New MA Tax; Begins Oct 1st, 2019

Greetings – there’s a lot of info here. If you have employees in Massachusetts, you need to grab your favorite drink and read this through. If not, count your blessings!

Hopefully you’ve been following the news on this one. If not, you’re in for a shock. If you’ve been following along, then time is short for the next steps. Big picture – Beginning January 2021, MA residents will be eligible to receive a maximum benefit of $850/week in paid time off to take care of a serious health issue, a family member with a serious health issue, or to ‘bond with a new child.’ The actual benefit amount will be based on a percentage of the person’s earnings.

Wow! How exciting! So who’s paying for this? Well, for companies with over 25 employees, the company will pay for some and the employee will pay for the rest. For companies with less than 25 employees, only the employees will pay.

If this is happening in 2021, what’s the rush? Well, you have to start collecting/contributing beginning October 1, 2019, Q4 of 2019, and report all of this in January 2020. This will allow time to have funds available for the January 2021 benefit roll out.

September 2019 – This month!

If you have employees whose W-2 shows MA as the state, you are required (yes, that’s their word, not ours) to notify your employees about the benefits of the MA Paid Family Medical Leave act, and the contribution rates. There are even a few guidelines where a 1099 Contractor might need to be included. Take the time to read up on the details. We’re just providing highlights, today.
Upgrade your software so you have access to some new Pay Types in the Paycalc screen (5-3-1 for S100C users).
Create some new Paycalcs. If you have 25 or more employees, you’ll need to create at least three (3) pay calcs based on what we’ve seen. If you have less than 25, you’ll need at least two (2) new pay calcs.

October 2019

For employers with 25 or more MA employees: With the first pay check dated October, there will be two deductions for the employee; one for the Family Leave contribution, and the other is 40% of the Medical Leave contribution. There will be one Employer contribution/accrual for 60% of the Medical leave. The grand total contribution for all three is 0.75% up to $132,900 in wages (the FICA limit).
For employers with less than 25 MA employees: With the first pay check dated October, there will be two deductions for the employee; one for the Family Leave contribution, and the employee portion of the Medical Leave contribution. There is no Employer contribution.

We’re pretty sure there will be refinements, clarifications, and maybe even changes as things unfold. It’s definitely time to plan the software upgrade, setup the new calcs, get the notifications posted in your office and out to your employees (there are some ‘proof’ rules you’ll want to check out), and add the calcs before the first paycheck in October.