members with a serious health condition becomes available
What You Should Be Doing Now • Calculating workforce size • Determining if you are a “covered entity” – 50% or more 1099’s • Figuring out if you are required to pay the employer contribution based on your number of workers (over/under 25 employees) • Fulfilling disclosure requirements – poster, notices to employees, to contractors if a “covered entity” • Collecting acknowledgements or at a minimum, proof of delivery (which may not be enough) • Calculating and setting up employee deductions (post tax) effective 10/1/19
What You Should Be Doing Now Continued • Establishing a system for tracking number of employees and 1099’s each calendar year to complete quarterly wage detail reports through Mass. Tax. Connect – ALL employers will need to report 1099’s even if they are not responsible for contributing or transmitting for them • Adding disclosure notice to new hire processes – required to provide within 30 days of hire • Watching how the payroll providers will respond to assist with contribution transmittals – Paychex and ADP have said they’ll transmit employee deductions, what about the 1099 deductions?
What You Need To Do Over The Next Year • Educate yourself on the coordination of benefits, notice requirements, eligibility and administrative differences between MA Parental leave, FMLA, company leave policies, private disability plans, MA Sick Leave law and MA Paid Medical and Family leave • Watch for emerging and evolving supplemental insurance products to take the place of traditional STD and LTD products • Adapt your leave policies to incorporate and weave together the provisions of state and federally provided leaves with company provided leaves and insurance products • Track deadlines and file quarterly wage detail reports • Transmit employer and employee contributions to the MA PMFL fund • Watch for guidance on the treatment of 1099 contractors who have not voluntarily opted into the program but for whom you must transmit or contribute
Contact Information Saleha Walsh, Vice President Insource Services, Inc. [email protected] com 781 -374 -5103 Elizabeth Adler, Partner Beacon Law Group, LLC [email protected] com 617 -235 -8600 Danielle Fleury, Director of Government Affairs Massachusetts Nonprofit Network [email protected] org 617 -391 -9175
The information contained herein and in the related webinar is designed to provide a helpful overview of a relevant topic; it does not set forth every facet of the law. It does not constitute legal advice nor should it be construed as such. Please do not take action based on the above information without seeking formal legal advice.