Massachusetts Paid Family and Medical Leave Program
The Basics of Massachusetts Paid Family and Medical Leave Program
Starting October 1, 2019, Massachusetts will require non exempt employers to withhold and pay premiums to the Paid Family and Medical Leave program. The Massachusetts Paid Family and Medical Leave program (PFML) is funded through premiums paid by covered individuals and employers in the form of paycheck withholdings and is administered by the Massachusetts Department of Family and Medical Leave (DFML).
The mission of the plan is to provide paid, job-protected leave to covered individuals beginning January 1, 2021. Covered individuals include W-2 employees and 1099-NEC contractors who meet the criteria defined by the PFML law.
What you need to know
- Covered individuals include most MA W-2 employees and MA 1099-NEC contractors if they are not defined as independent contractors and if they make up over 50% of the total workforce. Read more.
- If you had 25 or more covered individuals in your workforce for the previous year, then you are required to make employer contributions of 0.312% for covered individuals in the current year. If you had less than 25 covered individuals in last year’s workforce, you do not need to make an employer contribution this year. Read more.
What Square Payroll covers
- Square Payroll supports MA Paid Family and Medical Leave premium calculations, withholdings, payments, and reporting with a few exceptions.
- Covered W-2 employees’ premiums of 0.318% will be withheld from the employee’s paychecks and withholdings will be reported on their W-2s. Any premiums that were not withheld from the employee’s paychecks through Square Payroll, will be collected from the employer and the employer will need to collect the premiums from the employee.
- Covered contractors’ premiums of 0.318% will be withheld from the employer, and the tax will not be reported on the Form 1099-NEC.
What is not covered
- Square Payroll does not offer the option for employers to cover the W-2 employee’s portion of the MA PFML tax.
- If you are only paying contractors thru Square Payroll, we are unable to collect premiums, remit payments and complete the MA PFML filing at this time.
PFML Account Registration
In order for Square Payroll to file and pay this tax on your behalf, you must have a PFML account registered with the same FEIN (Federal Employer Identification Number) that is on your Square Payroll account. If you are a sole proprietor, you can also register under your SSN. If you are not registered with either of those numbers, Square will not be able to file on your behalf.
To register your MA PFML account with your FEIN, please follow the instructions in this video tutorial or complete the steps here:
Log in to your MassTaxConnect.
Under the I Want To section, select Add an account type/new location/new license.
Click the box next to Paid Family and Medical Leave > click Next.
Fill out the registration form and complete the remaining steps. You will receive a confirmation number when done.
Account Specific Settings
Employers and workers in the state of Massachusetts are required to participate in the PFML program with a few exceptions. To determine if your business, W-2 employee, or 1099-NEC contractor is exempt from the PFML program, please visit the Paid Family and Medical Leave website.
Small Businesses and Exempt Employers
Employers with fewer than 25 covered individuals are not required to pay the employer portion of the premium. Your workforce size is based on the average number of covered individuals from the previous calendar year (Jan. 1 - Dec. 31). To calculate your workforce, use the PFML Contribution Calculator.
If your business is exempt from the program or you employ 25 or more covered individuals, update your business settings by following these steps:
Visit Payroll > Settings in Square Dashboard or the Square Team App.
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In the Tax Info section, click Edit next to your Massachusetts state tax account information to update the Massachusetts Paid Family and Medical Leave rates or exemptions on your account. You will have the option to choose:
Employer is exempt: select if you employ less than 25 covered individuals.
Employer is not exempt: select if you employ 25 or more covered individuals or you volunteer to opt in to contribute the employer tax.
Business is exempt: select this if your business is not required to participate in the PFML program.
Add a future effective date and click Save.
Employee Exemption from Paid Family and Medical Leave Program
To mark an employee exempt from the program:
Visit Payroll > Payroll Team in Square Dashboard or the Square Team App.
Select the employee from the list of team members.
Under the Tax Settings section of the profile, check the box next to, “This employee is exempt from The Massachusetts Paid Family and Medical Leave Program.”
Note: Changes will be effective immediately and applicable to the current quarter.
Contractor Exemption from Paid Family and Medical Leave Program
1099-NEC contractors are exempt unless they make up more than 50% of your covered workforce. To mark a 1099-NEC contractor exempt from the program:
Visit Payroll > Payroll Team in Square Dashboard or the Square Team App.
Select the contractor from the list of team members.
Go to Employment Type section of the profile, check the box next to, “Exempt from Massachusetts Paid Family and Medical Leave Program.”
Note: Changes will be effective immediately and applicable to the current quarter.
For additional information about the MA PFML, please reference the Department of Family and Medical Leave’s website or the Employer’s guide.
Not Supported
If you are only paying contractors thru Square Payroll, we are unable to remit payments and complete the PFML tax filings on your behalf at this time.
Payments and filings can be completed through your MassTaxConnect account. Please visit the Massachusetts website for filing instructions.