Application for Exemption Due to Approved Private Plan

(1) Application. An employer or covered business entity may apply to the Department for an exemption from certain obligations under M.G.L. c. 175M by demonstrating that it offers paid family and/or medical leave benefits to covered individuals in its workforce through a private plan. An employer or covered business entity seeking an exemption must submit a Request for Exemption through the Massachusetts Department of Revenue's MassTaxConnect system. Employers and covered business entities seeking an exemption that do not have preexisting accounts on the MassTaxConnect system shall register and establish an account in order to request an exemption. (a) Partial Exemptions. 1 . An employer or covered business entity may apply for exemption from the requirement to make contributions for medical leave coverage, family leave coverage, or both. 2. An employer or covered business entity may not apply for an exemption on behalf of only a portion of its covered workforce. All employees and covered contract workers and former employees under M.G.L. c. 175M must be included in the employer's or covered business entity's private plan in order to be approved for an exemption. (b) Exemption from Contributions and Filing Requirements. 1 . If approved, the employer or covered business entity shall be exempt from the requirement to make contributions to the Trust Fund pursuant to M.G.L. c. 175M, § 6, and 458 CMR 2.05 for the approved leave type (family, medical, or both). An employer or covered business entity approved for one leave type only (either family or medical) must remit contributions owed under 458 CMR 2.05 for the leave type for which it has not been approved. 2. If approved, the employer or covered business entity shall be exempt from the filing requirements of 458 CMR 2.04 for the approved leave type (family, medical, or both.) An employer or covered business entity approved for one leave type only (either family or medical) must file a return under 458 CMR 2.04 for the leave type for which it has not been approved. (c) Application Timing and Effective Date of Coverage. 1 . Coverage under a private plan shall begin for all employees and covered contract workers no later than the first day of the first quarter immediately following the date of approval of the private plan exemption or on the date of hire of the employee or covered contract worker for private plans already approved. Employers or covered business entities that have been approved for a private plan exemption may require an employee or covered contract worker to provide verification of wages earned with an employer or covered business entity in the Commonwealth for purposes of determining whether that employee or covered contract worker meets the financial eligibility requirements of M.G.L. c. 175M, § 1 . 2. Applications for such exemptions will be accepted and reviewed by the Department on a rolling basis and will be effective no earlier than the quarter immediately following the date of approval. Exemptions from contributions will be effective for up to one year and may be renewed annually. The Department may establish a shorter or greater term of approval of the private plan when the Department deems it necessary. If the term of an approval of a private plan is reduced by the Department, the Department shall provide the employer with 60 calendar days notice prior to doing so. An employer or covered business entity offering paid family and medical leave benefits to its workforce through a private plan may submit an application for approval to the Department no more frequently than once per quarter. (2) Requirements for Exemption. To be approved for an exemption from the requirement to remit contributions, an employer's or covered business entity's private plan must: (a) confer all the same or better benefits as those provided to employees and covered contract workers under M.G.L. c. 175M including, but not limited to, all of the requirements specified in M.G.L. c. 175M, § 11; (b) not cost employees and covered contract workers more than they would be charged to be eligible to receive paid leave benefits from the Trust Fund administered by the Department pursuant to M.G.L. c. 175M. Additionally, the employer's or covered business entity's policies concerning family or medical leave must provide equivalent or better rights and protections as those provided in M.G.L. c. 175M, including, for employers, the job- and benefit-protection provisions of M.G.L. c. 175M, § 2 and the non-retaliation provisions of M.G.L. c. 175M, § 9. The employer or covered business entity must certify to the Department that its private plan meets these requirements; (c) provide for an appeals process with the private plan administrator before a covered individual can exercise its right of appeal with the Department pursuant to 458 CMR 2.07(6)(a) and 458 CMR 2.14. This private plan appeals process shall not require the covered individual to submit an appeal less than ten calendar days from the receipt of notice of the determination. The private plan appeals process must extend the ten calendar-day filing period where an individual establishes to the satisfaction of the Department that circumstances beyond the individual's control prevented the filing of a request for an appeal within the prescribed ten-day filing period; (d) provide notice to the covered individual as part of any adverse determination under the private plan as to their rights under the private plan as well as the rights afforded the employee or covered contract worker pursuant to M.G.L. c. 175M, and 458 CMR 2.00; and (e) for purposes of determining the benefit amount and leave allotment under a private plan, the weekly benefit amount and leave allotment shall be based on the covered individual's average working week in addition to the wages or qualified earnings earned with the employer or covered business entity at the time of an application for benefits. (3) If an employer's or covered business entity's plan is a paid family and/or medical leave plan issued by an insurance carrier, the forms of the policy