On May 1, the Department of Family and Medical Leave (“Department”) extended two deadlines for employer obligations in complying with Paid Family Medical Leave Act, G. L. c. 175M (“Act”). First, the deadline for providing written notice to employees of the rights and benefits available under the Act has been extended from May 31 to June 30. Second, the deadline for submitting applications for an exemption from the Act for the first quarter (July to September 2019) has been extended from June 30 to September 20. The latter extension will not apply to subsequent quarters. Moving forward, exemptions must be approved by the end of the prior quarter. Employers must still begin collecting payroll deductions from employees by July 1 and remit them to the Department by October 31.
More information on applying for an exemption, which must be done through MassTaxConnect, may be found on the Department’s updated website. This information includes the required documentation, how to calculate the required surety bond, and minimum benefit requirements. The Department has indicated that, if an application for an exemption for the first quarter is denied, the employer will be responsible for remitting the full contribution amount from July 1 forward.
The Department recently released guidance on the notice that must be given to employees by June 30, as we previously reported. This notice must be given in addition to displaying a mandatory poster in the workplace. After June 30, employees must receive the notice within thirty (30) days of their start date.
In addition to the extensions, the Department announced that it has sought guidance from the Internal Revenue Service (“IRS”) on the tax implications of the Act. The tax treatment of contributions and benefits will be governed by federal tax law. Employers may wonder, for example, whether contributions should be withheld from pre-tax or after-tax wages. The Department anticipates that the IRS will conclude that contributions should be withheld from after-tax wages, but more information will be forthcoming. For now, employers should consult with their tax advisers on these questions.
These obligations are part of a larger scheme rolling out paid family and medical leave in Massachusetts in the coming months, as explained in our prior posts. We recently covered the Department’s draft regulations for public comment, which shed light on some of these obligations. Public hearings on the regulations, which the Department plans to issue by July 1, are scheduled for May 23 in Holyoke and May 24 in Boston.
The Department continues to release frequent guidance on complying with the Act, which we will monitor. Check back for further updates on this important development in Massachusetts.
Employers with questions about the Act and how they should proceed to ensure they will be in compliance throughout its phased implementation should contact one of Conn Kavanaugh’s experienced employment lawyers.
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