Determining your total workforce
As a Massachusetts employer, your responsibility for making contributions under the Paid Family and Medical Leave (PFML) law (M.G.L. c. 175M) depends on the makeup of your workforce. If your business is new to PFML, you must calculate your total workforce for PFML contributions based on the covered individuals employed in the previous calendar year. After the first year you are registered for PFML contributions, the Department of Revenue determines your workforce count.
If you are an employer that has employees working outside of Massachusetts, you cannot include those employees as part of your workforce count.
Your workforce includes full-time, part-time, contractor, and seasonal employees who work in Massachusetts. DFML follows the same eligibility criteria as Massachusetts's unemployment insurance program. These employees do not need to live in MA.
If you own a business and pay yourself through a W-2, you are an employee of that business and will be considered part of your covered workforce under PFML.
If your workforce has been on average 50% 1099-MISC contractors over the past year, you should include them in your count.
Each quarter, you must withhold PFML contributions from employees’ paychecks. If your workforce has more than 25 covered individuals, you must also make employee contributions for all covered individuals in your Massachusetts workforce.
Individuals who are not properly classified as independent contractor as defined by the Massachusetts unemployment statute, (M.G.L. c.151A) are not considered covered individuals.
Counting visa program employees as covered individuals
Foreign worker program visas
H-2A visa holders (seasonal agricultural employees) are exempt from making PFML contributions and are not considered covered individuals. You are not required to withhold or send PFML contributions for your H-2A visa holders.
All other temporary foreign worker visa programs (e.g. H-1B, H-2B, O-1, O-2, etc.) are considered covered individuals (assuming they meet all other criteria above) and you must withhold and send PFML contributions on their behalf.
International student and foreign exchange program visas
International student and foreign exchange program visa holders (e.g. F-1, OPT, J-1, and J-2) are considered covered individuals (assuming they meet all other criteria above) and you must withhold and send PFML contributions on their behalf.
Counting your workforce for Professional Employment Organizations (PEOs)
Professional Employment Organizations (PEOs) typically file a single consolidated return when reporting Massachusetts withholding taxes on behalf their clients.
Since the business is considered the employer for PFML purposes, the business must file a return for its entire covered workforce, which would include employees paid by the PEO. The workforce count and the employer contribution rate should be determined on a client-by-client basis. Therefore, a PEO should never submit a consolidated return on behalf of their clients. Rather PEOs should submit individual filings for each client. PEOs should use the Department’s bulk filing method so all their clients’ returns are transmitted in a single transmission.
Read more about MassTaxConnect’s bulk filing specifications.
Business owners and family businesses
Anyone who has an ownership stake in the business and is paid through form W-2 is subject to PFML law and considered part of the covered workforce, unless the business is co-owned by family members.
DFML follows the Massachusetts unemployment statute about the employment of family members. Any spouse, minor child (under 18), or parent of a business owner who is employed by their family member’s business will have their wages excluded from PFML because their services are not considered "employment" in the statute.
In businesses co-owned by family members, the percentage of the ownership stake doesn't matter. So, in husband-wife or parent-child owned businesses, even if each is paid through W-2, both wages would be excluded.
Department of Family and Medical Leave - Hours of operation: Monday-Friday, 8 a.m. - 5 p.m.
Department of Family and Medical Leave - Hours of operation: Monday-Friday, 8 a.m - 5 p.m.
Department of Revenue - Hours of operation: Monday-Friday, 8:30 a.m. - 4:30 p.m.