must be issued by a Massachusetts licensed insurance company. The insurance carrier providing Massachusetts paid family or medical leave coverage must first submit its policy forms to the Massachusetts Division of Insurance. The Massachusetts Division of Insurance will review and acknowledge the policy form to have met the Department's requirements for the grant of a private plan exemption. (4) If an employer's or covered business entity's plan is in the form of self-insurance, the employer or covered business entity must furnish to the Department a surety bond with the Commonwealth of Massachusetts as Obligee in such form as may be approved by the Department and in such amount as may be required by the Department. The surety company issuing the bond must be authorized to transact business in Massachusetts. (5) Review. An employer or covered business entity that is denied an exemption from the requirement to remit contributions and that believes in good faith that its private plan meets or exceeds the requirements for exemption may request supplementary review by the Department. A request for review of a denied exemption is a form of discretionary relief and the determination of the Department is not subject to further administrative appeal. (a) Method. An employer or covered business entity must submit the review request electronically using the Massachusetts Department of Revenue's MassTaxConnect system. 2.07: continued 2. Applications for such exemptions will be accepted and reviewed by the Department on a rolling basis and will be effective no earlier than the quarter immediately following the date of approval. Exemptions from contributions will be effective for up to one year and may be renewed annually. The Department may establish a shorter or greater term of approval of the private plan when the Department deems it necessary. If the term of an approval of a private plan is reduced by the Department, the Department shall provide the employer with 60 calendar days notice prior to doing so. An employer or covered business entity offering paid family and medical leave benefits to its workforce through a private plan may submit an application for approval to the Department no more frequently than once per quarter. (2) Requirements for Exemption. To be approved for an exemption from the requirement to remit contributions, an employer's or covered business entity's private plan must: (a) confer all the same or better benefits as those provided to employees and covered contract workers under M.G.L. c. 175M including, but not limited to, all of the requirements specified in M.G.L. c. 175M, § 1 1 ; (b) not cost employees and covered contract workers more than they would be charged to be eligible to receive paid leave benefits from the Trust Fund administered by the Department pursuant to M.G.L. c. 175M. Additionally, the employer's or covered business entity's policies concerning family or medical leave must provide equivalent or better rights and protections as those provided in M.G.L. c. 175M, including, for employers, the job- and benefit-protection provisions of M.G.L. c. 175M, § 2 and the non-retaliation provisions of M.G.L. c. 175M, § 9. The employer or covered business entity must certify to the Department that its private plan meets these requirements; (c) provide for an appeals process with the private plan administrator before a covered individual can exercise its right of appeal with the Department pursuant to 458 CMR 2.07(6)(a) and 458 CMR 2.14. This private plan appeals process shall not require the covered individual to submit an appeal less than ten calendar days from the receipt of notice of the determination. The private plan appeals process must extend the ten calendar-day filing period where an individual establishes to the satisfaction of the Department that circumstances beyond the individual's control prevented the filing of a request for an appeal within the prescribed ten-day filing period; (d) provide notice to the covered individual as part of any adverse determination under the private plan as to their rights under the private plan as well as the rights afforded the employee or covered contract worker pursuant to M.G.L. c. 175M, and 458 CMR 2.00; and (e) for purposes of determining the benefit amount and leave allotment under a private plan, the weekly benefit amount and leave allotment shall be based on the covered individual's average working week in addition to the wages or qualified earnings earned with the employer or covered business entity at the time of an application for benefits. (3) If an employer's or covered business entity's plan is a paid family and/or medical leave plan issued by an insurance carrier, the forms of the policy must be issued by a Massachusetts licensed insurance company. The insurance carrier providing Massachusetts paid family or medical leave coverage must first submit its policy forms to the Massachusetts Division of Insurance. The Massachusetts Division of Insurance will review and acknowledge the policy form to have met the Department's requirements for the grant of a private plan exemption. (4) If an employer's or covered business entity's plan is in the form of self-insurance, the employer or covered business entity must furnish to the Department a surety bond with the Commonwealth of Massachusetts as Obligee in such form as may be approved by the Department and in such amount as may be required by the Department. The surety company issuing the bond must be authorized to transact business in Massachusetts. (5) Review. An employer or covered business entity that is denied an exemption from the requirement to remit contributions and that believes in good faith that its private plan meets or exceeds the requirements for exemption may request supplementary review by the Department. A request for review of a denied exemption is a form of discretionary relief and the determination of the Department is not subject to further administrative appeal. (a) Method. An employer or covered business entity must submit the review request electronically using the Massachusetts Department of Revenue's MassTaxConnect