BREAKING NEWS: As of June 24, religious institutions are no longer automatically included in this program. More information about how to participate in this potentially valuable benefit will be posted as soon as it is available.
The new Massachusetts Paid Family & Medical Leave Act requires all covered employers to notify their workers of the new law by September 30, 2019 (note that the original deadline was June 30), and begin withholding on October 1, 2019 (original date July 1). Beginning in 2021, employees of Massachusetts organizations, including churches, will be eligible for state-funded paid family and medical leave. This will allow virtually all workers in Massachusetts some compensation and job security if they become sick or need to care for a family member. All Massachusetts employers — including those who only employ 1099 contractors — will need to comply with new reporting responsibilities, as outlined in this Mass.gov one-page summary.
For all participating employers, there are five steps:
- determine employer status based on 2018 payroll and payments to contractors,
- notify employees and contractors before September 30, 2019, with a $50 per person fine for non-compliance (!)
- withhold taxes beginning October 1, 2019
- report quarterly wages through the MassTaxConnect site, due by January 31, 2020, and
- remit withheld taxes and the employer portion, if any, also by January 31, 2020.
First, determine whether the employer is a covered business entity who is required to withhold from its independent contractors, based on the previous calendar year. A covered business entity is an employer whose independent contractors make up more than 50% of its total workforce.
For the period January 1 – December 31, 2018:
- Calculate (a) the average number of employees – full time, part-time, and seasonal — per pay period. Include temporary employees unless they are paid by a separate Employment Agency.
- Calculate (b) the average number of eligible Massachusetts contractors per pay period.
- If (b) is greater than (a), then the employer is a covered business entity for the following calendar year and the covered workforce is the sum of (a) and (b) – both its employees and contractors.
- If (b) is less than or equal to (a), then the employer is not a covered business entity and the covered workforce is (a) — its employees only.
Note that this determination of the status of the employer then carries over to the next year’s contractors, regardless of the 50% threshold in the current year.
Also note that the majority of independent contractors are not a part of an employer’s workforce for the entire year, but for one or more pay periods, for example:
- A lawn maintainer, May – October, 13 of 26 pay periods
- A guest preacher from out of state, three Sundays, not eligible since out of state
- A guest preacher living in Massachusetts, three Sundays, three pay periods
- A trumpeter for the Christmas and Easter services, two pay periods
- A plumber, three service calls, three pay periods
- A painter, mid-July-September, five pay periods
- A bookkeeping service, all year
In this example, an employer filing seven 1099 forms would have an average of 2 eligible Massachusetts contractors per pay period.
Second, notify all employees and contractors of the new law by September 30, 2019, or at the time of hire, and receive acknowledgement that they have received the notification. All participating employers must:
- Display a poster on the premises, available here.
- Provide a written notice of contributions, benefits and workforce protections to all individuals in its workforce, employees and Massachusetts contractors, either in person, by mail or by e-mail. The Department of Family and Medical Leave has provided templates for notification of your employees and 1099 contractors.
- There are different notifications, depending whether your 1099 contractors are covered and/or you have more than 25 covered workers.
- You will need to download the template and fill in the information applicable to you for 2019. Note that this notice may change from year to year.
- For all employees on your payroll as of October 1, 2019,
- For all independent contractors for whom you will provide a 1099 in 2019, and who you will pay for services on or after October 1, 2019,
- The notice must be given in the individual’s primary language. The notice is provided in twelve languages here.
- Collect a signed acknowledgement from each covered individual and keep it in their personnel file. If you do not receive the signed acknowledgement returned to the church, be certain that you have documented the delivery of the notice to the individual so that the church avoids penalties.
- The penalty for failing to provide notice is $50 per employee or contractor for the first violation and $300 per employee or contractor for subsequent violations.
Information about the remaining three responsibilities, withholding, reporting, and remitting will be posted once the details are confirmed.