In a joint statement issued earlier this week, Massachusetts governor Charlie Baker, state senate president Karen Spilka, and state house speaker Robert DeLeo announced a three-month delay to the contributions that will fund the state’s new paid family and medical leave program. Employers were originally instructed to begin deducting contributions on July 1, 2019. Now, they will begin doing so on October 1, 2019. Recognizing employers’ confusion as to how the new program will impact preexisting benefits plans and payroll, officials proposed the delay to provide the state and businesses with adequate time to prepare for the program’s impact.
The governor must still sign the emergency measure before it takes effect, but the planned change has been approved by the Senate and House. The bill not only provides for the three-month delay in contributions but also appropriates $3,500,000 to the Executive Office of Labor and Workforce Development to help offset the loss in funds that such a delay will cause. Additionally, it limits the covered health conditions under the law to those that leave individuals “unable to perform the functions of the covered individual’s position,” and it adds further requirements to the employee filing procedure, namely that the certification filed with the department must include a statement of the medical necessity for intermittent leave.
Confusion remains as to how the delay will impact other elements of the program’s implementation. Though the senate bill calls for an appropriation of state funds, uncertainty remains as to whether this will adequately offset the impact of the delay on the Family and Security Employment Trust Fund. The state also has not yet specified how this delay affects employers’ obligation to notify employees of the law’s impact by June 30, 2019. While there are still many unanswered questions, the planned three-month reprieve should alleviate immediate pressure around payroll contributions and employer compliance.
We are continuing to monitor developments around the new law, and we will provide additional updates as they become available.
BREAKING NEWS UPDATE:
On June 14, 2019, the state Department of Family and Medical Leave clarified several points regarding the implementation of the legislation:
- Employers must begin withholding paid family and medical leave contributions from qualifying earnings on October 1, 2019. Employers must begin remitting employee and, where applicable, employer contributions for the October 1 to December 31, 2019, quarter by January 31, 2020.
- In order to offset the shorter period for collections resulting from the delayed implementation, the total contribution rate has been adjusted from 0.63 percent to 0.75 percent of qualifying earnings.
- Employers now have until September 30, 2019, to notify covered individuals of their rights and obligations under the law. The state is preparing an updated version of the required notice.
- Employers now have until December 20, 2019, to apply for an exemption from the obligation to remit contributions for the period beginning on October 1, 2019.
- As previously planned, final regulations to accompany the new paid family and medical leave law will be released on July 1, 2019.
Rachel Reingold Mandel is a shareholder in the Boston and Stamford offices of Ogletree Deakins.
Chris Toohey is a law student participating in the summer associate program in the Boston office of Ogletree Deakins.