system. (b) Timing. An employer covered business entity must submit the review request on or before the last day of the quarter prior to the effective date of the request for an exemption. (6) Retained Rights for Covered Individuals under Private Plans. (a) A covered individual who is denied family or medical leave benefits by a private plan shall have a right to appeal the denial before the Department and in the district court as provided by 458 CMR 2.14(5), and M.G.L. c. 175M, § 8(d). (b) An employee covered by a private plan approved under 458 CMR 2.07 shall retain all applicable rights under M.G.L. c. 175M, §§ 2(e) and (f) and under M.G.L. c. 175M, § 9. (c) The private plan administrator and employer or covered business entity shall be required to furnish the Department all application for benefits documentation that is retained by the private plan administrator or employer within ten business days of the request by the Department in connection with an appeal of a denial of family or medical leave benefits by the employee or covered contract worker. (d) Any determination by the Department in connection with the appeal of the denial of family or medical leave under the private plan shall be binding on the private plan administrator and employer or covered business entity. (e) In the case of a covered individual covered solely under a private plan, the covered individual shall not be entitled to file an application for benefits with the Department. (7) Audits, Withdrawal of Approval, and Penalties for Private Plans. (a) The Department may audit any approved private plan maintained by an employer or covered business entity and may require periodic reporting to ensure that a private plan complies with the requirements of M.G.L. c. 175M, 458 CMR 2.00, or other state or federal law. (b) Employers and covered business entities with approved private plans must retain all reports, information, and records related to the approved plan, including those related to all applications for benefits made under the plan, for three years, and must furnish same to the Department upon request. (c) The Department may withdraw approval for a private plan when terms or conditions of the plan have been changed or violated. Causes for termination of plan approval shall include, but not be limited to the following: 1. failure to pay benefits; 2. failure to pay benefits timely and in a manner consistent with the public plan; 3. failure to maintain adequate bond coverage; 4. misuse of private plan trust funds; 5. adverse changes to the financial condition or licensure status of the employer or covered business entity, private plan insurer, or surety company responsible for a bond; 6. failure or refusal to respond to requests for information or to submit reports, records, or other information that may be required by the Department; or 7. failure to comply with M.G.L. c. 175M, 458 CMR 2.00, or other state or federal law applicable to the private plan. (d) An employer or covered business entity, or private plan administrator must notify the Department in writing at least 30 calendar days before any proposed changes to the terms or conditions of an approved private plan. (e) An employer or covered business entity that fails to maintain a private plan as approved by the Department or has its approval withdrawn by the Department pursuant 458 CMR 2.07(7)(c) may be subject to the following penalties: 1. Assessment of a penalty of up to an amount equal to its total annual payroll for employees and covered contract workers each year or fraction thereof that it failed to maintain said plan multiplied by the then-current annual contribution rate required under M.G.L. c. 175M, § 6(a). This amount may be subject to penalties under M.G.L. c. 62C and interest from the due date of the PFML return to the date the PFML contributions are paid at a rate prescribed by M.G.L. c. 62C, § 32. 2. The employer or covered business entity may be required to repay to the Trust Fund the total amount of benefits paid to covered individuals who received benefits from the Trust Fund. 2.07: continued (b) Timing. An employer covered business entity must submit the review request on or before the last day of the quarter prior to the effective date of the request for an exemption. (6) Retained Rights for Covered Individuals under Private Plans. (a) A covered individual who is denied family or medical leave benefits by a private plan shall have a right to appeal the denial before the Department and in the district court as provided by 458 CMR 2.14(5), and M.G.L. c. 175M, § 8(d). (b) An employee covered by a private plan approved under 458 CMR 2.07 shall retain all applicable rights under M.G.L. c. 175M, §§ 2(e) and (f) and under M.G.L. c. 175M, § 9. (c) The private plan administrator and employer or covered business entity shall be required to furnish the Department all application for benefits documentation that is retained by the private plan administrator or employer within ten business days of the request by the Department in connection with an appeal of a denial of family or medical leave benefits by the employee or covered contract worker. (d) Any determination by the Department in connection with the appeal of the denial of family or medical leave under the private plan shall be binding on the private plan administrator and employer or covered business entity. (e) In the case of a covered individual covered solely under a private plan, the covered individual shall not be entitled to file an application for benefits with the Department. (7) Audits, Withdrawal of Approval, and Penalties for Private Plans. (a) The Department may audit any approved private plan maintained by an employer or covered business entity and may require periodic reporting to ensure that a private plan complies with the requirements ofM.G.L. c. 175M, 458 CMR 2.00, or other state or federal law. (b) Employers and covered business entities with approved private plans must retain all reports, information, and records related to the approved plan, including those related to all applications for benefits made under the plan, for three years, and