Senator Timilty Passes COVID-19 Emergency Paid Sick Leave
Comprehensive bill also includes updates to Unemployment Insurance and Paycheck Protection Program loans, extends tax filing deadline
(BOSTON–03/25/21) State Senator Walter F. Timilty (D-Milton) voted in favor of a comprehensive bill that would guarantee five paid days off for COVID-19 Emergency Paid Sick Leave for every employee in the Commonwealth. The bill also seeks to stabilize the state’s Unemployment Insurance (UI) trust fund, provide substantial tax relief to businesses and workers, and delay the state tax filing deadline.
“This pandemic has hurt workers and businesses across the Commonwealth. This bill will help keep our workers safe, especially those on the front lines. No worker who is sick should have to choose between staying home or risk going to work. There are too many citizens in the Commonwealth who have faced this situation during this pandemic. I am so thankful that my colleagues and I have acted decisively on this legislation,” said Timilty, who is the State Senate Vice-Chair of the Joint Committee on Labor and Workforce Development. “Additionally, not only does this bill help our workers, but also, it helps their employers. The Paycheck Protection Program loan forgiveness bill will ensure that thousands of businesses won’t be hit hard with a significant, potentially insurmountable, tax burden amidst the COVID-19 pandemic,” Timilty stated.
To help protect employees on the front lines, and to 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 unable to work because of 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.
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 bill, therefore, 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. Moreover, it 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.
Additionally, 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.
The bill also provides much-needed Unemployment Insurance-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 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 Paycheck Protection Program 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.
The bill has been enacted by the State Sate and House, and now moves to Governor Baker’s desk for his signature.