Bill Summary and Fact Sheet for An Act to Provide Paid Leave for Birth and Adoption

Bill Lead Sponsors:  Representative Anne Paulsen, 24th Middlesex

Bill Number: HB3827

Bill Co-Sponsors:

Proposed Law:
This proposed law establishes the New Families Trust Fund to provide partial wage replacement to working parents of newborn or newly adopted children. This three-year pilot program helps to ensure that all working parents - not just those who can afford to take unpaid leave- are able to balance work and family by taking time off to care for a new child.  The Massachusetts Department of Employment and Training administers the New Families Trust Fund.

Why do we need the New Families Trust Fund?
The United States is one of the only industrialized nations that does not provide paid leave for birth or adoption.  It is time for Massachusetts to recognize that parents should not be forced to choose between work and family.  By creating a New Families Trust, the Commonwealth can enable families to achieve the balance of strong work and family lives.

What benefits does the New Families Trust Fund provide?
Parents of newborn or newly adopted children, who meet qualifications required to collect state Unemployment Insurance benefits, are eligible to also collect from the New Families Trust Fund.

The benefit is offered for up to 12 weeks during the first year after a child is born or adopted.

How is the New Families Trust funded?
Employer contributions to the New Families Trust Fund will be set at a rate of two-tenths of one percent on the first $10,000 of an employee's wages.  For non-profits and government employers with less than 250 employees, the rate will be adjusted to accommodate the amount of the tax credit that for-profit employers shall receive.

Will this program burden certain businesses?
The New Families Trust Fund establishes a personal income tax credit for employers, either through a personal income tax or a corporate excise tax, for a portion of the company's contributions into the Trust Fund. The tax credit is as follows:

• For employers of ten or less employees: 100% credit.
• More than ten but not more than twenty: 75%
• More than twenty but not more than one hundred: 50%
• More than one hundred but not more than two hundred and fifty: 25%
• More than two hundred and fifty: no credit

AN ACT  TO PROVIDE PAID FAMILY LEAVE FOR BIRTH AND ADOPTION

SECTION 1. Said chapter 151A, as appearing in the 2000 Official Edition, is amended by adding after section 24A the following new section:

Section 24B. Birth and Adoption Benefits Pilot Program.

(a) An individual who is on a leave of absence from his or her employer or who leaves employment to be with the individual's child during the first year of life or during the first year following placement of the child with the individual for adoption shall be eligible to receive birth and adoption benefits under this section. The requirements of subsection (b) of section twenty-four and subsections (c) and (e) of section twenty-five shall not apply to eligibility for the receipt of benefits under this section; provided, that the individual meet the requirements of subsection (a) of section twenty-four.

(b) Benefits payable to an individual under this section shall be paid for each week of leave or unemployment in an amount equal to the individual's weekly benefit rate plus dependency benefits payable under section twenty-nine. The total amount of benefits payable under this section shall not exceed twelve times the individual's weekly benefit rate plus dependency benefits. Benefits payable to an individual under this section shall be deducted from the total benefits payable to said individual in the same benefit year under subsection (a) of section thirty.

(c) The following payments shall cause a reduction, in the same amount as the payments, to the total amount of birth and adoption benefits for which the individual is otherwise eligible under this section:

(1) any payment from the employer resulting from a birth or adoption described in subsection (a) of this section; and

(2) any payment resulting from a birth or adoption described in subsection (a) of this section from a disability insurance plan contributed to by the individual's employer, in proportion to the employer's contribution to such plan. (d) Nothing stated herein shall interfere with any greater rights or benefits under the terms of a collective bargaining agreement or any other employment agreement between the employee and the employing unit, nor shall the payment of benefits under this section require an employer not covered under 29 U.S.C. § 2601 or under section one hundred and five D of chapter one hundred and forty-nine of the general laws to provide a job protected leave.

(e) Two years following the effective date of this section, the deputy director shall issue a report to the chairs of the joint committee on commerce and labor evaluating the effectiveness of the payment of benefits under this section.

(f) This section shall be in effect as a pilot program for three years from its effective date, and shall terminate thereafter unless reauthorized by law.

SECTION 2. Said chapter 151 A, as so appearing, is further amended by adding after section 14G the following new section:

Section 14H. New Families Contribution and Trust Fund.

(a)(1) Beginning on January first, 2006, each employer subject to the provisions of section fourteen shall pay, in the same manner and at the same times as the deputy director of employment and training prescribes for the contribution required by said section fourteen, a new families contribution computed by multiplying the wages paid its employees by the new families contribution rate of two-tenths of one percent.

