Navigating the Paid Family and Medical Leave Act

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Robert Kaitz
01/25/2021

PFML

Effective January 1, Massachusetts employees and some 1099 contractors and self-employed individuals became eligible to take paid, job-protected leave for family or medical reasons through the Commonwealth’s Paid Family and Medical Leave program (PFML).  PFML is administered by the Department of Family and Medical Leave (Department), a new state agency, and funded by PFML payroll taxes.

Massachusetts employers navigate this new legal terrain that also exists in eight other states (California, Connecticut, Colorado, New Jersey, New York, Oregon, Rhode Island and Washington) . They key is for employers to educate themselves and their workers on the nuances of PFML. Proactive efforts to understand PFML and its complexities will greatly ease the transition for employers. 

Notably, employers who voluntarily administer a leave program for their workers that provides equivalent (or more generous) benefits and protections can apply to the Department for an exemption to PFML. Otherwise, employers are bound by this scheme. For the purposes of this article, we will delve into what this policy looks like in the state of Massachusetts as an example.

Contributions

Since October 2019, the PFML program has been funded through payroll taxes. PFML requires employers to withhold contributions from covered individuals, remit them to the Department and pay their own share of the payroll taxes (for larger businesses). The payroll taxes in Massachusetts are currently up to 0.75% of a worker’s earnings, capped at taxable wages or earnings of $142,800, and they will remain at this rate until at least the end of 2021.

Smaller businesses of fewer than 25 covered individuals on average in the prior year are excused from paying an employer portion of the contributions, while larger businesses are required to contribute to roughly half of the 0.75% amount for each covered individual, with the covered individual bearing responsibility for the rest.

Eligibility for Benefits

Covered individuals eligible for PFML benefits include employees (W-2 workers), self-employed individuals, and 1099 contractors living and performing services in the state if 1099 contractors make up more than 50% of an employer’s workforce. On an annual basis, employers must calculate if 1099 contractors comprise at least 50% of their workforce, to determine if those 1099 contractors are eligible for PFML benefits for the following year.

READ: Supreme Court Rules in ERISA Pre-Emption Case 

On January 1, covered individuals became eligible for paid, job protected leave for the following qualifying events:

  1. Up to 20 weeks of medical leave to care for one’s own serious health condition
  2. Up to 12 weeks of family leave to bond with a child after birth, adoption, or foster care placement (leave can be taken for this purpose up until one year after the child’s birth or adoption or foster care placement)
  3. Up to 26 weeks of family leave to care for a qualifying family member who suffers from a serious health condition as a result of active duty service overseas in the armed forces
  4. Up to 12 weeks of family leave to manage needs arising out of a qualifying family member’s current or impending active duty service.

Beginning on July 1, 2021, eligible individuals may take up to 12 weeks of paid family leave per year to care for a family member with a serious health condition. Per benefit year, eligible individuals are capped at 26 total weeks of PFML. Leave need not be taken at once, as intermittent leave may be an option for some qualifying events.

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Applying for Benefits 

The covered individual is responsible for applying directly to the Department for family or medical leave. The Department facilitates and processes benefit applications, while employers must supply the Department with certain information and verify the accuracy of information submitted by covered individuals. 

Where feasible, the covered individual must provide the employer with notice of the leave at least thirty days prior to its commencement.

Calculating Benefits 

Covered individuals on PFML leave will receive up to 80% of their average weekly wage, with a maximum benefit in 2021 of $850 per week. The average weekly wage is calculated from the individual’s earnings in a base period consisting of four of the five quarters immediately prior to the commencement of the leave. The weekly benefit amount will be reduced by certain other benefits or wages received. The scheme for calculating benefits is similar to Massachusetts unemployment insurance laws.

Interplay with Other Types of Leave 

Employers with at least 50 employees within a 75 mile radius of a worksite are subject to the federal Family and Medical Leave Act (FMLA). Leave under PFML and FMLA run concurrently, but eligibility for each leave has different criteria. For example, while employees may be eligible for PFML benefits upon hire, employees must work for the employer for at least one year and at least 1,250 hours in the preceding year to qualify for FMLA leave. Conceivably, a new employee could exhaust PFML leave and become eligible for unpaid leave under the FMLA within several months thereafter.

PFML’s 12-month benefit period looks forward from the first day of leave, unlike the FMLA, under which an employer can choose from several methods for calculating a benefit year.  Employers subject to FMLA should consider changing their FMLA benefit year calculation to run concurrently with PFML’s “look forward” method to streamline leave procedures.

Employees eligible for employer-provided paid leave benefits while on medical or family leave will not be permitted to “double dip” and receive PFML payments simultaneous with the receipt of employer-provided paid leave benefits. Employers must explain to their employees that these paid leave benefits run concurrently with PFML leave.

Job Protection 

Job protention can vary by state. In Massachusetts, PFML leave is job protected, meaning the employer must restore the individual to his or her job after completion of the leave, subject to a very narrow exception. Employers cannot retaliate against workers for lawfully applying for and taking PFML.

Strikingly, under the law, any “negative change” to an employee’s seniority, status, employment benefits, pay, or other terms or conditions of employment during the PFML leave or within six months thereafter creates a presumption of retaliation. The employer must justify the “negative change” with clear and convincing evidence.

In response to push back from business interest groups, the Department recently published revised regulations that clarify that an employer’s application of a preexisting employment rule or policy giving rise to a “negative change” constitutes clear and convincing evidence to rebut a presumption of retaliation. 

The regulations further provide that trivial or perceived inconveniences with a de minimis impact on an employee’s work do not give rise to a retaliation claim. Finally, an employer is not engaged in retaliation by reporting to the Department a bona fide belief that an employee committed fraud in connection with applying for PFML.

These limitations to the presumption of retaliation provide some reassurance to employers, but the law’s anti-retaliation provision remains skewed to broadly protect employees. To mitigate the risk of a retaliation claim, employers must ensure that business-necessary employment rules or policies are in writing and uniformly enforced to provide the clear and convincing evidence needed if they take adverse action against an employee recently returning from PFML leave.

Photo Courtesy of Stock Photo Secrets 

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