The idea of mandated family leave has been slow to catch on in this country. However, now that a number of states have latched onto the idea, it seems to be more likely that paid family leave will eventually become universal. The big question is what it will look like. Massachusetts‘ new law could be a blueprint for the rest of the country.
As of October 1 (2019), Massachusetts workers are subject to additional payroll deductions that will go toward mandated family leave benefits. Said benefits will be available beginning in 2021. The delay gives the state enough time to fund the $800 million program. Workers will pay 0.75% of their pretax income to the state fund.
Some workers could pay less if their companies decide to offer a family leave plan more generous than that which the state mandates. According to BenefitMall, payroll companies should be able to help employers figure out what employee contributions should be based on the plan chosen.
What the Law Covers
An employee making $50,000 annually would contribute just under $200 to the state program each year. In exchange for those contributions, he or she would get up to 12 weeks of paid leave to address qualifying circumstances. That might mean providing care for a sick family member or taking on the responsibilities of a family member who has been called to active military duty.
The program also allows for up to 20 weeks of paid leave for a worker’s own serious illness or injury. This second benefit would be in addition to any workers’ comp benefits payable in the event a person is injured or made ill on the job.
Already Planning for Leave
WBUR radio says that some Massachusetts workers are already planning to take advantage of leave when benefits finally kick in. They cite young couples now choosing to wait to start a family until they can apply for mandated leave. It is a good bet that Massachusetts is going to see a baby boom in the third quarter of 2021 and the first quarter of 2022.
Planning to start a family makes perfect sense in light of Massachusetts’ new law. But the example being set by Massachusetts residents could be a harbinger of things to come, if mandated family leave goes on to become nationwide. Employees will begin planning families and medical procedures around their eligibility to receive benefits.
What It Means for Employers
Massachusetts mandated family leave applies to businesses in different ways. For example, companies with fewer than 25 employees do not have to contribute to the program. They must still withhold the employee portion and remit it with the rest of their payroll taxes, but their businesses don’t have to contribute.
Companies with more than 25 employees will have to contribute their share along with what is withheld from employee paychecks. Some businesses will be able to pass on the cost by upping their prices. Other businesses will not. As usual, the smallest mom-and-pop businesses stand to be impacted the most by the program.
Finally, businesses may opt out of the program if they are willing to provide a comparable option. One suggestion is for employers to purchase paid leave plans from private insurance companies, much the same way they purchase health insurance. Prudential, Guardian Life, Mutual of Omaha, and The Hartford have all been mentioned as possible providers of private paid leave plans.
Massachusetts’ mandated paid leave seems to be a well devised plan that looks out for everyone involved. Will it become a blueprint for the rest of the nation? Time will tell.