The Department of Paid Family and Medical Leave (DFML) continues to issue updates concerning compliance with the Massachusetts Paid Family and Medical Leave Law (PFML). The DFML’s most recent updates address private plan exemptions and how the DFML has reevaluated and revised its internal review process to more efficiently evaluate these applications. In addition to understanding the impact of these private plan updates, employers should also be aware that failure to comply with notice requirements under the law may result in fines.

Private Plan Exemption Updates

Exemption Deadline Extension

The deadline for submitting an application for exemption from remitting contributions for the first-quarter period of October 1, 2019, to December 31, 2019, is December 20, 2019. If the DFML ultimately approves an application submitted by the December 20 deadline, that employer’s effective exemption date is October 1. This retroactive approval is available only for the first quarter of PFML contributions, as the DFML continues to streamline the review of exemption applications. Going forward, the DFML will consider any application for an exemption submitted on December 21, 2019, or later, for the following quarter; thus, those employers will be responsible for collecting first-quarter contributions.

The process for obtaining approval for a private plan has several steps, and the DFML may request additional information from an employer following its initial application submission. Note that an employer is responsible for notifying its employees if it is in the process of applying for a private plan exemption. If an employer is approved for an exemption after September 30, 2019, it is also required to notify employees about the details of its private plan and any changes to contributions.

Standards for Fully Insured Approved Plans

Following the receipt of over 500 private plans from employers, the DFML discussed in a recent public forum the wide disparity in the plans for which employers are seeking to receive exemptions. As a result, the DFML has worked to refine its internal review process and standardize the criteria necessary for approval. Note that there are two types of plans that can qualify for an exemption: (1) a fully insured PFML private plan offered by an insurance carrier licensed by the Massachusetts Division of Insurance (DOI) or (2) a self-insured plan funded by an employer (which may have a third-party administrator). With regard to fully insured private plans, the DFML and the DOI are working with insurance carriers to create a standardized declaration of insurance form that all carriers can use to demonstrate that a plan is consistent with PFML requirements. The DFML seeks to have this form available by November 2019. In the interim, it will consider a carrier-issued declaration of insurance as acceptable proof of PFML coverage consistent with the DFML’s standards.

Insurance Carriers

The DOI has published a list of approved insurance carriers that can provide a PFML declaration of insurance that complies with DFML standards. The DOI will continue to update this list. Employers can work with their insurance carriers to obtain the forms necessary for inclusion in their exemption applications.

Update on Bond Forms for Self-Insured Plans

With regard to self-insured plans, employers that are self-insured and that have been approved for an exemption must provide to the DFML a surety bond running to the Commonwealth of Massachusetts. The DFML updated its bond calculation formula and bond forms as of September 2019.

Reminders About Notice to Workers

1099-MISC Workers

In August 2019, the DFML issued clarification on which 1099-Misc workers are covered under the PFML. Those changes, most notably the clarification that true independent contractors are not covered under the PFML, were detailed in our last update. These changes may require employers to contact 1099-MISC workers who previously received notices of benefits under the PFML. To assist with this, the DFML has posted an “acknowledgement reversal” form for employers to provide to 1099-MISC workers who are not actually covered individuals because of the updated guidance.

Reminder About Fines for Failure to Provide Notice

The deadlines for notice to current employees regarding the PFML, including the workplace poster and notices for distribution to individual employees, have now passed. Employers are reminded that failure to provide the notice required by law may result in a fine of $50 per Massachusetts W-2 employee or 1099-MISC contractor for first violations, increasing to $300 per worker for subsequent violations.