PFML (Paid Family Medical Leave)
The Paid Family Medical Leave Act created a lot of confusion. The state has worked out a lot of those confusing details, and we will continue to update you on their progress.
Essentially the PFML is a benefits program. The payments start now, however no one is eligible for the benefits until January 1st 2021. All Massachusetts W-2 employees and many 1099-MISC contractors will be covered by the PFML law and eligible for benefits.
If an employer offers another form of PFML, they may apply for an exemption from payment, however the workers have the same anti-retaliation and protections under the new law.
Benefits
Per the MA department of Revenue, paid leave may be taken to:
- Care for a sick family member
- Bond with a newborn child
- Bond with a child after adoption or foster care placement
- Manage family affairs when a family member is on active duty in the armed forces
- Manage a personal serious injury or illness
Weekly benefit amounts are calculated as a percentage of your earnings. This means weekly benefits may be different for each individual.
The maximum weekly benefit is $850 per week.
Tax
PFML eligible wages match MA unemployment wages, therefore stipends and employer 401k contributions are included in the PFML wages calculation. PFML is a tax of no greater than 0.75% of your eligible wages paid by you and, potentially, your employer. The maximum amount that could come out of your paycheck is $0.38 per $100.00. The amount will vary depending on how much is being contributed by each party. The maximum amount of earnings subject to these contribution rates is $132,900 annually for each covered individual.
If you are a self-employed individual, you can choose to opt-into PFML contributions.
Please use the link below for the details on the wages and subcontract pay from the state of Massachusetts.
Counting your MA workforce
- Add up the total number of MA W-2 employees you paid each pay period in 2018 and divide that number by the number of pay periods. This is your 2018 MA W-2 average.
- Add up the total number of MA 1099-MISC contractors you paid for services each pay period in 2018 and divide that number by the number of pay periods. This is your 2018 MA 1099-MISC average.
- If your 2018 MA 1099-MISC average is greater than your W-2 average, then they are considered covered individuals.
- Add up your total number of covered individuals in 2018.
Employers with fewer than 25 covered individuals (employees and subcontractors) must remit an effective contribution rate of 0.378% of eligible wages. This contribution rate is less because small employers are not required to pay the employer share of the medical leave contribution, reducing the total contribution amount.
Small employers are responsible for remitting the funds withheld from covered individuals’ earnings but are under no obligation to contribute themselves. However, they may elect to cover some or all of the covered individuals’ share.
Employers with 25 or more covered individuals (employees and subcontractors) must will be required to remit a contribution to the Department of Family and Medical Leave of 0.75% of eligible wages. This contribution can be split between covered individuals’ payroll or wage withholdings and an employer contribution.
For employers with under 25 eligible employees, the employer may tell 1099 subcontractors to pay their own contribution. For instance a $100 payment can be used by the subcontractor as part of their calculation and they can record and pay the $0.38 to the state. It seems easier for the employer to pay the $0.38 as part of the withholding. A number of payroll services will process this amount for you.
Please see this link to a Payroll Provider
Employers reporting year-end PFML contributions on both the W-2 and 1099-MISC forms should report contributions on Box 14 for W-2s and Box 16 for 1099-MISC. In both cases, the boxes should read “MAPFML”
https://www.mass.gov/info-details/family-and-medical-leave-contribution-rates-for-employers