(2) Beginning on January first, 2006, each employer subject to the provisions of sections fourteen A or fourteen C shall pay, in the manner and at the times that the deputy director of employment and training prescribes for the contribution required by section fourteen, a new families contribution computed according to the following schedule; provided, however, that any such employer whose contribution is governed by the provisions of section twenty-seven C of chapter twenty-nine shall not be required to make such contribution unless said employer has accepted the provisions of this section as provided in said section twenty-seven C:

(i) Such employers with ten or fewer employees shall not be liable for a new families contribution.

(ii) For such employers with more than ten, but not more than twenty, employees, the contribution shall be computed by multiplying the wages paid its employees by a new families contribution rate of five one-hundredths of one percent.

(iii) For such employers with more than twenty, but not more than one hundred, employees, the contribution shall be computed by multiplying the wages paid its employees by a new families contribution rate of one tenth of one percent.

(iv) For such employers with more than one hundred, but not more than two hundred and fifty, employees, the contribution shall be computed by multiplying the wages paid its employees by a new families contribution rate of fifteen one-hundredths of one percent.

(v) For such employers with more than two hundred fifty employees, the contribution shall be computed by multiplying the wages paid its employees by a new families contribution rate of two tenths of one percent.

(b) Such new families contributions shall be paid to the deputy director of employment and training in accordance with the procedures prescribed by said deputy director. The receipts from such contributions shall not be deposited in the State Unemployment Compensation Fund but shall be impressed with a trust on behalf of beneficiaries of the birth and adoption benefits program and dedicated, through the state treasurer as trustee, to the New Families Trust Fund, established in subsection (f).

(c)(1) For the purposes of this section, the term "wages" shall not include that part of remuneration that, after remuneration equal to the new families contribution wage base with respect to employment with such employer has been paid to an individual during the calendar year, is paid to such individual during such year. For the purposes of this paragraph, remuneration shall include remuneration paid to an individual during the calendar year with respect to employment with a transferring employer, as that term is used in subsection (n) of section fourteen.

(2) For the purposes of this section, the term "new families contribution wage base" shall equal $10,000 for the calendar year 2003. For each subsequent calendar year, the new families contribution wage base shall equal the product of (i) the new families contribution wage base for the 2003 calendar year and (ii) the average annual wage inflation adjustment for that calendar year.

(3) For the purposes of this section, the term "average annual wage inflation adjustment" shall mean, for any calendar year, the number, rounded to four decimal places, determined by dividing (i) the average annual wage, calculated pursuant to subsection (a) of section twenty-nine, for the period commencing on the first Sunday of October in the year preceding said calendar year, by (ii) the average annual wage base, calculated pursuant to said subsection (a) of section twenty-nine, for the period commencing on the first Sunday of October in the year 2002.

(d) Except where inconsistent with the provisions of this section, the terms and conditions of this chapter which are applicable to the payment and collection of contributions or payments in lieu of contributions shall apply to the same extent to the payment of and the collection of such new families contribution; provided, however, that such contributions shall not be credited to the employer's account or to the solvency account established pursuant to section fourteen, fourteen A or fourteen C.

(e) Any employer who fails to file any report or form as required by this section shall pay a penalty equal to ten per cent of the contribution due under this section; provided, however, that the penalty assessed shall not exceed one hundred dollars nor shall it be less than twenty-five dollars for each such failure to file, in addition to restitution for any amounts owed to the New Families Trust Fund as a result of such failure to make a correct contribution. Any penalties collected pursuant to this section shall be deposited in the New Families Trust Fund. Any contribution under this section shall be allowable as a business expense.

(f) There is hereby established a New Families Trust Fund, which shall be administered and expended by the division of employment and training without appropriation. Said trust fund shall consist of employer new families contributions required by subsection (a) and other sums that may be provided pursuant to this section or otherwise. Said fund shall be used exclusively for the payment of benefits under the Birth and Adoption Benefits Program established by section twenty-four B; provided however, that the deputy director of employment and training may use monies in the fund to cover administrative costs incurred by the division of employment and training as a result of this section, including an amount as determined by the United States Secretary of Labor in accordance with federal cost rules, but in no calendar year may such administrative expenditures exceed five per cent of the amounts collected pursuant to this section.

