Following a truncated period of public comment and hearings, the Massachusetts Department of Family and Medical Leave (Department) released the final regulations under the Massachusetts Paid Family and Medical Leave Law (PFML), effective July 24, 2020.  Beginning on January 1, 2021, all private Massachusetts employers must provide covered individuals with paid family and medical leave, funded through a payroll tax.

The most significant changes adopted in the final regulations are summarized below.

Private Plan Exemptions

Under the PFML, employers have the option of providing equivalent benefits to their employees through an approved private plan or self-insurance. The Department has significantly modified the regulations concerning exemptions through adoption of a private plan.  While employers may continue to apply for an exemption from medical leave, family leave, or both, the final regulations prohibit the grant of an exemption for a private plan that covers only a portion of the workforce.  Instead, per the PFML regulations, all employees, covered workers and former employees must be included within the private plan in order for the employer to be exempted.

Employers must also address additional requirements to receive a private plan exemption:

1. Internal Appeals Process: A private plan must provide covered individuals with an internal appeals process through the private plan administrator before the employee can exercise their rights to an appeal with the Department.  The internal appeals process must give the individual at least 10 calendar days to submit an appeal, and must extend that period if the individual can establish that circumstances outside of their control prevented the filing of the appeal within the proscribed period. 
2. Provide Notice of Rights: The private plan must provide notice to covered individuals, as part of any determination, of their rights under both the private plan and the PFML.  
3. Calculating Benefits: For purposes of determining benefit amount, a private plan must determine the weekly benefit amount based on the wages earned with the employer at the time of an application for benefits.

Once approved for the private plan exemption, coverage for employees and covered workers begins on the first day of the first quarter following the approval or on the employee’s or covered worker’s date of hire. An employer can require verification of wages earned to determine whether the newly hired worker meets the financial eligibility requirements under the PFML.

The final regulations also devote substantial attention to the intersection of state and private plans and the avoidance of coverage gaps if there is a transition between the two. An employer that does not intend to renew its approved private plan must continue to pay the benefits to an employee for the entire duration of the leave if the leave was originally filed under the prior private plan. Similarly, if the employer wishes to transition from participation in the state plan to a private plan, an employee will continue to receive benefits from the state plan for the entire duration of the leave when such leave was originally filed with the Department’s state plan.

With respect to former employees separated less than 26 weeks, if the covered individual remains unemployed and the employer has a private plan exemption, the individual will file for benefits with their former employer. If, however, the former employee is employed with a different employer, they will be required to file for benefits with their current employer.

Lastly, the final regulations further confirm that reimbursement for benefits paid to employees or covered workers is not permitted for an employer or covered business entity that has a private plan exemption.

Applications for Benefits and Benefit Availability

The final regulations now require the covered individual to provide notice to their employer prior to applying for benefits. The Department will reject benefits applications absent proof of such notice.  Covered individuals must submit benefits applications at least 30 days in advance of the anticipated leave start date, but no more than 60 days in advance. The final regulations, however, also provide that covered individuals may file applications as soon as practicable, if the covered individual was unable to meet the filing deadline for reasons beyond the covered individual’s “reasonable” control.

Employees may also qualify for PFML benefits for a substance use disorder that qualifies as a serious health condition. Similar to a rule under the federal Family and Medical Leave Act, absence because of the employee’s use of the substance does not qualify for PFML leave. Treatment for a substance use disorder does not prevent an employer from taking employment action against an employee if the employer has an established policy, applies it in a nondiscriminatory manner, and has communicated the policy to all employees.

Finally, the new regulations allow the use of intermittent leave in 15-minute increments consistent with the employer’s policies provided, however, that payment of PFML benefits by the Department will not be made in requests of less than eight hours, unless more than 30 calendar days have elapsed since the initial taking of such leave.

Reductions to Benefits

The final regulations add additional categories of wages or wage replacement benefits that will reduce PFML benefits. The weekly benefit amount is calculated on the individual’s average weekly wage at the time of the filing of a leave request, which is determined by the individual’s earnings in the base period as reported to the Massachusetts Department of Revenue. In addition to unemployment benefits or any state or federal disability benefits, the final regulations provide that the weekly benefit amount will also be reduced by benefits received from an employer through an approved, exempted private plan or any wages received from “another employer or covered business entity or through self-employment.”  The final regulations remove language that the weekly benefit amount may be reduced where a covered individual has an outstanding tax obligation or obligation for child support.

Focusing on covered individuals with multiple employers, the final regulations also clarify that such individuals are not required to take leave from each employer or covered business entity at the same time.  Depending on the scenario, the covered individual may need leave from one employer or covered business entity while not necessarily needing it from another. Thus, for employers with private plans, the fact that an employee takes a leave from a second employer or covered business entity will have no impact on the benefits available from the employer’s private plan.

Waiting Period

The final regulations clarify that there will be an initial seven-day waiting period for each application for benefits, with the exception of medical leave during pregnancy or recovery from childbirth if supported by a healthcare provider that this medical leave follows immediately after the family leave. 

On the topic of pregnancies, the final regulations also clarify that in case of multiple births, no more than 12 weeks of leave benefits are permitted in a benefit year. This is in contrast to the Massachusetts Parental Leave law that provides up to eight weeks of unpaid, job-protected leave per child. 

Modifications to Key Definitions

Finally, the regulations clarify key components of the PFML:

Accrued Paid Leave. Accrued Paid Leave does not include paid leave under an employer (1) disability policy or program; or (2) paid family or medical leave policy.

Active Duty. The definition now requires that deployment must be to a foreign country to qualify as Active Duty. 

Average Weekly Wage.  If a covered worker has multiple employers, the Average Weekly Wage will be calculated for each employer separately.

Average Working Week. The final regulations include this new definition. The Average Working Week is the average number of hours worked from the two highest quarters of the 12 months preceding an individual’s application for benefits under the PFML.

Base Period. The definition clarifies that the Base Period is defined as the last four completed calendar quarters within the previous five calendar quarters.

Continuing Treatment by a Health Care Provider. The definition now includes an allowance for telehealth and removes reference to substance abuse disorders.

Extended Illness Leave Bank. The final regulations include this new definition. An Extended Illness Leave Bank is a voluntary program where individuals may donate accrued leave time to fund a bank for the benefit of a co-worker experiencing a qualifying reason under the PFML.

Financial Eligibility Test.  The final regulations include language that allows wages received from multiple employers within the Base Period to be aggregated to determine financial eligibility for leave.

Former Members of Armed Services.  The definition deletes reference to the exclusion of workers for dishonorable discharge.

Job Protected Leave. The definition clarifies that use of leave under an employer’s disability policy, paid leave policy, and Extended Illness Leave Bank program will begin job protected leave and will run concurrently with the PFML benefits.

As January 1, 2021 approaches, Massachusetts employers should take stock of the steps necessary for PFML compliance.  Employers should ensure they not only understand how PFML benefits will be administered and calculated, but also the new requirements to successfully apply for an exemption for a private plan.  Given the complexities of leave and wage replacement and related benefit issues, employers should seek advice from legal counsel.