Prepare to Implement Paid Family and Medical Leave (PFML) Under the New Massachusetts Law

I am not sure if you have heard of the new payroll tax that starts in October, but I thought I would send over some information about it, as there are some requirements that employers need to follow for this. The Paid Family Medical Leave Act is a state law that requires withholdings from employees wages. The payroll companies seem to be on top of this, especially ADP, but it might be a good idea to call and make sure they are all set on this.  

There are three things that they are asking employers to do to be in compliance with this:  

  1. Display a poster where employees can be notified of the law (see download below)—similar to how labor law posters need to be displayed. 
  2. Have employees read and sign the notification letter. This just gets put into their personnel file. I have attached a blank one for you to fill out. The employer share of the tax kicks in at 25 employees, but subcontractors may be subject to this as well (see #3)
  3. The kicker on this is that if you have subcontractors who receive a 1099 that do the same work that you are in business to do, you must withhold from their 1099 pay as well but only if they are more than half your total workforce including employees. For example, if someone worked independently for you in your business, then they would qualify. If the total of these 1099 based contractors is less than your W2 employee count, then you would not need to withhold from them but you still need to provide the notice and check the box that you are a non-covered entity and get back an acknowledgement signature.
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For the purposes of this law a subject 1099 contractor is someone who: 

  1. Performs services as an individual (so no LLCs or other business entity types even if they receive a 1099) 
  2. Is a Massachusetts resident 
  3. Performs services in Massachusetts

For your existing staff you need to get back signed forms for everyone by the date that withholdings begin—which is October 1st, 2019. 

For new employees/subcontractors you need to get the signed forms back within the first 30 days of their employment. 

I have included links below to the poster that must be displayed as well as the templates of forms that need to be signed by your employees and subcontractors.

Depending on whether your employee count (including eligible sub-contractors) is below 25 or not, use the set of forms that are appropriate to your business. 

Lastly, here is the link to the Employer’s Guide to Paid Family and Medical Leave on website, for more information.

Let me know if you have any questions.

—Jonathan Bello

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