On January 23, 2019, the newly-created Massachusetts Department of Family and Medical Leave (Department) released proposed regulations clarifying the rights and responsibilities of employers and employees under the new Massachusetts Family and Medical Leave Law (MFMLL). The MFMLL will require all private employers in Massachusetts to provide covered individuals with paid family and medical leave funded through a payroll tax.1 Under the proposed regulations, it appears that the Department will be responsible for, among other things, making decisions about whether to approve employees for paid leave under the MFMLL once the law goes into effect on January 1, 2021.
As is often the case during rulemaking, the proposed regulations left some questions unanswered, and raised some new questions. The most significant provisions of the proposed regulations are summarized below.
Mandatory Quarterly Filings
The proposed regulations provide that all employers will be required to file a quarterly report, through the Department of Revenue's Mass TaxConnect system, that includes the name, social security number, and wages paid or other earnings for each employee and contracted service provider. The proposed regulations are silent as to when the employer must begin filing these required quarterly reports.
Based on the quarterly report, the Department will calculate the total quarterly contribution owed by the employer, which must be remitted within 30 days after the end of the quarter. An employer that fails or refuses to make the required contributions will be assessed a fine of 0.63 percent of its total annual payroll for each year it failed to comply, in addition to the total amount of the benefits paid to covered individuals for whom the employer failed to make contributions.
Employer Workforce Count
The MFMLL provides that employers averaging fewer than 25 employees are exempt from paying the employer share of the contributions. The average number of employees will be determined by counting all full-time, part-time, seasonal and temporary employees on the payroll during each pay period and dividing by the number of pay periods in the previous calendar year. Employers that use contract workers that are reported on a Form 1099 must also include those individuals in the employee count.
The proposed regulations do not address how the quarterly contributions will be divided between the medical leave and family leave components of the new law, other than to say that it will be based on the Department's estimate of the anticipated cost of benefits and administration of the program. As a result, it is still unclear what percentage of the mandatory contributions employers may deduct from employees' wages and from payments made to contracted service providers.
Opting Out with Private Plan
Employers with a private plan may apply to be exempted from the medical coverage, leave coverage, or both. The Department will only approve an application for exemption if the private plan confers the same rights, benefits and protections as those provided under the MFMLL. Approved applications will only be valid for one year, but may be renewed annually. The proposed regulations do not offer any further information regarding specific criteria for exemption or whether, for example, an employer's short-term disability plan would be sufficient to qualify for an exemption.
Employee Notice Requirement
Employees must provide their employer with at least 30 days' notice of: (i) the anticipated start date of the leave; (ii) the anticipated length of the leave; (iii) the type of leave; and (iv) the individual's expected return date. If, for reasons beyond the employee's control, the 30 days' notice cannot be provided, the proposed regulations allow for notice as soon as is practicable.
An employee will be required to use Department-issued forms to file a claim for benefits, accompanied by a certification. We anticipate the Department will release model certifications forms for each type of leave requested.
Processing a Claim for Benefits
The proposed regulations provide additional information on the timeline for the submission and processing of claims for benefits.
Within 5 days after the date the employee has made a claim for benefits, the Department will notify the employer and provide information with: (i) the employee's name; (ii) the type of leave; (iii) the expected duration of the leave; (iv) whether the request is for intermittent leave; and (v) any other information needed to verify the claim. Employees filing claims will be required to provide the Department with consent to share information regarding the claim with employers.
Upon request, employers will be required to provide the Department with records relevant to a claim, including the employee's wages/earnings over the past 12 months, job descriptions, the employee's full-time or part-time status, amount of prior leave taken, weekly hours worked, the amount of paid leave already taken during the current benefit year, and a description of the employer's paid leave policies.
Within 14 days of receiving a claim for benefits, the Department will provide contemporaneous notice to the employer and employee as to whether a claim is denied or approved. The notice of approval for payment of benefits will include: (i) the reason for the approved leave benefits; (ii) the duration of the approved leave benefits; (iii) for intermittent leaves, the frequency and duration of the leave benefits; and (iv) the expiration of the approved leave benefits.
At least 14 calendar days prior to the expiration of the original approved leave, an employee seeking to extend benefits must file a claim to extend the benefits. The Department will then notify the employer no less than 5 business days following receipt of the employee's request to provide the employer with notice of the requested duration of the extension, whether the new leave is continuous or intermittent and any other information that is determined to be valid. The employer will then be expected to provide within 5 business days any necessary information for the claim to be processed including, but not limited to, evidence of a fraudulent claim.
The Department intends to release final regulations for collecting contributions and processing benefits by March 31, 2019. In the interim, the Department has scheduled a number of public listening sessions on the draft regulations throughout the state.2
It is important for employers to remember that, although employees will not be able to apply for and receive paid leave under the MFMLL until January 2021, employers will be obligated to begin paying the applicable payroll tax as of July 1, 2019. Thus, it is critical for Massachusetts employers to remain informed about their obligations under the MFMLL. We will continue to monitor updates from the Department and provide guidance to employers as they review and update their leave policies to comply with the new law.
1 See Chris Kaczmarek and Alice Kokodis, Massachusetts Increases Minimum Wage, Eliminates Premium Pay For Sunday Work, And Enacts New Paid Leave Program, Littler ASAP (June 29, 2018).
2 Representatives from Littler Mendelson will be attending these sessions so that we can articulate any concerns that clients may have about the proposed regulations. If you have any questions that you would like us to raise at one of these sessions, please contact the authors.
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