Governor Charlie Baker on Thursday signed legislation that will extend by three months the July 1 starting date for contributions to the new Massachusetts paid family and medical leave program.
Baker, along with House Speaker Robert DeLeo and Senate President Karen Spilka, had committed to a delay on Tuesday.
"To ensure businesses have adequate time to implement the state’s Paid Family and Medical Leave program, the House, Senate, and Administration have agreed to adopt a three month delay to the start of required contributions to the program. We will also adopt technical changes to clarify program design. We look forward to the successful implementation of this program this fall,” read a joint statement issued by the three leaders.
The action comes three weeks after AIM, Raise Up Massachusetts and other groups sought a delay to permit employers, employees and the marketplace to prepare for the sweeping new benefit approved last year. AIM and its 3,500 members are particularly concerned about the lack of clarity surrounding opt-outs and cost sharing with employees.
The delay will not reduce total contributions paid to the new family and medical leave trust fund because the state will increase the contribution rate from .63 percent to .75 percent of wages. The new contribution rate will raise the tax for an employee earning the state average weekly wage from $872 per year to $1,038 per year.
Workers will be able to access paid leave benefits beginning in January 2021.
“Associated Industries of Massachusetts (AIM) and its 3,500 member companies are gratified that the governor, House speaker and Senate president today committed to a three-month delay in the start of the paid family and medical leave program. The decision will allow employers and workers alike to prepare themselves for the era of paid leave and ensure that this landmark initiative gets off the ground successfully,” said John Regan, President and CEO of AIM.
“The state’s top elected leaders deserve tremendous credit for recognizing the need to adjust the timing of the program’s capitalization and to make minor adjustments to the law that was passed last year. AIM is also grateful to the 52 state legislators who sent letters to Beacon Hill leaders urging them to take this action.”
The proposed adjustments to the law include five amendments intended to provide clarity on issues such as intermittent leave and the definition of “serious medical condition.” The clarifying amendments will also align core principles of the Massachusetts paid family and medical leave law with the federal Family and Medical Leave Act (FMLA).
AIM-member employers sent more than 2,500 messages to Governor Charlie Baker and Beacon Hill leaders last month indicating that they do have adequate time or information to make decisions about how to much of the paid leave assessment to share with employees or whether to elect a private-sector alternative to the state program. One company wrote that it has been trying to determine how to implement the new law while preserving the paid medical leave benefit that it already offers its associates because it is more generous than the state law.
“I have contacted insurance companies to get a cost estimate for a paid family leave policy in order to determine our best course of action on that part of the law, but no one is ready to quote a product yet. We don't even know if the deductions from employees pay should be pre- or post- tax,” the company wrote.
Joining AIM and Raise Up in calling for a delay were the Greater Boston Chamber of Commerce, The Coalition for Social Justice, Local 509 of the Service Employees International Union, Greater Boston Legal Services, The Massachusetts Business Roundtable, the Alliance for Business Leadership and the Springfield Regional Chamber of Commerce.
The administration attempted to allay employer concerns last month by extending the deadline for employers to secure private insurance that would allow them to opt out of the paid leave system. The administration also extended the deadline for employers to inform workers about opt-out plans from May 31 to the end of June.
The business and advocacy groups commended the administration’s efforts but said they will not solve the problem.
“Given the lack of employer clarity on the regulations, the importance of communicating with employees regarding payroll deductions, and the ability for insurance providers to offer a private-sector option, we continue to support and urge legislative action on the proposed amendment extending the deadline for private plan approvals and the commencement of required contributions from July 1, 2019, to October 1, 2019…” the group wrote.
The paid family and medical leave law provides workers with 12 weeks of family leave and 20 weeks of personal medical leave. Workers on paid leave will earn 80 percent of their wages up to 50 percent of the state average weekly wage, then 50 percent of wages above that amount.
The employer is required to pay at least 60 percent of the medical leave contribution required for each employee. The employer is required to pay none of the contribution for family leave. Employers may, of course, pay a higher percentage for each category of leave or elect to pay the entire contribution for each employee.
“The business community remains committed to the successful implementation of paid family and medical leave in Massachusetts,” Regan said.
Want updates on paid family and medical leave in Massachusetts? Contact Brad MacDougall, firstname.lastname@example.org.