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New MA Paid Family and Medical Leave Act

Starting July 1st, 2019 employers need to start planning for the new Family and Medical Leave Act, which will be an additional payroll tax. This act allows paid leave for up to 26 weeks for eligible individuals for situations such as a child birth, a serious health condition, or to care for a spouse, child, or parent with a serious health condition. Employers will be responsible for withholding and remitting the tax to the state of Massachusetts. Below are some key highlights of the new tax:

* Every single employee on a W-2 is subject to the new tax (including owners that are on a W-2).

* If 1099-Misc contractors make up over 50% of your workforce, they are subject to the new tax as well.

* The tax works similar to social security, wages are subject to tax up to $132,900. Once wages go above this limit, the tax is not owed for this particular employee who reached the max.

* The tax gets paid after each quarter on Masstaxconnect after the quarter ends. The first payment is due on October 31, 2019 for the 3rd quarter of 2019.

* If you already provide paid leave benefits to your workforce, you can apply for an exemption if your plan is equal to or better than the new FMLA plan offered by Massachusetts which is up to 26 weeks paid leave per year.

* By June 30th, you need to post the following poster on your premises:

https://www.mass.gov/files/documents/2019/03/21/20190321_DFML%20Notice_FINAL.pdf

* By June 30th you will need to have each employee and/or subcontractor sign the acknowledgement form. (please keep in mind that subcontractors are only subject to this tax if 50% or more of your workforce is made up of subcontractors). This form can be found on the following webpage:

https://www.mass.gov/guides/a-guide-to-paid-family-and-medical-leave-for-massachusetts-employers

* The tax is equal to .63% of the gross wages or other payments to all covered individuals in your workforce.

* If your workforce is under 25 covered individuals, as an employer you do not have to pay an employer’s portion of the tax but you still need to withhold the tax from your employees and remit it to MA.

* If your workforce is 25 or more covered individuals, you as an employer need to pay a tax along with your employees.

Please consult your payroll company and/or tax advisor on the above situation.

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