State Senate Passes COVID-19 Emergency Paid Sick Leave

BOSTON — Ten weeks after Senate President Karen Spilka promised swift action on COVID-19 emergency paid sick leave, the Massachusetts State Senate passed a comprehensive bill that would guarantee five paid days off for every employee in the Commonwealth. The bill also seeks to stabilize the state’s Unemployment Insurance (UI) trust fund, provides tax relief to businesses and workers, and delays the state tax-filing deadline.

“In January, I declared that we must act quickly to provide our workers with COVID-19 emergency paid sick leave, and today the Senate has delivered on that promise,” Spilka said on Friday. “I am proud of the collaboration that brought about this agreement, which will provide needed relief for both businesses and workers.”

She added, “as we continue to recover from the COVID-19 emergency, these measures will provide stability to our economy and keep workers safe.”

To help protect employees on the front lines, and prevent the further spread of COVID-19, the bill ensures that all workers in Massachusetts have access to paid leave if they are unable to work as a result of a COVID infection or a quarantine order. Significantly, given the state’s push to increase vaccination rates, employees will be able to use this paid leave time to take time off to receive the vaccine. In addition, the legislation provides for leave if the worker needs time to care for a family member unable to work because of COVID.

To align state tax deadlines with federal tax deadlines, the bill also extends the Commonwealth’s tax-filing deadline from April 15, 2021, to May 17, 2021. This tax flexibility, similar to a delay authorized last year by the Legislature, will provide stability and ensure residents have time to prepare and file taxes as the state continues to weather the impacts of the COVID-19 pandemic.

“I have seen firsthand the devastating impact COVID-19 has had on businesses, families, and the economy in the Hampden District,” state Sen. Adam Gomez said. “This legislation will provide relief for business owners and individuals during tax-filing season. I hope that these provisions, as well as the extension of the tax-filing deadline, provide families in the state some breathing room so that they can get back on their feet.”

Under this legislation, employees are eligible for up to five days of paid leave, at their regular rate of pay, capped at $850 per week — which is the same maximum weekly benefit provided for in the Massachusetts Paid Family Medical Leave law. Employers covered by federal legislation providing for paid leave will have the cost of providing such leave paid for through the federal tax credit. For all other employers, the bill creates a $75 million COVID-19 Emergency Paid Sick Leave Fund to reimburse eligible employers for providing their employees with emergency paid sick leave. The state requirement for paid leave would extend until Sept. 30, 2021 or until the fund is exhausted.

The bill also provides UI-related relief to businesses and employees. For businesses, the bill prevents increases in the UI rate schedule for 2021 and 2022, providing employers with stability and relief as the Commonwealth continues to recover. For unemployed workers, some navigating the UI system for the first time, the bill waives tax penalties on UI benefits in 2020 and 2021. It also mirrors federal tax provisions included in the recent American Rescue Plan and excludes $10,200 of unemployment compensation received by an individual with a household income of less than 200% of the federal poverty level from gross income for tax purposes, putting up to $500 into the hands of lower-income unemployed individuals. This would apply to individuals making $25,760 or under, or a total income of $53,000 for a family of four.

Further relief for businesses comes in the form of a change in state tax policy regarding PPP loans. In Massachusetts, corporate excise tax, but not personal income tax, is tied to the current federal Internal Revenue Code. As a result, Massachusetts’ tax law treats forgiven Paycheck Protection Program (PPP) loans differently depending on whether the recipient small business is organized as a pass-through entity or a C-corp. This bill conforms to federal law and ensures that all forgiven PPP loans, advance Economic Injury Disaster Loans, and payments made under the federal Small Business Debt Relief are excluded from gross income, regardless of how the business is organized.

“With the tax filing season upon us, the inclusion of language from my PPP loan-forgiveness bill will ensure that thousands of businesses won’t be hit hard with a significant, potentially insurmountable, tax burden amidst the COVID-19 pandemic,” said state Sen. Eric Lesser, Senate chair of the Joint Committee on Economic Development and Emerging Technologies. “Over 140,000 businesses across the Commonwealth have received Paycheck Protection Program loans from the Small Business Administration and have been asked to be patient, flexible, and resilient in order to keep their lights on. It’s unfair for our state to hit them with an unexpected tax. This is a critical measure for speedy economic recovery.”

The bill now goes to the House for further action.