How is Massachusetts Paid Family Medical Leave Funded?
The Massachusetts Paid Family Leave program is funded by payroll deductions from W-2 employees and similar contributions from self-employed individuals and 1099 contractors who choose to opt into the program.
For smaller employers (less than 25 employees), the contribution can be 100% from your employees, and will be deducted from their paychecks and submitted to the state, much like federal and state payroll taxes are deducted and submitted.
If you have more than 25 employees, you are required to contribute a portion of the funding, similar to how you pay a portion of their social security taxes in each payroll.
In a way, this program operates like unemployment- the benefits are not a direct cost to the employer, but paid out of a fund employers contribute to throughout the year. Unlike unemployment, the contributions are mostly not the employer's expense, nor does an employer's expense increase based on how many employees take advantage of the benefits.
Learn more here about the Massachusetts Paid Family Leave Law.
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