Baker Signs Paid Family Medical Leave Tax Delay

June 14, 2019

Governor Charlie Baker made quick work of the bill imposing a three-month delay to the start of the payroll tax by signing it within 90 minutes of its final legislative vote. This new payroll tax will fund Paid Family and Medical Leave (PFML) benefits for all Massachusetts workers.

The bill (S 2255), now a law, delays until October 1, 2019. This will be the start of a new payroll tax contribution to fund the estimated $800,000,000 paid family and medical leave program. This program will allow workers to easily take care of themselves and their families without facing financial crises. The fledgling Department of Family and Medical Leave (DFML) planned to begin collecting a 0.63 percent payroll tax from employers July 1 to fund the program, but business and advocacy groups raised concerns about their ability to prepare for the new tax.

A joint statement was issued by the governor, House Speaker and Senate President earlier this week committing to the delay. The postponement was meant to give employers a measure of certainty about what will be expected of them once those contributions begin. Though Baker administration officials confirmed that they had proposed to increase the payroll tax rate from 0.63 percent to 0.75 percent in order to collect the same amount of money in a shorter timeframe, the new law does not appear to have altered the tax rate.

The new law calls for up to 12 weeks of job-protected paid leave to care for a seriously ill or injured family member, to care for a new child, or to meet family needs arising from a family member’s active duty military service. It also authorizes up to 20 weeks of job-protected paid leave to recover from a worker’s own serious illness or injury, or to care for a seriously ill or injured service member.

The new law does not delay benefits which will become available on Jan. 1, 2021 for workers seeking time off to bond with a new child, take care of a sick or injured service member or to tend to a serious personal health condition. On July 1, 2021, benefits will be made available for workers to care for a family member with a serious health condition.

Are you prepared for this new law? If not, give us a call and we are happy to help you understand your employer obligations and the impact this regulation will have on your business. Click here to read our most recent blog regarding PFML.