must furnish same to the Department upon request. (c) The Department may withdraw approval for a private plan when terms or conditions of the plan have been changed or violated. Causes for termination of plan approval shall include, but not be limited to the following: 1 . failure to pay benefits; 2. failure to pay benefits timely and in a manner consistent with the public plan; 3. failure to maintain adequate bond coverage; 4. misuse of private plan trust funds; 5. adverse changes to the financial condition or licensure status of the employer or covered business entity, private plan insurer, or surety company responsible for a bond; 6. failure or refusal to respond to requests for information or to submit reports, records, or other information that may be required by the Department; or 7. failure to comply with M.G.L. c. 175M, 458 CMR 2.00, or other state or federal law applicable to the private plan. (d) An employer or covered business entity, or private plan administrator must notify the Department in writing at least 30 calendar days before any proposed changes to the terms or conditions of an approved private plan. (e) An employer or covered business entity that fails to maintain a private plan as approved by the Department or has its approval withdrawn by the Department pursuant 458 CMR 2.07(7)(c) may be subject to the following penalties: 1 . Assessment of a penalty of up to an amount equal to its total annual payroll for employees and covered contract workers each year or fraction thereof that it failed to maintain said plan multiplied by the then-current annual contribution rate required under M.G.L. c. 175M, § 6(a). This amount may be subject to penalties under M.G.L. c. 62C and interest from the due date of the PFML return to the date the PFML contributions are paid at a rate prescribed by M.G.L. c. 62C, § 32. 2. The employer or covered business entity may be required to repay to the Trust Fund the total amount of benefits paid to covered individuals who received benefits from the Trust Fund. (f) The penalty prescribed in 458 CMR 2.07(7)(e)1. shall also apply to an employer or covered business entity that fails to maintain or renew a private plan approved by the Department for the future payment of leave benefits scheduled to begin on January 1, 2021, pursuant to 458 CMR 2.08(8). An employer or covered business entity who fails to maintain or renew a private plan exemption approved prior to January 1, 2021 shall be responsible for retroactive contributions to the Trust Fund. (8) Private Plan Termination or Non-renewal and Intersection of State and Private Plans. (a) Benefits and benefit eligibility under an approved private plan must be maintained for all covered individuals until the effective date of termination or nonrenewal of the approved private plan. An employer or covered business entity that does not intend to renew its approved private plan at the effective date of termination must notify covered individuals and the Department no later than 30 calendar days prior to the effective date of termination. The effective date of the termination of a private plan shall be on the first day of the first quarter immediately following the date of the termination or nonrenewal. (b) An employer or covered business entity that does not renew an approved private plan must continue to provide paid leave benefits to covered individuals under the same terms and conditions of the private plan for the entire duration of the leave for requests for leave filed with the private plan administrator with a start date commencing prior to the effective date of termination or nonrenewal. In the case of intermittent leave, the private plan shall maintain coverage until the end of the employee or covered contract worker's benefit year. The Department shall continue to provide paid leave benefits to covered individuals for the entire leave duration for leave filed with the Department prior to the effective date of an employer transferring from the Trust Fund to a private plan exemption. Employers or covered business entities shall continue to provide paid leave benefits to covered individuals for the entire leave duration for leave filed under a private plan prior to the effective date of an employer transferring from a private plan exemption to the Trust Fund. Employers or covered business entities that renew a private plan with a new or different insurance carrier shall ensure that there are no gaps in coverage for covered individuals. (c) Those covered individuals of an employer or covered business entity that does not renew an approved private plan shall be eligible to submit an application for benefits to the Department pursuant to 458 CMR 2.08 on the first day of the first quarter immediately following the date of termination or nonrenewal, subject to the conditions of 458 CMR 2.07(8)(b). The employer or covered business entity that terminates or nonrenews its private plan exemption will be required to report prior wages and qualified earnings to Massachusetts Department of Revenue pursuant to 458 CMR 2.04 and 2.05 for the four quarters immediately preceding the termination date of the exemption. (d) An employer or covered business entity that dissolves or undergoes an acquisition or merger after the approval of an exemption and before the renewal period, shall notify the Department within 60 calendar days of the dissolution or acquisition or merger, or as soon as reasonably practicable, with sufficient documentation to allow the Department to determine, among other things, the effective date of the termination of the private plan, the listing of employees and covered contract workers that are affected, and the name and Federal Employer Identification Number of any acquiring or affiliate organization that will be assuming the employees and covered contract workers affected by the dissolution, acquisition or merger. (e) For purposes of private plan exemptions, the following shall apply to applications for benefits submitted by former employees. 