Paid Family and Medical Leave
By John S. Gannon, Esq. and Amelia J. Holstrom, Esq.
Businesses have had almost a year to prepare for the implementation of Paid Family and Medical Leave (PFML) in Massachusetts. Still, many questions remain, and the first critical date — July 1 — is right around the corner.
Here are five things that should be at the top of your to-do list as employers in the Commonwealth prepare for PFML.
Decide How to Handle Tax Contributions
PFML is funded through mandatory payroll contributions that begin on July 1. Currently, the contribution is set at 0.63% of an employee’s eligible wages. Because PFML covers two types of leave — medical leave and family leave — the state Department of Family and Medical Leave (DFML) has attributed a portion of the contribution (82.5%) to medical leave and the remainder (17.5%) to family leave. As if that wasn’t confusing enough, employers are permitted to deduct up to 100% of the family-leave contribution and up to 40% of the medical-leave contribution from an employee’s pay. Employers with 25 or more employees are required to pay the rest.
Although employers can pass on a lot of the contribution to the employee, businesses should consider whether to pay a portion, or even all, of the employee’s portion. When doing so, employers should consider the impact on morale, whether an employee is more or less likely to use the leave if they are paying for it, and whether the employer can afford to do more.
Provide the Required Notices
Employers are required to provide notice to employees about PFML on or before June 30. Two separate notices are required — a workplace poster and a written notice distributed to each employee and, in some cases, independent contractors. The mandatory workplace poster must be posted in English and each language that is the primary language of at least five individuals in your workforce if the DFML has published a translation of the notice in that language. Posters are available on the DFML website.
“It goes without saying that employees will have less incentive to return to work once PFML goes live. This undoubtedly will increase the amount of time employees are out of work.”
The written notice must be distributed to each employee in the primary language of the employee and must provide, among other things, employee and employer contribution amounts and obligations and instructions on how to file a claim for benefits. Employees must be given the opportunity, even if provided electronically, to acknowledge or decline receipt of the notice. The DFML has issued a model notice for employers to use.
Employers must get these notices out by June 30, but also within 30 days of an employee’s hire. Failure to do so subjects an employer to penalties.
Consider Private-plan Options
Employers who provide paid leave plans that are greater than or equal to the benefits required by the PFML law may apply for an exemption from making contributions by applying to the DFML. Employers can apply for an exemption to family-leave or medical-leave contributions, or both. Private-plan approvals are good for one year, and, generally, will be effective the first full quarter after the approval.
However, the DFML has made a one-time exception for the first quarter — July 1 through Sept. 30. Employers have until Sept. 20 to apply for an exemption, and any approval will be retroactive to July 1. Employers should consider whether this is a viable option for them before employees can begin taking leave on January 1, 2021.
There are benefits to doing so, but employers should consider the potential cost. If an employer chooses to self-insure its private plan, it must post a surety bond with a value of $51,000 for medical leave and $19,000 for family leave for every 25 employees. Employers may also have the option to purchase a private insurance plan that meets the requirements of the law through a Massachusetts-licensed insurance company.
Review Current Time-off and Attendance Policies
The principal regulator of frequent leaves of absence is the fact that employees are not getting paid for this time away from work, absent company provided paid time off like sick or vacation time. Once those company-provided benefits are used up, the employee is not getting a paycheck.
Naturally, this gives employees motivation to get back to work and on the payroll. Unfortunately, when Jan. 1, 2021 comes around, businesses will lose this regulator as PFML will be paid time off, up to a cap of $850 per week (and up to a whopping 26 weeks of paid time off per year).
It goes without saying that employees will have less incentive to return to work once PFML goes live. This undoubtedly will increase the amount of time employees are out of work. Therefore, businesses should be reviewing their current time-off and attendance policies to determine whether changes should be made in light of this forthcoming law. Are you providing too much paid time off already? Should you develop stricter requirements surrounding absenteeism and employee call-out procedures?
The time is now for discussing these changes as modifications to leave and attendance policies take time to think through and implement.
Plan for Increased Staffing Challenges
Many businesses and organizations throughout the region are currently dealing with significant staffing difficulties due to historically low unemployment rates. This challenge is only going to increase when the leave protections of PFML kick in on Jan. 1, 2021.
We recommend that employers try to get out in front of this by having meetings and possibly forming committees tasked with planning for expected workforce shortages. Consider increasing per-diem staff as regular staffers are likely to have more time off and call-outs from work. Consult with staffing agencies to explore whether temporary staffing will be an option if (and when) employees take extended PFML. Whatever you do, don’t wait until late next year to address potential staffing problems.
PFML is certainly going to be a challenge for employers to deal with, particularly smaller employers who are not already familiar with leave laws like the federal Family and Medical Leave Act. Although it may seem as though the sky is falling on employers, with proper and careful planning and guidance from experts, transitioning into the world of PFML should be reasonably manageable.
John S. Gannon and Amelia J. Holstrom are attorneys with Skoler, Abbott & Presser, P.C., one of the largest law firms in New England exclusively representing management in labor and employment law. Gannon specializes in employment litigation and personnel policies and practices, wage-and-hour compliance, and non-compete and trade-secrets litigation. Holstrom devotes much of her practice to defending employers in state and federal courts and before administrative agencies. She also regularly assists her clients with day-to-day employment issues, including disciplinary matters, leave management, compliance, and union-related matters; (413) 737-4753; [email protected]; [email protected]