Massachusetts Paid Family and Medical Leave: Update on 1099-MISC Workers and State-Provided Training

The deadlines for notice to employees and contribution withholdings required by the Massachusetts Paid Family and Medical Leave Act (PFML) are fast approaching, and employers are encouraged to make sure that they are prepared. Ahead of these important deadlines, the Department of Family and Medical Leave (DFML) continues to announce updated guidance on the program. Most recently, the DFML issued new guidance regarding 1099-MISC workers and access to PFML training for different organizations.

Clarification on Which 1099-MISC Workers Are Covered by the PFML

The DFML has issued clarification on when a 1099-MISC worker should be considered part of an entity’s Massachusetts workforce count for purposes of the PFML. Previously, the guidance released by the department suggested that in order to count as part of a workforce, 1099-MISC contractors would have to satisfy the following criteria:

1. They must perform services as an individual entity.
2. They must live in Massachusetts.
3. They must perform services in Massachusetts.

The department has now added additional clarification with a fourth factor:

4. They must not be independent contractors as defined in the Massachusetts unemployment statute (Mass. G.L. c. 151A, § 2).

Under the Massachusetts unemployment statute, there is a three-part test for determining whether an individual is an independent contractor:

1. In connection with the performance of services for the entity, the individual is free from the entity’s control and direction.
2. The service is performed either outside of the entity’s usual course of business or is performed outside of all the places of business of the entity for which the service is performed.
3. The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

Thus, with the newly issued clarification, if a 1099-MISC worker (i) satisfies the first three criteria previously established by the DFML and (ii) does not satisfy the ABC independent contractor test, then that worker should be counted as a member of the entity’s Massachusetts workforce. In other words, properly classified independent contractors who satisfy the first three criteria should not be counted as part of the employer’s workforce count for PFML purposes, but workers who meet those first three criteria and do not pass the state standard as independent contractors must be included in the workforce count.

Clarification on Reporting Requirements for 1099-MISC Workers Covered by the PFML

The DFML has also clarified its reporting requirements for 1099-MISC workers. If 1099-MISC workers do not make up more than 50 percent of an entity’s Massachusetts workforce, the entity is not required to report payments made to these workers in the quarterly reports submitted to the department. As a reminder, 1099-MISC workers count towards an entity’s total number of covered individuals for purposes of contributions and reporting only if they make up more than 50 percent of the entity’s total Massachusetts workforce. (The total Massachusetts workforce is Massachusetts W-2 employees and 1099-MISC workers combined.)

Access to PFML Training

Finally, the DFML is providing a new individualized opportunity for entities to receive training on the paid leave program. The department has indicated that organizations, trade associations, or local chambers of commerce that are interested in having a member of the DFML team come and speak to their organization concerning the PFML or its requirements can fill out this request form. There are limited details on what these trainings will look like, but they are yet another source of guidance on this frequently changing program.

The DFML frequently posts additional guidance concerning the PFML on its website, and Ogletree Deakins will continue to monitor and provide updates concerning these developments with respect to the law.