1. Covered individuals that have been separated from an employer or covered business entity for less than 26 weeks shall file applications for benefits as follows: a. If the covered individual remains unemployed on the date that an application for benefits is filed, the covered individual shall submit an application for benefits with their former employer or covered business entity. b. If the covered individual has become employed by a different employer or contracted with a covered business entity at the time that that an application for benefits is filed, the covered individual shall submit an application for benefits with their current employer or covered business entity. 2.07: continued (f) The penalty prescribed in 458 CMR 2.07(7)(e)l . shall also apply to an employer or covered business entity that fails to maintain or renew a private plan approved by the Department for the future payment of leave benefits scheduled to begin on January 1, 2021, pursuant to 458 CMR 2.08(8). An employer or covered business entity who fails to maintain or renew a private plan exemption approved prior to January 1, 2021 shall be responsible for retroactive contributions to the Trust Fund. (8) Private Plan Termination or Non-renewal and Intersection of State and Private Plans. (a) Benefits and benefit eligibility under an approved private plan must be maintained for all covered individuals until the effective date of termination or nonrenewal of the approved private plan. An employer or covered business entity that does not intend to renew its approved private plan at the effective date of termination must notify covered individuals and the Department no later than 30 calendar days prior to the effective date of termination. The effective date of the termination of a private plan shall be on the first day of the first quarter immediately following the date of the termination or nonrenewal. (b) An employer or covered business entity that does not renew an approved private plan must continue to provide paid leave benefits to covered individuals under the same terms and conditions of the private plan for the entire duration of the leave for requests for leave filed with the private plan administrator with a start date commencing prior to the effective date of termination or nonrenewal. In the case of intermittent leave, the private plan shall maintain coverage until the end of the employee or covered contract worker's benefit year. The Department shall continue to provide paid leave benefits to covered individuals for the entire leave duration for leave filed with the Department prior to the effective date of an employer transferring from the Trust Fund to a private plan exemption. Employers or covered business entities shall continue to provide paid leave benefits to covered individuals for the entire leave duration for leave filed under a private plan prior to the effective date of an employer transferring from a private plan exemption to the Trust Fund. Employers or covered business entities that renew a private plan with a new or different insurance carrier shall ensure that there are no gaps in coverage for covered individuals. (c) Those covered individuals of an employer or covered business entity that does not renew an approved private plan shall be eligible to submit an application for benefits to the Department pursuant to 458 CMR 2.08 on the first day of the first quarter immediately following the date of termination or nonrenewal, subject to the conditions of 458 CMR 2.07(8)(b). The employer or covered business entity that terminates or nonrenews its private plan exemption will be required to report prior wages and qualified earnings to Massachusetts Department of Revenue pursuant to 458 CMR 2.04 and 2.05 for the four quarters immediately preceding the termination date of the exemption. (d) An employer or covered business entity that dissolves or undergoes an acquisition or merger after the approval of an exemption and before the renewal period, shall notify the Department within 60 calendar days of the dissolution or acquisition or merger, or as soon as reasonably practicable, with sufficient documentation to allow the Department to determine, among other things, the effective date of the termination of the private plan, the listing of employees and covered contract workers that are affected, and the name and Federal Employer Identification Number of any acquiring or affiliate organization that will be assuming the employees and covered contract workers affected by the dissolution, acquisition or merger. (e) For purposes of private plan exemptions, the following shall apply to applications for benefits submitted by former employees. 1 . Covered individuals that have been separated from an employer or covered business entity for less than 26 weeks shall file applications for benefits as follows: a. If the covered individual remains unemployed on the date that an application for benefits is filed, the covered individual shall submit an application for benefits with their former employer or covered business entity. b. If the covered individual has become employed by a different employer or contracted with a covered business entity at the time that that an application for benefits is filed, the covered individual shall submit an application for benefits with their current employer or covered business entity. If the new employer or covered business entity has a private plan exemption, the covered individual shall submit the application for benefits to the private plan in accordance with the requirements established by their employer or covered business entity. Employers or covered business entities that have been approved for a private plan exemption may require a covered individual to provide verification of wages earned with an employer or covered business entity in the Commonwealth for purposes of determining whether that covered individual meets the financial eligibility requirements of M.G.L. c. 175M, § 1. c. If an individual submitting an application for benefits identifies themselves as a former employee, the Department or, if applicable, the employer or covered business entity that has been approved for an exemption, may inquire as to whether the individual is currently employed.