SECTION 3. Section 14 of chapter 151A of the General Laws, as so appearing, is amended by adding after the word "voluntary" in line 106 the following:

and provided further that, where an individual receives benefits under the provisions of section twenty-four B, such benefits shall not be charged to the employer's account but shall be charged to the New Families Trust Fund.

SECTION 4. Section 62A of chapter 151A, as so appearing, is amended by adding after the word "compensation," in line 44 the following:

a description of the availability of birth and adoption benefits under section twenty-four B,

SECTION 5. Section 62A of chapter 151A, as so appearing, is further amended by adding after the word "Fund." in line 52 the following new sentence:

Each employer shall provide to every employee, at the beginning of employment and whenever an employee requests a leave for birth or for adoption, a form provided by the deputy director describing the availability of birth and adoption benefits under section twenty-four B.

SECTION 6. Section 6 of chapter 62 of the General Laws, as appearing in the 2000 Official Edition, is amended by inserting, after subsection (k), the following new subsection:

(1) (1) There is hereby established a credit for certain employers for a portion of the new families contributions made by such employers during the taxable year pursuant to the provisions of section fourteen H of chapter one hundred fifty-one A. For the purposes of this section, the term "employers" shall include professions, sole proprietorships, trades, businesses, partnerships, or other employers, to the extent that their income is subject to tax under this chapter.

(2) (A) For any employer which makes new families contributions during the taxable year on behalf of not more than ten employees, the credit shall equal one hundred percent of the amount of such contributions.

(B) For any employer which makes new families contributions during the taxable year on behalf of more than ten, but not more than twenty, employees, the credit shall equal seventy-five percent of the amount of such contributions.

(C) For any employer which makes new families contributions during the taxable year on behalf of more than twenty, but not more than one hundred, employees, the credit shall equal fifty percent of the amount of such contributions.

(D) For any employer which makes new families contributions during the taxable year on behalf of more than one hundred, but not more than two hundred and fifty, employees, the credit shall equal twenty-five percent of the amount of such contributions.

(E) For employers which make new families contributions during the taxable year on behalf of more than two hundred and fifty employees, no credit shall be allowed under this subsection.

(3) In no taxable year may the amount of the credit allowed to any taxpayer under this subsection exceed the total tax due of the taxpayer for the relevant taxable year, provided, however, that a taxpayer may carry over the amount of any unused credit, as reduced from year to year, and apply it to his tax liability for any one or more of the next succeeding three taxable years.

SECTION 7. Chapter 63 of the General Laws, as appearing in the 2000 Official Edition, is amended by inserting after section 38Q the following new section:

Section 38R. (a) A corporation subject to tax under this chapter which pays new families contributions for not more than two hundred and fifty employees during the taxable year, pursuant to the provisions of section fourteen H of chapter one hundred fifty-one A, may take a credit as hereinafter provided against its excise imposed by this chapter. (b) (1 )For any corporation that makes new families contributions during the taxable year on behalf of not more than ten employees, the credit shall equal one hundred percent of the amount of such contributions.

(2) For any corporation that makes new families contributions during the taxable year on behalf of more than ten, but not more than twenty, employees, the credit shall equal seventy-five percent of the amount of such contributions.

(3) For any corporation that makes new families contributions during the taxable year on behalf of more than twenty, but not more than one hundred, employees, the credit shall equal fifty percent of the amount of such contributions.

(4) For any corporation that makes new families contributions during the taxable year on behalf of more than one hundred, but not more than two hundred and fifty, employees, the credit shall equal twenty-five percent of the amount of such contributions.

(5) For corporations that make new families contributions during the taxable year on behalf of more than two hundred and fifty employees, no credit shall be allowed under this section.

(c) In no taxable year may the amount of the credit allowed to any taxpayer under this section exceed the total excise due from the taxpayer for the relevant taxable year, provided, however, that a taxpayer may carry over the amount of any unused credit, as reduced from year to year, and apply it to its excise liability for any one or more of the next succeeding three taxable years.

SECTION 8. The provisions of sections 1, 3, 4, and 5 of this Act shall take effect as of July first, two thousand and six. The remainder of this Act shall take effect as of January first, two thousand and six. The provisions of sections 6 and 7 shall apply to taxable years beginning on or after January first, two thousand and six.

SECTION 9. The provisions of sections 1, 3, 4, and 5 of this Act shall expire as of July first, two thousand and nine, unless reauthorized by law. The provisions of section 2 of this Act shall expire as of January first, two thousand and nine, unless reauthorized by law; provided that the New Families Trust Fund established pursuant to said section shall remain in existence until all funds therein have been expended.