On January 23, the Department of Family and Medical Leave (“Department”) issued draft regulations expanding upon the Paid Family Medical Leave Act (“Act”), G. L. c. 175M, which was enacted last June. As we previously reported, the Act provides that nearly all employees will be eligible for up to 20 weeks of paid medical leave and 12 weeks of paid family leave per year starting in 2021. The benefits will be paid from a trust funded by both employers and employees. Employers must begin making contributions to the trust on July 1.
The draft regulations include many requirements of the Act. Some key additions and clarifications are:
Contribution Rate. The initial contribution rate will be 0.63% of all wages or other qualifying payments. Although not in the draft regulations, the Department recently clarified the allocation of this amount between medical and family leave on its website: 0.52% to medical leave and 0.11% to family leave.
Duty to Report. Employers must file quarterly earnings reports. Based on these reports, the Department will calculate the total quarterly contribution owed, which must be paid within 30 days.
Duty to Register. Employers that do not already have an account with the Department of Revenue’s MassTax Connect system must register for one. Employers will submit reports and pay contributions through this system.
Duty to Inform. After benefits are approved by the Department, employers, as well as employees, have an obligation to inform the Department if there is a “change in relevant circumstances” that might justify a change in benefits. That term is not defined.
Duty to Respond. Employers must respond to requests from the Department for information or records relevant to a claim for benefits within five calendar days.
Penalty for Failure to Contribute. Employers who fail to contribute shall be fined up to 0.63% of their total annual payroll, plus the total amount of benefits paid to individuals for whom they failed to contribute.
The Department will hold a series of listening sessions on the draft regulations over the next month throughout the state. The Department expects to publish a final draft for formal public comment by March 29 and announce the regulations by July 1.
The draft regulations follow the launch of the newly-created Department’s website, which provides further guidance on the rollout of paid family and medical leave in Massachusetts.
Employers should be aware of all of their obligations under the Act, including non-retaliation and notice, as discussed in our prior posts on this topic. Note also that many obligations in the draft regulations and Act are shared by: (1) self-employed individuals who contribute to the program to become eligible for benefits; and (2) certain “covered business entities” that contract with self-employed individuals.
Employers with questions about the Act and how they should proceed to ensure they will be in compliance throughout its phased implementation should contact an attorney.