Employer Alert: Final Regulations Issued for Massachusetts Paid Family Medical Leave

August 28, 2020

On July 24, 2020, the Department of Family and Medical Leave (the “Department”) issued final regulations regarding Massachusetts paid family and medical leave (“PFML”). The final regulations include several substantive changes from the initial draft regulations, specifically regarding applications for exemption from PFML contributions, substance abuse disorders, effect of employer-provided leave, and reimbursement for employer-issued PFML benefits. These changes are summarized below.

What is PFML?

As described in a previous alert, paid family and medical leave will be available to covered individuals who work in Massachusetts beginning January 1, 2021. Covered individuals include:

  •  W-2 workers who work in Massachusetts, whether they are full-time, part-time, or seasonal who meet certain financial eligibility requirements (i.e., in the 12 months before filing a claim for benefits they earned at least 30 times the weekly benefit amount, totaling at least $5,100);

  • 1099-MISC workers who work in Massachusetts, do not qualify as independent contractors, who make up more than 50% of their employer's workforce, and meet the financial eligibility requirements described above;

  • Former employees who met the financial eligibility requirements described above at the time they were separated from their employment and who have been unemployed for less than 26 weeks; and

  • Self-employed individuals who opt into the program and meet certain criteria.

Note: Under the final regulations, wages received from multiple employers or covered business entities (“CBEs”) within the base period can be aggregated to determine financial eligibility for leave. A covered business entity is a business or trade that contracts with self-employed individuals for services and is required to report the payment for services to such individuals on IRS Form 1099-MISC for more than 50% of its workforce.

Beginning January 1, 2021 eligible individuals may begin taking: 

  • Family Leave: up to 12 weeks of leave to 1) bond with their child within the first 12 months after birth or adoption/foster care placement or 2) due to 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;

  • Medical Leave: up to 20 weeks of medical leave for the individual’s own serious health condition; and

  • Up to 26 weeks to care for a covered service member.

On July 1, 2021, eligible individuals may begin taking up to 12 weeks of leave to care for a family member with a serious health condition.

Serious health condition means an illness, injury, impairment or physical or mental condition that involves: (a) inpatient care in a hospital, hospice or residential medical facility; or (b) continuing treatment by a health care provider.

What are the biggest takeaways from the final regulations?

1)    Applications for Exemption Due to Approved Private Plan

The final regulations include additional information regarding the application process for private plan exemptions, including applications for partial exemptions (employers or CBEs may apply for an exemption from making contributions for medical leave coverage, family leave coverage, or both). Specifically, employers or CBEs may not apply for exemptions on behalf of a portion of their covered workforce – all employees, covered contract workers, and former employees eligible for PFML must be included in the employer or CBE’s private plan to be approved for exemption. 

2)    Substance Abuse Disorders

Although substance abuse disorders were specifically excluded from serious health conditions under earlier versions of the regulations, substance abuse disorders may now qualify as a serious health condition if leave is taken for treatment by a health care provider, by a provider of health care services on referral by a health care provider, or by a program licensed or approved by the Massachusetts Department of Public Health. An absence from work because of the employee's use of the substance, rather than for treatment, does not qualify for leave.

Although an employer may not take action against an employee because they exercised their right to take leave for treatment, their employment may be terminated if the employer has an established policy, applied in nondiscriminatory manner, that has been communicated to all employees, which provides that under certain circumstances an employee may be terminated for substance use. An individual’s employment may be terminated pursuant to that policy regardless of whether they are on leave. 

An employee may also take leave to care for a covered family member who is receiving treatment for a substance use disorder.

3)    Accrued Paid Leave and Substitution of Employer-Provided Leave

The final regulations also include a definition of “accrued paid leave.” Accrued paid leave is leave earned by or provided to a covered individual pursuant to an employer or CBE’s benefit plan or policy, including (but not limited to) sick leave, annual leave, vacation leave, personal leave, compensatory leave or paid time off. Accrued paid leave does not include an employer or CBE’s disability policy or program, or paid family, or medical leave policy. 

This added definition is helpful because it offers greater clarity for employers regarding under what circumstances an otherwise qualified individual will be unable to receive PFML benefits. Specifically, covered individuals who use accrued paid leave or leave through an extended illness leave bank program will not receive Department-issued PFML benefits for the period of time they are taking such leave. This leave will also run concurrently with any available PFML. 

For example, if an employee takes PFML for the birth of their child (12 weeks) and takes two weeks of vacation at the beginning of their leave, they will not receive PFML benefits during that initial two-week period. However, the employee will remain eligible to receive PFML benefits for the remaining 10 weeks of their leave.

4)    Wage Reductions

The final regulations also offer additional information regarding what types of compensation will lead to a reduction in Department-issued weekly PFML benefits. Specifically, the weekly benefit amount a covered individual receives will be reduced by the amount of wages, wage replacement, or leave they receive for that period from: 1) any government program or law (i.e., unemployment, workers’ compensation, etc.) except for permanent partial disability incurred prior to their application for PMFL benefits; 2) any other temporary or permanent disability benefits law; or 3) an employer or CBE’s permanent disability policy or program. 

The weekly benefit amount will not be reduced by the amount of wage replacement that a covered individual on family or medical leave receives for that period from: 1) their employer or CBE’s temporary disability policy or program; 2) their employer or CBE’s paid family or medical leave policy; or 3) any wages received from another employer or CBE or through self-employment, unless the aggregate amount the covered individual receives exceeds their average weekly wage. 

A covered individual’s weekly benefit amount will also be reduced by any paid family or medical leave they receive from any source for any qualifying reason in the 12-month period prior to filing an application for benefits. Their leave allotment (i.e., the weeks of PFML they qualify for) will also be reduced by the amount of family or medical leave they take for any qualifying reason during the benefit year. However, any leave taken by the covered individual for the samequalifying reason prior to January 1, 2021 shall not count against the covered individual's weekly benefit amount and/orleave allotment.

5)    Employer Reimbursement

Under the final regulations, employers and CBEs may qualify for reimbursement from the Department if:

  • They make payments to a covered individual during a period of family or medical leave that are equal to or greater than the benefits the individual would have received from the Department.

  • They make these payments pursuant to a temporary disability policy or program, paid family, or medical leave policy, or an extended illness leave bank.

  • The leave is granted for a qualifying reason under the PFML statute, that is separate from and in addition to any accrued paid leave available to the covered individual.

Employers and CBEs will not be eligible for reimbursement from the Department if the covered individual elected to use accrued paid leave, whether it is in lieu of applying for PFML benefits or supplementary to an employer or CBE’s temporary disability policy or program, or paid family, or medical leave policy.

Employers and CBEs who have received a private plan exemption are not eligible for reimbursement.

Are there other changes to the regulations?

 

In addition to the substantive changes described above, the final regulations include changes to:

  • Calculations for a covered individual’s wages if they have multiple employers;

  • Notice requirements for covered individuals applying for PFML benefits;

  • The process for requesting leave; and

  • The definition of intermittent leave.

The regulations also include several added definitions and allow for treatment by a healthcare provider to occur either in-person or through telehealth visits.

For assistance with these developing issues and to ensure compliance with Massachusetts’ paid family and medical leave requirements, please contact Margaret H. Paget or Allyson E. Kurker at Kurker Paget LLC.