First PFML deadlines are approaching--are you ready?

—For the past year, we've been helping Massachusetts employers prepare for the upcoming "Grand Bargain" legislation, which, among other things, mandates paid family and medical leave (PFML) for employees. Although employees will not be entitled to receive PFML benefits until January 1, 2021, covered employers must start making wage deductions on July 1, 2019, to fund contributions to the Massachusetts Department of Family and Medical Leave (DFML), which will be due with your October 2019 quarterly tax payments. You must also meet certain notice requirements under the PFML law and, if you haven't already, consider whether you want to opt out and institute a private plan. The DFML recently announced several important changes to upcoming deadlines and provided additional information about the PFML law, which goes into effect July 1.

Deadline for employee notice extended to June 30

In addition to collecting and making contributions to fund PFML, employers must provide notice of the law to employees by June 30, 2019. Two separate notice forms are required:

  1. The PFML mandatory workplace poster, which provides general notice of the benefits available under the law; and
  2. A written notice distributed to each employee.

The mandatory workplace poster must be available in English and each language that is primarily spoken by at least five people in your workforce if the DFML has published a translation of the notice in that language.

The written notice must include information on PFML benefits, contribution rates, and how to apply for benefits. It must also include your company's name and mailing address, your federal employer identification number, and the DFML's mailing address, e-mail address, and telephone number. If more than 50 percent of your workers are independent contractors, you must also provide notice of the law to them because they will generally be entitled to PFML benefits.

Notice to individual employees is required within 30 days of their first day of employment (or by June 30 for employees hired before June 1, 2019) and must be written in the employee's primary language. So far, the DFML has published both the poster and the notice in 13 different languages. We recommend using the model notices, which are available for download on the DFML's website at https://www.mass.gov/orgs/department-of-family-and-medical-leave.

Questions about tax treatment of contributions remain

You must begin making contributions to the state to cover PFML on July 1, 2019, but uncertainty about the tax treatment of those contributions remains. As a result, the DFML asked the IRS for guidance. The department recently provided an update for employers.

Although the DFML anticipates that employees' contributions should be withheld from after-tax wages, it's awaiting the IRS guidance before making a final determination. It's unclear when that guidance might be issued. If no guidance is issued by July 1, you should check with your tax adviser for a recommendation on the PFML law's tax-related implications. Regardless of the notice extensions and the lack of definitive guidance on tax issues, contributions to PFML begin on July 1.

State extends private plan exemption deadline

Employers with paid leave plans that offer benefits equal to or more generous than the benefits provided under the PFML law may obtain an exemption from the DFML. If you haven't given a lot of thought to private plan options, you will have more time to do so. The deadline for filing for a private plan exemption has been extended from June 30 to September 20 for the first quarter. After that, applications will continue to be accepted on a rolling basis and, if approved, will be applicable beginning the following quarter.

Employers that apply for an exemption that isn't approved will be responsible for making contributions for the first quarter (July 1 through September 30) by October 31. More information about applying for an exemption can be found on the DFML's website.

Bottom line

Given the upcoming deadlines, now is the time to determine what your contribution rates will be (if you haven't done so already), consider applying for an exemption, and make sure you are prepared to provide notice to your employees by the June 30 deadline. If you have questions about the notice requirements or any of your other obligations under the PFML law, be sure to consult with experienced employment counsel.

Marylou Fabbo is a partner at the firm of Skoler, Abbott & Presser, P.C. She can be reached at 413-737-4753 or mfabbo@skoler-abbott.com. Kimberly A. Klimczuk is a partner at the firm of Skoler, Abbott & Presser, P.C. She can be reached at 413-737-4753 or kklimczuk@skoler-abbott.com.

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