The House and Senate unanimously approved and sent to the governor legislation (H. 95) to shore up the state’s underfunded unemployment insurance program and impose a temporary emergency sick leave requirement on employers, including local governments.

On March 8, legislative leadership announced an agreement on the outline of the legislation. The House approved a version on March 11, and the Senate approved a similar bill on March 18. There were no public hearings on the legislation.

The original bill, filed by the governor in January, included only unemployment insurance provisions.

Sick leave mandate
The mandated paid sick time provisions would require Massachusetts employers to temporarily provide emergency paid sick leave to employees who are absent or unable to work for reasons related to COVID-19, including:
• Employee self care
• Care of a family member with a COVID-19 diagnosis or symptoms
• Compliance with an order to quarantine because of exposure or symptoms
• Inability to telework after a COVID-19 diagnosis

The definitions of “employer” and “employee” include local governments.

The new temporary state program is based on requirements in the federal sick leave program included in the Families First Coronavirus Response Act, which expired at the end of 2020.

The state sick leave provisions would take effect 10 days after the effective date of the law and would end on Sept. 30, 2021, unless extended. There are separate bills in the House and Senate that would make emergency paid sick time during a declared state of emergency or disaster a permanent benefit.

An employee who works 40 hours or more per week would be eligible for 40 hours of emergency paid sick time. For employees who work less than 40 hours per week, leave eligibility would be tied to an average of the number of hours worked.

The Legislature’s bill would establish a $75 million COVID-19 Emergency Paid Sick Leave Fund to reimburse eligible employers for providing paid sick leave. Generally, cities and towns would not be eligible for reimbursements from the fund, but would be able to take a federal tax credit against employment taxes, including Medicare, to cover part of the cost of mandated sick leave. The new tax credit provision was provided through an amendment to the federal Emergency Paid Sick Leave Act in the American Rescue Plan Act signed by President Joe Biden on March 11.

The legislation would require the Executive Office for Administration and Finance to draft regulations to implement the new state sick leave program.

Unemployment insurance
The bill includes the governor’s recommendations to provide rate relief to contributory employers, take steps to ensure that the Unemployment Insurance Trust Fund remains solvent, and establish a way to repay federal borrowing.

The legislation would freeze the experience rate of employers for 2021 and 2022, rather than jump to a higher schedule based on sharply higher unemployment due to the public health emergency.

The legislation would also set a temporary surcharge on employers to fund interest payments on advances to the Unemployment Insurance Trust Fund from the federal government. The legislation would authorize the state to issue $7 billion in special obligation bonds to repay federal advances.

State tax provisions
The legislation includes several tax provisions that would exclude forgiven federal Paycheck Protection Program loans and certain other loans and payments from gross income for the purpose of state personal income taxes in 2020. The bill would exclude $10,200 of unemployment compensation received by a taxpayer with a household income of less than 200% of the federal poverty level from gross state income in tax years 2020 and 2021.

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