Counting the covered individuals in your workforce under the PFML law

The makeup of your Massachusetts workforce will determine your responsibilities as an employer for making contributions under the Paid Family and Medical Leave (PFML) law.

Table of Contents

Summary

As a Massachusetts employer, your responsibility for making contributions under the Paid Family and Medical Leave (PFML) law depends on the makeup of your workforce. To make sure you're correctly assessed for contributions, it's important that you properly report the size and makeup of your Massachusetts workforce to the Department of Family and Medical Leave.

Your total workforce includes:

  • All Massachusetts W2 employees (full-time, part-time, seasonal). A Massachusetts W2 employee is anyone to whom you issue a W2 form for performing services in Massachusetts.
  • All Massachusetts 1099-MISC contractors. A Massachusetts 1099-MISC contractor is an individual who resides in Massachusetts for whom you are required to report payment for services on IRS Form 1099-MISC.

You'll always report on your total workforce numbers, but you're only responsible for submitting contributions on behalf of members of your workforce who are treated as covered individuals for the purposes of the PFML law.

Who's a covered individual?

  • W2 employees will always count as covered individuals
  • 1099-MISC contractors count toward your total number of covered individuals only if they make up more than 50 percent of your total workforce (W2 employees and 1099-MISC contractors combined)

Each quarter, you'll be required to submit contributions for all covered individuals in your workforce. As illustrated below, you may deduct a part of the required contribution from wages you pay your employees and payments you make to 1099-MISC contractors who qualify as covered individuals. If your workforce includes 25 or more covered individuals, you'll also be responsible for paying an additional employer share of contributions.

Additional Resources

Scenarios of employer obligations

The 3 scenarios below provide examples of counting covered individuals when your Massachusetts workforce includes Massachusetts W2 employees and Massachusetts 1099-MISC contractors (as defined above). The total number of covered individuals will determine whether you're responsible for paying the employer share.

Scenario 1

Last year, your Massachusetts workforce consisted of:

  • 1 Massachusetts W2 employee
  • 2 Massachusetts 1099-MISC contractors

In this scenario, more than 50 percent of your workforce last year was made up of Massachusetts 1099-MISC contractors. This means Massachusetts 1099-MISC contractors count toward the total number of covered individuals in your workforce.

As a result, this year you must remit contributions for all 3 covered individuals in your workforce. But, because the total number of covered individuals in your workforce was less than 25, you aren't required to pay an employer share of the contributions.

Scenario 2

Last year, your Massachusetts workforce consisted of:

  • 24 Massachusetts W2 employees
  • 4 Massachusetts 1099-MISC contractors

In this scenario, less than 50 percent of your workforce last year was made up of Massachusetts 1099-MISC contractors. This means Massachusetts 1099-MISC contractors don't count toward the total number of covered individuals in your workforce.

As a result, this year you must remit contributions for all 24 covered individuals in your workforce. But because the total number of covered individuals in your workforce was less than 25, you aren't required to pay an employer share of the contributions.

Scenario 3

Last year, your Massachusetts workforce consisted of:

  • 40 Massachusetts W2 employees
  • 83 Massachusetts 1099-MISC contractors

In this scenario, more than 50 percent of your workforce last year was made up of Massachusetts 1099-MISC contractors. This means Massachusetts 1099-MISC contractors count toward the total number of covered individuals.

As a result, this year you must remit contributions for all 123 covered individuals in your workforce. Because the total number of covered individuals in your workforce meet the 25-person threshold, you must also pay the employer share of contributions for each covered individual.

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