Massachusetts Announces Paid Family and Medical Leave Updates for 2027

As we enter the fourth quarter of 2026, employers should be aware of several recent updates to Massachusetts Paid Family and Medical Leave (PFML), some already in effect and others taking effect during the first quarter of 2027.

Below is a summary of the most relevant developments.

Rate Announcement for 2027

On October 1, 2026, the Massachusetts Department of Family and Medical Leave (DFML) announced that effective January 1, 2027, the total PFML contribution rate will remain at 0.88 percent of eligible wages for employers with 25 or more employees and that the maximum weekly benefit will increase from $1,230.39 to $1,284.61. Employers with fewer than 25 employees will continue to remit an effective rate of 0.46 percent because they are not required to pay the employer share.

The 2027 announcement continues the trend of recent years. After the program's early rate adjustments, the total contribution rate has remained steady since 2024, and the maximum weekly benefit has increased modestly each year. Employers can therefore expect relatively stable contribution costs but should anticipate continued annual maximum benefit increases, which also affect private plans that must provide benefits at least equal to those offered under the state program.

Contribution Shift from Medical to Family Leave

Although the total rate remains unchanged, Chapter 101 of the Acts of 2026 moves the required employer share of contributions from the medical leave contribution to the family leave contribution. According to the DFML, this change is intended to mitigate the impact of recent IRS guidance on the tax treatment of Massachusetts PFML benefits, which will take effect in 2027.

The IRS guidance clarified that PFML benefits are subject to federal taxation, with family leave benefits generally taxable as income. It also established that the portion of medical leave benefits attributable to employer contributions may be treated as taxable wages and third-party sick pay. Because family leave benefits are typically not wages, regardless of who funds the contribution, shifting the employer share to family leave is expected to avoid any new employment tax obligations for employers.

The new contribution allocations for employers with 25 or more employees have changed as follows:

Because the employer's minimum share remains 0.42 percent of eligible wages and the maximum employee withholding remains at 0.46 percent, the impact is mainly operational. However, payroll systems coded to the current split will need to be updated before the first 2027 payroll. Additionally, employers that currently withhold the full family leave contribution from employees should ensure they are not withholding more than necessary under the new structure.

Employers with fewer than 25 employees are less affected. These employers will continue to remit an effective contribution rate of 0.46 percent of eligible wages and remain exempt from paying any employer share, so their total remittance obligation will not change. However, because the allocation of contributions between family and medical leave is shifting, small employers should still work with their payroll providers to update withholding settings before the first payroll of 2027. Small employers that have elected to cover some or all of their employees' share should also review that election with their payroll provider and legal counsel, as well as update any written policies or employee communications describing it.

New Exemption Request Process

Employers with approved private plans providing benefits that are at least equal to those offered under the PFML program may be exempt from PFML contributions. Since July 1, 2026, employers have been required to request and renew exemptions through the PFML employer portal rather than MassTaxConnect and may begin the renewal process during the last quarter of the current exemption period. Employers that do not intend to renew their exemption must notify their employees and the DFML at least 30 calendar days before the exemption expires.

Conclusion and Next Steps

In light of these PFML updates, Massachusetts employers should consider taking the following steps:

• Coordinate with payroll vendors to update PFML withholding settings for the 2027 contribution split and confirm that employee withholdings do not exceed the permitted shares.
• Update employee notices and communications and review collective bargaining agreements and/or policies that reference the current contribution allocation or the 2026 maximum weekly benefit amount.
• Employers with private plan exemptions should confirm access to the PFML employer portal and make note of renewal dates, as well as ensure that private plan benefits meet or exceed the 2027 maximum weekly benefit.

For more information on this or related topics, please contact the authors or your Holland & Knight attorney.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.