Comprehensive legislation also includes updates to Unemployment Insurance and Paycheck Protection Program loans, extends tax filing deadline
BOSTON (03/25/21) – Weeks after Senate and House leadership promised swift action on COVID-19 Emergency Paid Sick Leave, Senator Cindy F. Friedman (D-Arlington) joined her colleagues in the Massachusetts Legislature to pass a comprehensive bill that would guarantee five paid days off for every employee in the Commonwealth. The bill also seeks to stabilize the state’s Unemployment Insurance (UI) trust fund, provides substantial tax relief to businesses and workers, and delays the state tax filing deadline.
“We are still battling the pandemic, and I am so thankful for the Senate’s swift action, under the leadership of Senate President Spilka, to provide much-needed relief to our businesses and working families,” said Senator Friedman, Vice Chair of the Committee on Ways and Means. “Not only will this bill strengthen our economy and keep our workforce safe, but it provides long-overdue emergency paid sick leave benefits for all workers.”
To help protect employees on the front lines, and prevent the further spread of COVID-19, this bill ensures that all workers in Massachusetts have access to paid leave if they are unable to work as a result of a COVID-19 infection or a quarantine order. Significantly—given the state’s push to increase vaccination rates—employees will be able to use this paid leave time to take time off to receive the vaccine. In addition, the legislation provides for leave if the worker needs time to care for a family member who has contracted COVID.
Under this legislation, employees are eligible for up to five days of paid leave, at their regular rate of pay, capped at $850 per week – which is the same maximum weekly benefit provided for in the Massachusetts Paid Family Medical Leave (PFML) law. Employers covered by federal legislation providing for paid leave will have the cost of providing such leave paid for through the federal tax credit. For all other employers, the bill creates a $75 million COVID-19 Emergency Paid Sick Leave Fund to reimburse eligible employers for providing their employees with emergency paid sick leave. The state requirement for paid leave would extend until September 30, 2021 or until the fund is exhausted.
Governor Baker signed the majority of the bill into law on April 1, 2021 and returned sections of the bill pertaining to the paid sick leave program with amendments.
One of the Governor’s amendments would exclude municipal workers, including teachers, public works employees, police, and others from the paid sick leave program in the bill. Senate and House leadership continue to believe that paid sick leave will protect our communities by preventing the further spread of COVID-19, and municipal employees deserve the same access to it as other workers. The Massachusetts Legislature is committed to returning this legislation back to the Governor’s desk with municipal employees included in the paid sick leave program.
The bill also authorizes up to $7 billion worth of borrowing to replenish the UI trust fund and to repay all federal UI loans, funded by an employer charge, and creates a separate time-limited employer assessment to repay interest on federal UI loans by their due dates to ensure the solvency of the UI trust fund. The COVID-19 public health crisis has created a surge of pandemic-related unemployment claims, which has depleted the Commonwealth’s unemployment trust fund, necessitating borrowing from the federal government to pay out those benefits.
The legislation also establishes a commission on the solvency of the UI trust fund to pursue long-term solutions for solvency. The commission convenes a balance of business and advocacy interests with the Chairs of the Joint Committee on Labor and Workforce to report on changes required to ensure a solvent trust fund.
The bill provides much-needed UI-related relief to businesses and employees. For businesses, the bill prevents increases in the UI rate schedule for 2021 and 2022, providing employers with needed stability and relief as the Commonwealth continues to recover. For unemployed workers—some navigating the UI system for the first time—the bill waives tax penalties on UI benefits in 2020 and 2021. It also mirrors federal tax provisions included in the recent American Rescue Plan and excludes $10,200 of unemployment compensation received by an individual with a household income of less than 200% of the federal poverty level from gross income for tax purposes, putting up to $500 into the hands of lower income unemployed individuals. This would apply to individuals making $25,760 or under, or a total income of $53,000 for a family of four.
Further relief for businesses comes in the form of a change in state tax policy regarding Paycheck Protection Program (PPP) loans. In Massachusetts, corporate excise, but not personal income tax, is tied to the current federal Internal Revenue Code. As a result, Massachusetts’ tax law treats forgiven PPP loans differently depending on whether the recipient small businesses is organized as a pass-through entity or a c-corp. This bill conforms to federal law and ensures that all forgiven PPP loans, advance Economic Injury Disaster Loans, and payments made under the federal Small Business Debt Relief are excluded from gross income, regardless of how the business is organized.
Finally, to align state tax deadlines with federal tax deadlines, the bill extends the Commonwealth’s tax filing deadline from April 15, 2021, to May 17, 2021. This tax flexibility, similar to a delay authorized last year by the Legislature, will provide stability and ensure residents have time to prepare and file taxes as the state continues to weather the impacts of the COVID-19 pandemic.