On June 14, the Massachusetts Department of Family and Medical Leave issued more details regarding the delay in the start of employer and employee contributions to the Paid Family and Medical Leave program.
As we reported last week, the Department delayed the beginning of contributions by three months, until October 1, 2019.
On Friday, the Department announced an increase to the total contribution rate from 0.63 percent to 0.75 percent of employee qualifying earnings. According to the Department, this adjustment is meant to offset the shorter period for collections that will result from the three-month delay and will ensure that full funding will be in place when benefit payments begin in January 2021. The breakdown between medical contributions and family leave contributions remains at 82.5 percent and 17.5 percent, respectively. However, applying these percentages to the 0.75 percent total contribution means the following:
Employer contribution to medical leave (.825 x .0075 x .60) will be 0.37 percent of employee wages.
Employee contribution to medical leave (.825 x .0075 x .40) will be 0.25 percent of employee wages.
Employee contribution to family leave (.175 x .0075 x 1) will be 0.13 percent of employee wages.
Employers who have already sent out notices that included the old contribution rates, and employers who have not yet sent out notices, will have until September 30 to notify all covered individuals of their rights and obligations under the law.
Additionally, employers will now have until December 20 to apply for a private plan exemption that will excuse them from the obligation to remit contributions for the full period beginning with the October 1 start date.
As this article went to press, the Department said that it planned to post final regulations on its website today, June 17. The Department expects the regulations to become final and effective on July 1.
We will continue to keep you up to date on any new developments.