Comprehensive bill includes COVID-19 Emergency Paid Sick Leave, updates to Unemployment Insurance and Paycheck Protection Program loans, extends tax filing deadline.
(BOSTON–03/19/21) Ten weeks after Senate President Karen E. Spilka promised swift action on COVID-19 Emergency Paid Sick Leave, the Massachusetts State Senate passed a comprehensive bill that would guarantee five paid days off for every employee in the Commonwealth. The bill also seeks to stabilize the state’s Unemployment Insurance (UI) trust fund, provides substantial tax relief to businesses and workers, and delays the state tax filing deadline.
“In January, I declared that we must act quickly to provide our workers with COVID-19 Emergency Paid Sick Leave, and today the Senate has delivered on that promise,” stated Senate President Karen E. Spilka (D-Ashland). “I am proud of the collaboration that brought about this agreement, which will provide needed relief for both businesses and workers. As we continue to recover from the COVID-19 emergency, these measures will provide stability to our economy, and keep workers safe.”
“As we slowly emerge from the COVID-19 pandemic, I am proud of the collective action taken by the Senate and House to pass this comprehensive bill that strikes a balance to help businesses, workers, and jumpstart an equitable recovery for our Commonwealth,” stated Senator Michael J. Rodrigues (D-Westport), Chair of the Senate Committee on Ways and Means. “With more people getting vaccinated by the day, and our economy re-opening, this bill will bring much needed relief to small businesses, keep our essential front line workers safe, and target tax relief to lift up low-income families who lost jobs during this pandemic. Time is of the essence, so I look forward to this comprehensive relief package becoming law.”
“This bill provides critical support for the many businesses and residents who have continued to struggle financially during this pandemic,” said Senator John C. Velis (D-Westfield). “The changes to unemployment insurance, PPP loan tax status, and the tax filing deadline will provide much needed stability and flexibility during an incredibly stressful time,”
To help protect employees on the front lines, and 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, and 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.
The Senate accepted an amendment from Senator Patricia D. Jehlen (D-Somerville) to establish a commission on the solvency of the UI trust fund to pursue long-term solutions for solvency. The commission convenes a balance of business and advocacy interests with the Chairs of the Joint Committee on Labor and Workforce to report on changes required to ensure a solvent trust fund.
The bill also provides much-needed UI-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.
“With the tax filing season upon us, the inclusion of language from my PPP 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,” stated Senator Eric P. Lesser (D-Longmeadow), Senate Chair of the Joint Committee on Economic Development and Emerging Technologies. “Over 140,000 businesses across the Commonwealth have received Paycheck Protection Program loans from the Small Business Administration, and have been asked to be patient, flexible, and resilient in order to keep their lights on. It’s unfair for our state to hit them with an unexpected tax. This is a critical measure for speedy economic recovery.”
Finally, 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 now goes to the House for further action.
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