The Massachusetts Department of Family and Medical Leave (DFML) is ringing in the new year with new, more employer-friendly guidance regarding an employee’s ability to use paid leave to “top up” Paid Family and Medical Leave (PFML) benefits paid by the Commonwealth of Massachusetts. The guidance makes clear that the use and accrual of employer-provided paid leave to top up PFML benefits is subject to the terms and conditions of the employer’s policy.

What is “top up” and why does it matter?

Massachusetts PFML benefits are available to employees to provide partial income replacement during certain medical and family leave events. Because the law only partially replaces an employee’s income, employees receiving PFML benefits often seek to use paid leave provided by their employer to “top up” the PFML benefit and receive 100% of their pay. 

By way of background, prior to October 2023, DFML had indicated that if an employee received any accrued paid leave, the employee was not eligible to receive PFML benefits during the same period, thus prohibiting topping up. Accrued paid leave could only be used during the seven-day unpaid waiting period unless the employee elected to use accrued paid leave instead of receiving PFML benefits. Effective November 1, 2023, however, the PFML law was amended to provide that receipt of paid leave “provided under an employer policy” would not render an employee ineligible for PFML wage replacement benefits, and that weekly PFML benefit amounts would not be reduced by any employer-provided paid leave benefits, provided that the total amount an employee received from PFML and employer-provided paid leave did not exceed 100% of the employee’s individual average weekly wage (IAWW).

Shortly after the law was amended, DFML issued guidance stating that the use of employer-provided paid leave to top up PFML benefits was solely the employee’s choice, and that an employer’s policy could not dictate whether and how employees could use paid leave benefits. This was problematic for many employers whose policies prohibited the use of paid leave benefits to top up statutory benefits like PFML. Additionally, calculating the correct top up posed significant administrative burdens since the top up is not tied to an employee’s salary or current earnings but rather to the employee’s IAWW. Since IAWW is defined as the amount the employee earned during the two highest-earning quarters in a defined period, if an employee received a bonus or worked a second job during those quarters, the IAWW could be much higher than current earnings. Conversely, if an employee worked part time or was on leave during those quarters, the IAWW could be much lower than current earnings. Finally, employers struggled to convert the dollar value of the top up into paid time off hours, particularly employers whose paid time off policies require time to be taken in a set increment of time when the top up amount did not equate to the required increment.

What is the new guidance?

Recognizing these concerns, in December 2023, Littler’s Workplace Policy Institute (WPI) contacted DMFL to request that it clarify or amend its guidance to properly reflect that the terms of an employer’s plan would govern an employee’s ability to top up PFML benefits. The Department issued a timely and thoughtful response modifying its FAQs on this issue. The new guidance –FAQs for Employees about Topping Off PFML Benefits–now makes clear that “Employees may use accrued sick or vacation pay or other paid leave provided under an employer policy to top off PFML benefits up to their IAWW, subject to the accrual and use rules of an employer’s PTO policies and provided further that the employer’s PTO policy does not discriminate against an employee for exercising a right to which such employee is entitled to under the PFML program (M.G.L. c. 175M).” (emphasis added) DFML further advised employees to consult their employer’s policies and talk to their employer to determine if and how they may use employer-provided paid leave to top up PFML benefits.

Why is this good news for employers?

The newly issued guidance is welcome news for employers whose policies do not allow employees to use accrued paid time off while receiving PFML benefits, or require paid time off to be taken in certain increments. The revised guidance allows employers to apply the terms of their policy to control whether and how employees can use paid time under their policy to top up PFML benefits, eliminating a number of administrative complications and making clear that an employer’s leave policy will control whether and how an employee can use employer-paid benefits to top off PFML benefits provided by the Commonwealth. This is a welcome development for employers that provide paid leave benefits in Massachusetts. WPI will keep readers apprised of any future developments.