Easily manage employment in Massachusetts

Payroll management in Massachusetts

Massachusetts has a strong economy driven by industries such as healthcare, technology, education, and finance. With some of the most employee-friendly labor laws in the country, including a high minimum wage and paid family and medical leave, employers in Massachusetts must ensure compliance with both state and federal payroll regulations. Understanding these requirements is essential for smooth payroll operations.

Payroll breakdown in Massachusetts

Employers in Massachusetts must adhere to both federal and state payroll regulations regarding wages, taxes, and benefits. Below is an overview of key payroll components:

Minimum wage and overtime

• Minimum wage: Massachusetts’ minimum wage is $15.00 per hour.
• Overtime rules:
• Massachusetts follows federal overtime laws, requiring employers to pay 1.5 times an employee’s regular rate for hours worked beyond 40 hours in a workweek.
• Certain salaried employees may be exempt from overtime based on their job classification.

State income tax

• Massachusetts has a flat state income tax rate of 5% for all employees.
• Employers must withhold state income tax and remit it to the Massachusetts Department of Revenue.

Unemployment insurance (UI) tax

• Employers must contribute to Massachusetts’ Unemployment Insurance (UI) program, managed by the Massachusetts Department of Unemployment Assistance.
• The wage base for UI tax in Massachusetts is $15,000.
• UI tax rates vary based on an employer’s experience rating and range from 0.94% to 14.37%.

Paid family and medical leave (PFML)

• Massachusetts requires employers to participate in the Paid Family and Medical Leave (PFML) program, which provides income replacement for eligible employees who need time off for medical or family-related reasons.
• The contribution rate for PFML is 0.88% of eligible wages, split between employer and employee contributions, depending on company size.

Workers’ compensation

• Massachusetts law requires most employers to carry workers’ compensation insurance to cover medical expenses and lost wages for employees injured on the job.

Payroll tax filing and payment deadlines

• Employers must register for a Massachusetts Withholding Tax Account Number with the Massachusetts Department of Revenue.
• State withholding tax returns must be filed monthly, quarterly, or annually, depending on employer classification.
• UI tax reports must be submitted quarterly to the Massachusetts Department of Unemployment Assistance.
• Payroll tax payments can be made electronically through MassTaxConnect.

Quick facts: Important considerations for employers

• State minimum wage compliance: Massachusetts’ minimum wage is higher than the federal rate, and employers must comply with state laws.
• Final paycheck rules:
• If an employee is terminated, employers must provide the final paycheck on the day of termination.
• If an employee resigns, the final paycheck must be provided on the next scheduled payday.
• New hire reporting: Employers must report new hires to the Massachusetts New Hire Reporting Center within 14 days.
• Paid sick leave: Massachusetts requires employers with 11 or more employees to provide paid sick leave at a rate of one hour per 30 hours worked, up to 40 hours per year.
• Payroll recordkeeping: Employers must maintain payroll records for at least three years to comply with state and federal laws.
• Right-to-work state: Massachusetts is not a right-to-work state, meaning employees may be required to join a union if applicable.

Run payroll in Massachusetts with Remote

Managing payroll in Massachusetts requires careful attention to state-specific regulations, including minimum wage compliance, PFML contributions, and UI tax requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

To see just how easy global payroll can be, book a demo today.