Compliance update – June 2019
Every month, Lincoln puts together the latest compliance news related to family and medical leave laws and regulations – helping you keep track of the important deadlines, compliance considerations and links to additional information.
Family and medical leave
Paid sick leave
|Breaking news as of June 14, 2019|
Massachusetts recently introduced a number of significant changes to the PFML program. These changes, summarized below, include a delay in collecting contributions from July 1 to October 1 and an increase in the contribution rate.
The Department of Family and Medical Leave (DFML) has released new guidance on deadlines and employer obligations on the DFML website. Lincoln is working to identify the impacts to our products and services and will continue to share updates about changes.
Extended Deadline – PFML Contributions: The start date for required PFML contributions is now October 1, 2019. Employers will be responsible for remitting contributions for the October 1 to December 31 quarter by January 31, 2020.
Increased Contribution Rate: The total contribution rate has been adjusted from 0.63% to 0.75% of employee qualifying earnings to offset the shorter period for collections that will result from the three-month delay. The contribution rate percentage split between employers and employees will not change. Updated information on the contribution breakdown is on the DFML website.
Exemptions: Employers can apply for an exemption from contributing to family leave, medical leave, or both, by submitting an annual approved plan application to the DFML. The electronic plan application will be available through MassTaxConnect. Self-insured plans will also need to provide proof of bond coverage. The DFML is expected to release guidelines on the proof of bond coverage soon. While the DFML continues to work through additional bond guidelines, employers may proceed with applying with a plan even if they don’t have the surety bond in place.
Extended Deadline: December 20, 2019 is now the deadline to file for a private plan exemption for fourth quarter contributions. (If the exemption request is denied, the impacted business will be responsible for remitting the full contribution amount from October 1, 2019 forward.)
Employers applying for an exemption will receive an email notification within 1-2 business days indicating that a determination has been made. The DFML will continue to accept applications on a rolling basis but applications must be approved in the quarter prior to the quarter in which they go into effect.
More information on the private plan exemption application process can be found on the DFML website.
Employee notification: All Massachusetts employers must display the mandatory workplace PFML poster prepared or approved by the DFML that explains the benefits available to their workforce under the PFML law. This poster must be posted in a location where it can be easily read. The poster must be available in English and each language which is the primary language of 5 or more individuals in the employer’s workforce, if such translations are made available from DFML.
Extended deadline: On or before September 30, 2019, employers and covered business entities are required to provide written notice to their current workforce (Massachusetts W2 employees and 1099-MISC contractors) of PFML benefits, contribution rates, and other provisions as outlined in the PFML law. The deadline of the requirement to provide notice was extended from June 30, 2019.
The notice, which may be provided electronically, must include the opportunity for an employee or self-employed individual to acknowledge receipt or decline to acknowledge receipt of the information. The employer can receive these acknowledgments in paper form or electronically. In the event that an employee or self-employed individual fails to acknowledge receipt, the Department shall consider an Employer or Covered Business entity to have fulfilled its notice obligation if it can establish that it provided to each member of its current workforce notice and the opportunity to acknowledge or decline to acknowledge receipt.
Templates for the poster and employee notices can be found on the DFML website.
Tax considerations: The tax treatment of PFML contributions for both state and federal purposes is governed by federal tax law. The Commonwealth has requested guidance from the Internal Revenue Service (IRS) on this question and others related to the tax implications of PFML contributions and benefits. Until IRS guidance is issued, individuals and businesses are urged to consult with their own tax advisors on these questions.
Based on its own review of federal rules and following consultation with the Massachusetts Department of Revenue, the DFML anticipates that the IRS will conclude that employee contributions should be withheld from after-tax wages. A definitive rule for proper tax treatment of contributions will be available once IRS guidance is issued.
DISTRICT OF COLUMBIA
- April 1, 2019: Employers must begin recording workers’ wages.
- July 1, 2019: The first collection of PFL employer contributions begins, for wages paid to covered workers from April 1 through June 30.
The Office of Paid Family Leave has released a Paid Family Leave Employer Toolkit, which provides information on what employers and business owners need to know about paid family leave, including:
- How to prepare for the employer tax beginning July 1, 2019
- How self-employed individuals can opt into the paid family leave program, if interested
The PFL Employer Toolkit and other resources are available on their website.
The Division of Temporary Disability Insurance has released guidance on employee elections for private plans, including recent amendments to the Temporary Disability Benefits and Paid Family Leave laws. The guidance reiterates that effective immediately, employee consent for contributory private plans is no longer required, with the exception of employees covered by a collective bargaining agreement. Attempts to change the contributory provisions of an already approved private plan from a non-contributory basis to a contributory basis will not require an election. However, a newly filed DP application for plan modification is still required and prior notice must be given to the Division in order for such changes to be approved.
The Department of Labor and Workforce Development has released an updated Family Leave Insurance (FLI) poster in the employer poster packet. The updated FLI poster and other required employer posters are available on their website. The state has not issued regulations regarding the broader TDI, FLI, FLA & SAFE Act amendments.
The Department of Fair Employment and Housing has released an updated Family Care and Medical Leave (CFRA Leave) and Pregnancy Disability Leave poster. This poster applies to businesses with 20 or more employees. The updated CFRA and Pregnancy Disability Leave poster and other required employer posters are available on their website.
Dallas, Texas enacted a paid sick leave ordinance requiring all private sector employers to provide employees with paid sick leave at the same wage rate as the employee normally earns. Under the enacted ordinance, which is similar to the Austin PSL ordinance, employees will accrue one hour of PSL for every 30 hours worked, but employees are not entitled to accrue or use more than 40 hours of PSL per year. PSL is capped annually at:
- 48 hours for small employers (fewer than 15 employees)
- 64 hours for medium or large employers (15 or more employees)
The law takes effect:
- August 1, 2019: For employers with six or more employees
- August 1, 2021: For employers with five or fewer employees
The Portland City Council rejected an ordinance that would have established the city’s paid sick leave program. The bill would have provided employees, including part-time, seasonal, and per-diem employees with one hour of PSL for every 30 hours worked. However, employers should note that state legislators in Maine are considering enacting paid sick leave legislation which, if passed, would take effect January 1, 2021.
WESTCHESTER COUNTY, NEW YORK
Westchester County, New York issued new guidance for their existing paid sick leave law, which requires employers to provide employees with one hour of PSL for every 30 hours worked. Accrual will begin on July 10, 2019, or on the date of hiring, whichever is later. Westchester County has created employer and employee frequently asked questions documents, and poster and employee notice requirements.
More information on the Westchester County paid sick leave program can be found on the Westchester County Human Rights Commission website.
Connecticut issued new guidance for their existing pregnancy accommodation law, which requires employers with three or more employees to reasonably accommodate the needs of employees due to pregnancy, childbirth, or a related medical condition. The guidance provides non-exhaustive lists and examples for employers, such as potential reasonable accommodations, pregnancy-related conditions, good-faith interactive process best practices, and prohibited forms of pregnancy discrimination. In addition, the guidance specifies that an employer may not require a medical certification or doctor’s note before discussing the need for a reasonable accommodation with an employee or job applicant.
The full text of the Connecticut guidance on pregnancy accommodation can be found on the Commission on Human Rights and Opportunities website.