Massachusetts employers have two ways to reduce or restructure their Paid Family and Medical Leave obligations, and the PFML exemptions work differently depending on company size. If you employ fewer than 25 covered individuals, you are automatically off the hook for the employer share of the premium. Any employer, regardless of size, can also apply to substitute a qualifying private plan for the state program. For 2026, the full contribution rate is 0.88% of eligible wages; small employers owe only the 0.46% employee portion.1Mass.gov. Paid Family and Medical Leave Employer Contribution Rates and Calculator
The Small Business Exemption
Employers with fewer than 25 covered individuals do not pay the 0.42% employer portion of the medical leave contribution. You still have to withhold and remit the employee share: 0.28% for medical leave and 0.18% for family leave, for a combined 0.46% of eligible wages.
The headcount is based on the average number of covered individuals during the previous calendar year. If your workforce crosses the 25-person line in either direction, your obligations change for the following year. Even when you owe nothing from the company’s own funds, you remain responsible for withholding correctly from every paycheck, filing quarterly through MassTaxConnect, and reporting each covered individual. The paperwork does not shrink with the headcount.
Who Counts Toward the 25-Worker Threshold
The count includes every W-2 employee on your Massachusetts payroll, whether full-time, part-time, or seasonal. It also includes 1099-MISC contractors if they make up at least half of your total workforce.2Mass.gov. Paid Family and Medical Leave Coverage for Self-Employed Individuals Business owners who pay themselves through W-2 wages count as employees of their own company.
This matters most for businesses near the line. If you have 22 employees and engage five independent contractors who represent more than half of your total workforce, those contractors push your covered-individual count above 25, and you owe the employer share for the following year. A workforce review before year-end prevents a January surprise.
The Private Plan Exemption
Any employer can apply to use a private plan in place of the state program. The Department of Family and Medical Leave will approve the exemption only if the plan matches or exceeds the state program on every measurable dimension. You can apply for a medical leave exemption, a family leave exemption, or both; each component is reviewed independently, so a strong medical plan will not pull a weaker family plan across the line. If your plan only covers one type, you stay in the state system for the other.
Benefit Standards the Plan Must Meet
- Weekly benefit at least equal to the state’s maximum, which is $1,230.39 for 2026.3Mass.gov. How PFML Weekly Benefit Amounts Are Calculated and/or Changed
- Leave duration of at least 20 weeks for a worker’s own serious health condition, 12 weeks for family-related needs such as bonding with a new child or caring for a family member, and up to 26 weeks for caring for a covered service member. The combined maximum in a benefit year must reach at least 26 weeks.4Mass.gov. Paid Family and Medical Leave (PFML) Overview and Benefits
- Intermittent or reduced-schedule leave available for both medical and family leave, with the weekly benefit prorated.5Mass.gov. Benefit Requirements for Private Paid Leave Plan Exemptions
- Employee cost no higher than what workers would have paid into the state program.
- Job restoration after leave and continued accrual of employment benefits during the absence.
Documentation for Insured Plans
For a plan purchased through an insurance carrier, you need the carrier’s name, your policy number, and the policy’s effective date. The effective date must align with the start of the quarter for which you are requesting the exemption. Confirm the policy language covers every category of worker who qualifies as a covered individual under Massachusetts law, not only your full-time employees.
Documentation for Self-Insured Plans
Self-insured employers face steeper requirements because they are asking the state to trust their financial ability to pay claims. The central requirement is a surety bond running to the Commonwealth, with the bond amount tied to your Massachusetts workforce size. The Department estimates roughly $16,000 in benefits for every 25 covered employees under a combined family and medical leave plan, and the bond must reflect that estimated liability.6Mass.gov. Requirements for Self-Insured Private Paid Leave Plans The bond must be issued on a state-approved form and signed by an authorized company representative. You may also be asked for financial statements or proof of a dedicated trust account.
Annual premiums on surety bonds typically run between 1% and 15% of the bond face value, depending on your creditworthiness and financial history. For a 100-employee business, the bond amount would be roughly $64,000, putting the annual premium somewhere between $640 and $9,600. Factor that cost into your comparison before assuming a private plan saves money.
Applying and Renewing Through MassTaxConnect
Exemption applications are submitted through MassTaxConnect on a rolling basis. Log in to your employer account, open your Paid Family and Medical Leave account panel, and select the “Exemptions” link followed by “Request Exemption.”7Mass.gov. Request a Paid Family and Medical Leave Exemption Enter the policy details, submit, and save the confirmation.
If approved, the exemption takes effect on the first day of the quarter following approval and lasts one year, or four quarters.8Mass.gov. PFML Exemption Requests, Registration, Contributions, and Payments You can file for renewal during the quarter before the current exemption expires. If your exemption ends September 30, you can start renewing July 1.9Mass.gov. Renewing Your Private Plan Exemption Renewal requires a full new application through the same portal, not a confirmation that nothing has changed.
Once approved, you must notify employees that the company has a private plan in place. Post the program notice in an accessible workplace area and send it by email or mail to remote workers. Employees remain protected from retaliation under Chapter 175M regardless of whether the employer uses the state system or a private plan.
What a Lapse or Revocation Costs
Missing a renewal is one of the most expensive mistakes in this process. If your exemption expires without an approved renewal, you become immediately liable for contributions to the state trust fund, back to the first day of the new quarter, plus potential interest and penalties.
Revocation is also possible if the Department determines your private plan no longer meets the benefit standards. A plan that was compliant at approval can fall out of compliance if the state’s maximum weekly benefit rises (it moved from $1,149.90 in 2024 to $1,230.39 in 2026) and your plan does not keep pace. When an exemption is revoked, the employer returns to the state system and owes contributions from the date the plan fell short. The Department communicates formal decisions through MassTaxConnect’s online messaging system, so check it rather than waiting for a letter.
The private-plan calculus comes down to this: potential savings have to be weighed against the risk of a lapse or revocation that triggers retroactive liability. If your HR team is already stretched, the overhead of tracking renewal dates, updating benefit amounts annually, and maintaining surety bonds may outweigh what you save on contributions.
One Note on Federal FMLA
Neither Massachusetts exemption changes your obligations under the federal Family and Medical Leave Act. FMLA applies only to employers with 50 or more employees within 75 miles of the worksite, and workers must have logged at least 1,250 hours in the previous 12 months to qualify.10U.S. Department of Labor. Fact Sheet #28 – The Family and Medical Leave Act A 15-person company is subject to Massachusetts PFML but not FMLA. A 60-person company running a private PFML plan still owes its workers FMLA’s unpaid, job-protected leave on top of the private plan’s paid benefits. A small-business exemption does not touch that layer, and a private plan does not replace it.