Over the past couple of years, four states plus Washington, D.C., have adopted paid leave statutes. When Massachusetts Governor Charlie Baker signed the Paid Family & Medical Leave Act (PFML) in June, the Bay State became the sixth. What does this mean for business owners and their employers? Here are the benefits workers will receive:
- Workers will receive 12 weeks of paid leave to:
- Be with a newborn, adopted, or foster child.
- Care for a seriously ill or injured family member.
- Up to 20 weeks for a worker’s own serious illness or injury.
- Up to 26 weeks for the family member of a military service person to care for that person.
Workers must be employed long enough to qualify for unemployment insurance, but the program is portable, which means that an individual who changes jobs does not have to re-qualify for the benefit, which is paid as follows:
- 80 percent of the employee’s wages, up to one-half of the Average Weekly Wage (AWW) in Massachusetts (which is currently about $1,200).
- For workers who earn more than 50 percent of the AWW, the remainder would be paid at 50 percent.
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Estimated Wage Replacement Illustration Assuming a $1,200 AWW.
| Weekly Wage | 80% Component | 50% Component | Total |
|---|---|---|---|
| $500 | $400 | 0 | $400 |
| $1,000 | $480 | $200 | $680 |
| $1,500 | $480 | $450 | $930 |
| $2,000 | $480 | $700 | $1,180 |
The cost of the program will be shared equally by the employer and the employee. The initial premium will be 0.63 percent of wages. For example, an employee earning $50,000 per year would pay $3.03 weekly, and the employer would pay the same. Premiums will not be charged after the employee reaches the social security limit, which is projected to be $132,300 in 2019.
For small businesses, the program affords employers the ability to retain employees as they would be “off the books” during the leave period. Those wage dollars could then be paid to other workers or temporary workers that may be required during the employee’s absence. Also, employers can elect to opt out of PFML if they can demonstrate they have a plan in place that offers the same or better benefits. A small opt out fee may be charged to cover oversight costs.
When do PFML deductions begin?
Originally, deductions were scheduled to begin on January 1, 2019. However, we recently learned that since the administration has the responsibility to execute PFML and has a March 31, 2019, deadline to publish regulations, deductions will not start until July 1, 2019.
While deductions will begin in 2019, benefits will not be available to be paid until 2021. The original target date for all eligible was January 1, 2021, with one exception. Workers who take care of a seriously ill or injured family member must wait until July 1, 2021 to receive the benefit. However, these dates will likely also be extended to a later time, given the delay in the rulemaking process. We will share this information once it becomes available.
