Get ready for Massachusetts paid family medical leave

Though the prospect of paid family medical leave has been a topic du jour among politicians from both sides of the aisle nationally, its time has come in Massachusetts.

On June 28, Gov. Charlie Baker signed into law the so-called “grand bargain” bill, which resulted from a compromise among legislators, the business community, labor unions and community groups designed to eliminate three potential November ballot questions concerning paid leave, the minimum wage, and a reduction in the state sales tax.

The law will provide Massachusetts workers paid family and medical leave through one of the most generous programs nationwide. Over the next five years, the law also gradually will raise the state minimum wage from $11 to $15 an hour and gradually will phase out the time-and-a-half premium pay requirement for retail workers working on Sundays and holidays.

Of high concern to in-house counsel and human resources departments, G.L.c. 175M — the new Paid Family Medical Leave Law, or PFML Law — will create a sea change for Massachusetts employers. The statutory language raises a number of questions, and technical and substantive corrections and clarification are expected through a corrections bill and the regulatory process.

And though the law’s requirements will be phased in over three years, Massachusetts employers should start preparing for the altered landscape.

Who is eligible?

Unlike the federal FMLA, all employers are subject to the PFML Law, and all Massachusetts employees will be eligible provided they meet the financial eligibility criteria for state unemployment benefits.

The law also will apply to certain former employees after separation and self-employed workers with whom companies contract (i.e., independent contractors).

Leave provided

The PFML Law will provide up to 20 weeks per year of job-protected, paid medical leave for the employee’s own serious health condition, and up to 12 weeks per year of job-protected, paid family leave.

Family leave will be available for the following reasons:

• to care for a family member with a serious health condition;
• to bond with the worker’s child during the first 12 months after birth or the first 12 months after the placement of the child for adoption or foster care with the worker;
• because of any qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call or order to active duty in the armed forces; or
• to care for a family member who is a covered servicemember with a serious injury or illness incurred or aggravated in the line of duty (for this category, up to 26 weeks of leave may be taken).

The law sets a maximum aggregate of 26 weeks of paid leave per benefit year.

Though these categories of leave mostly align with those under the federal FMLA, the federal law does not provide pay and provides only up to 12 weeks of medical leave for an employee’s own serious health condition.

What will workers be paid and how?

Commencing July 1, 2019, all Massachusetts employers will contribute to the Family and Employment Security Trust Fund at an initial contribution rate of 0.63 percent of each employee’s wages. The cost may be shared between employer and employee at varying percentages, based on the type of leave and the size of the company.

For employers with 25 or more employees in Massachusetts, though the employer must remit the full contribution to the trust fund, for medical leave the employer may deduct up to 40 percent of the contribution from the employee’s wages; and for family leave the employer may deduct up to 100 percent of the contribution from the employee’s wages.

The impending regulations will determine how the 0.63 percent contribution rate will be allocated between medical leave and family leave. Smaller employers with less than 25 employees in Massachusetts are not required to pay any portion of the contribution for family and medical leave.

The director of the newly established Department of Family and Medical Leave may adjust the contribution rate annually if necessary to provide the program sufficient funds.

Beginning July 1, 2021 (although the statutory language concerning this date is currently inconsistent and needs to be clarified), workers will be able to take family or medical leave and file claims with the department for medical or family leave benefits.

After a seven-day waiting period, workers on paid leave will earn 80 percent of their wages up to 50 percent of the state average weekly wage, and then 50 percent of their wages above that amount, up to an $850/week cap. The director may adjust that cap annually to be 64 percent of the state average weekly wage. During the waiting period, employees may use accrued paid sick leave.

Opt-out option

Employers may apply to the department for approval to opt out of the state program if they have a private program that offers benefits greater than or equal to what an employee would receive in the state program.

It is anticipated that a marketplace for alternative insured private plans will develop.

Employer notice requirements

Effective July 1, 2019, employers will be required to post a notice of benefits available under the law (prepared or approved by the department) in a conspicuous place on each of their premises. The notice must be in English and any other language that is the primary language of five or more employees of that workplace. Contemplated technical amendments may change the five-employee threshold to 5 percent.

Also effective July 1, 2019, employers must issue to each employee within 30 days after the employee’s start date written information provided or approved by the department in the employee’s primary language explaining the available benefits; the employee’s contribution amount and obligations; the employer’s contribution amount and obligations; instructions on how to file a claim for family and medical leave benefits; and related information.

The new Paid Family Medical Leave Law may cause a significant uptick in the amount of leave taken by employees.

Coordination with other types of leave, benefits

The weekly benefit amount shall be reduced by the amount a worker receives under any government program or law, including workers’ compensation (other than for permanent partial disability previously incurred), other disability benefits law, or an employer’s permanent disability program.

The amount shall not be reduced by the amount received while on leave under a temporary disability program, or a paid family or medical leave policy, unless the aggregate amount an employee would receive exceeds the employee’s average weekly wage.

During leave, the employer shall continue to provide for and contribute to the employee’s employer-provided health insurance benefits, if any, at the level and under the conditions coverage would have been provided if the employee had continued working continuously for the duration of such leave.

As the current statutory language reads, the taking of family or medical leave shall not affect an employee’s right to accrue vacation time, sick leave, bonuses or other employment benefits.

PFML will run concurrently with leave taken under the Massachusetts Parental Leave Law or the federal FMLA. Employers also may require PFML to run concurrently with leave provided under an employer’s policy or a collective bargaining agreement at the same or higher rate than PFML, provided employers provide written notice.

Submitting a claim

Employees must provide employers at least 30 days’ notice of the anticipated starting date of the leave, its anticipated length, and the expected return date, or as soon as practicable if the delay is for reasons beyond the employee’s control.

Workers must submit a benefits claim to the department within 90 days after the start of leave, or benefits may be reduced.

Legal compliance

The law prohibits retaliation against employees for exercising their rights, and any negative change in status or adverse employment action during a leave or within six months of the leave will create a rebuttable presumption of retaliation.

The law provides employees a private right of action for a violation with a three-year statute of limitations. A court may award a prevailing employee job reinstatement; benefits reinstatement; injunctive relief; compensation for three times any lost wages, benefits and other remuneration and the interest thereon; and reasonable costs and attorneys’ fees. However, proposed technical amendments contemplate striking the treble damages provision.

Failure to comply with the notice requirements will result in a civil penalty for a first violation of $50 per employee, and $300 per employee for each subsequent violation.

What’s next?

By March 31, 2019, the department will publish for public comment and hearing proposed regulations, which will be promulgated by July 1, 2019.

The PFML Law may cause a significant uptick in the amount of leave taken by employees. For one, the increase from 12 to 20 weeks for medical leave for an employee’s own condition may cause an increase in the amount of leave taken. The fact that employees will now receive partial pay, and for lower wage earners full pay, for leave likely will serve as an incentive for many to take more time off than previously taken.

Though the employer’s contribution is limited, the law likely will increase labor costs, as employers likely will have to pay overtime or additional wages to co-workers or temporary workers to cover the absent employees’ duties.

For companies with a low number of employees within the commonwealth that were not subject to the federal FMLA, the PFML Law will provide their Massachusetts employees the ability to take significant time off not previously offered.

Questions surrounding the law’s terms and implementation will be the subject of much discussion through the March 2019 proposed regulations. In the interim, employers should start reviewing and consider redesigning their leave programs and policies.

Daniel Klein is a partner at Seyfarth Shaw in Boston.