8 minute read
Insurance Perspective
Jordan Tirone
DeSanctis Insurance Agency, Inc.
PFML: A Reality of 2021 and Beyond
An issue that has had employers searching for answers and solutions has now officially gone live. 2021 has marked the official kickoff of the Massachusetts Paid Family and Medical Leave Act (PFML) and its details and business implications seem to be a bit of a “black box.”
For this month’s “Insurance Based” article I tapped the shoulder of Chad DiBonaventura who is a Managing Director at Baystate Benefit Services out of Braintree Massachusetts to breakdown the topic. Chad has been a trusted advisor in the benefits space for over 15 years and has performed extensive research on PFML and its significance to employee benefits.
This article will navigate around the practical concepts of PFML and how employers may be able to seek alternative solutions within compliance.
With all of the uncertainty that has taken place in 2020, employers in Massachusetts now must begin to implement the Paid Family and Medical Leave Act (PFML), which will prove to be one of the state’s most important legislative changes in regards to an employee’s ability to take leave. Eight other states along with D.C. have now enacted paid family and medical leave laws, which is an increase from four states in 2016. Nationally, this is a growing phenomenon with additional states sure to follow Massachusetts.
On January 1, 2021, the Massachusetts Paid Family and Medical Leave Act (PFML) began providing leave benefits to employees meeting the eligibility requirements. Employers should have already begun to take steps to ensure that they are complying with the leave law. Specific items that should be addressed include implementing leave policies, updating employee handbooks, and for those employers utilizing a private plan, ensure that the exemption process has been completed. Who is Eligible for the Massachusetts PFML?
The PFML platform provides paid leave benefits to the following: • All eligible W-2 employees in Massachusetts • Some 1099-MISC workers
In order for employees to be eligible to receive paid benefits, they must have earned $5,100 during the last four completed calendar quarters from Massachusetts employers and the earnings may be aggregated from different employers. Additional requirements could apply due to the complex formula being used by the State. What are the Benefits Being Offered by the PFML?
Beginning on January 1, 2021, employees may be entitled to up to: • 12 weeks of paid family leave in a benefit year for the birth, adoption, or foster care placement of a child, or because of a qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call to active duty in the Armed Forces; • 20 weeks of paid medical leave in a benefit year if they have a serious health condition that incapacitates them from work; • 26 weeks of paid family leave in a benefit year to care for a family member who is a covered service member undergoing medical treatment or otherwise addressing consequences continued on page 60
Insurance Perspective continued from page 59 exercising any right to which their entitled under the of a serious health condition relating to the family member’s military service. paid family and medical leave law. An employee or former employee who is discriminated or retaliated against for exercising rights under the law may, not
Beginning July 1, 2021, employees may be en- more than three years after the violation occurs, instititled to up to: tute a civil action in the superior court. • 12 weeks of paid family leave in a benefit year to care of a family member with a seri- How is the PFML Benefit Funded? ous health condition. The overall PFML program is funded through a • 26 total weeks, in the aggregate, of paid fam- combination of contributions from covered individuals ily and medical leave in a single benefit year. and employers. Employers are responsible for remit-
Weekly benefit amounts will be based on the em- ting contributions to the DFML on behalf of their covployee’s earnings up to a maximum benefit of $850 ered individuals. While larger employers (25 or more per week. The calculation to determine the weekly covered individuals) must pay a share of the contribubenefit is very difficult, as it takes into account the tions, smaller employers (fewer than 25 covered in Boston Area employee’s average weekly wages up to 50% of the dividuals) a Locatiore not required to pay an employer share ns state’s average weekly wage (SAWW). Any portion continued on page 61 of the employee’s average weekly 2 Dexter Street wages that exceeds 50% of the SAWW will be paid at 50%, subject to a weekly benefit that is tied Boston Area Locations Everett, MA 0 431 Second S 2149 treet Bos Lo ton cat Ar ion e s a to the SAWW. 2 Dexte Everett r , Street MA 021 2 49 Dexter Street
Waiting period: Seven cal- Everett, MA 021 Eve49 rett, MA 02149 endar day waiting period before benefits are paid. The waiting pe- 431 Second Stre 43et 1 Second Street riod must be satisfied for each new PFML leave, except that there is Everet Everett, MA 0t, MA 02149 BOSTON AREA LOCATIONS 2149 no waiting period for family leave 2 Dexter Street 100 Fremont Street 431 Second Street for bonding that is taken immedi- Everett, MA 02149 Worcester, MA 01603 Everett, MA 02149 ately after medical leave for childbirth. The waiting period is counted as part of the annual allotment of PFML.
Job Protection: Generally, if an employee takes family or medical leave under the law then they must be restored to their previous position or to an equivalent position, with the same status, pay, employment benefits, length-ofMinichiello Bros./Scrap-It, Inc., Minichiello Bros./Scrap-It, Inc. service credit, and seniority as of Serves over 2500 customers a week and is one New England's largest buyers, Serves over 2500 customers a week and is one of New England’s largest the date of leave. sellers and processors of scrap metal. For over 60 years our goal has remainedbuyers, sellers, and processors of scrap metal. For over 60 years our goal Continuation of Health Insurance: Employers must con-Minichiello Bros./Scrap-It, Inc., the same - to provide the best prices in the industry along with top notch customer service! Call Fred Rogers at 617-595-5505 has remained the same - to provide the best prices in the industry along with top notch customer service! Call Fred Rogers at 617-595-5505 tinue to provide for and contribute Minichiello Bros./Scrap-It, Inc., to the employee’s employmentServes over 2500 customers a week and is one New England's largest buyers, related health insurance benefits, sellers and Servesprocessors of over 2500 customers a week and is one New England'sscrap metal. For over 60 years our goal has remained largest buyers, if any, at the level and under the the same - to sellersprovide the and best processors prices in theof scrap industry metal. along For over 60 yearswith top notch our goal has remained condition’s coverage would have customer service! the same - to provide the best pricesCall Fred Rogers at 617-595-5505 in the industry along with top notch been provided if they had contincustomer service! Call Fred Rogers at 617-595-5505 ued working continuously for the duration of such leave. No Retaliation: It is unlawful for any employer to discriminate or retaliate against an employee for Turn your metal into money today! Minichiello Bros. Inc.,/Scrap-It Inc. Turn your metal into money today! Minichiello Bros. Inc./Scrap-It Inc.
Insurance Perspective continued from page 60 of contributions. Failure of an employer to make contributions or properly assess the allowable deductions from workers may result in monetary penalties against the employer.
Besides the State PFML Plan Does an
Employer have Any Other Options?
Yes, employers have the option to offer employees the leave benefit via a private plan. The benefits are required to be equal to those provided under the PFML program. Employers moving to a private plan have the opportunity to substantially reduce their costs, as several private insurers have priced their plans below the State costs. Private exemptions may be obtained for remitting contributions for family leave, medical leave, or both (primarily this is done for both). Exemptions must be renewed annually and are done at the beginning of each quarter. Employers interested in obtaining an exemption must submit an application through MassTaxConnect, the online portal of the Massachusetts Department of Revenue. The DFML accepts applications for exemptions on a rolling basis, but the exemption will not be applicable unless approved in the quarter prior to the quarter that the exemption is intended to go into effect.
Massachusetts has provided employers the opportunity to utilize one of two types of private plans: • Self-insured plan funded by an employer • Employer must put up a bond and meet State bonding requirements • Purchased private plan offered by an insurance carrier licensed by the Massachusetts Division of Insurance • Most common form outside of employers going directly to the State Next Steps
Employers should first determine if moving to a private plan makes the most sense for the organization or if you should remain in the State plan. Once you make that decision then each employer needs to take the steps necessary for PFML compliance. Employers should ensure that they understand not only how PFML benefits will be administered and calculated, but also the new State requirements. With all of the complexities around leave and wage replacement and related benefit issues, employers should seek advice from their ben-
efits consultants and legal counsel. n
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