An upcoming mandate for Massachusetts companies to begin payroll deductions to support paid family medical leave legislation has many robotics and artificial intelligence companies concerned about its effects, but many say it will help them in the long run to attract and recruit a more diverse workforce.
Robotics Business Review canvassed several Massachusetts-based robotics and AI firms to find out if they were ready for the Paid Family Medical Leave (PFML) law, in which payroll deductions begin on Oct. 1, 2019. Beginning in January 2021, most workers in Massachusetts will be eligible to get up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave annually, with a combined maximum amount of family/medical leave of 26 weeks per year.
The new law will go a long way toward helping robotics companies in the state compete with companies across the county when it comes to recruiting diverse talent, according to Diandra Drago, director of talent acquisition and HR at Vecna Robotics in Waltham.
“It’s really going to help us, as well as a number of other employers, be able to recruit diverse talent – women, minorities and veterans,” said Drago, whose company has around 90 employees. “This is an amazing law that I think we’ve all been looking forward to.”
Because Massachusetts is a progressive state, it makes sense that it’s going to put forth a “wonderful policy” that supports families and military families especially, Drago said.
“I think this might be one of the first medical family leave policies in the United States that does support military families specifically,” she said. “It’s a fantastic recruiting tool, even if employers are having part of the tax come from the employees themselves.”
Crunching the numbers, Drago said an employee making $75,000 annually would only be paying about $6 a week for the benefits.
“And $6 a week to make sure that you have the time to spend with your newborn or your adopted child or to take care of someone who’s recently had an injury – where they get disability coverage, but you don’t as the caretaker,” she said. “That’s an amazing peace of mind you wouldn’t have without this law.”
Whether an employer covers its employees’ costs or not, Drago said workers won’t see this as a tax. “In reality it is a tax, but the amount that they’re paying for the benefit they’re getting in the long term is amazing,” she said.
Tracy Simek, vice president of human resources at Locus Robotics in Wilmington, agreed that the PFML cements the state’s position as one of most progressive states in the country in terms of employment law.
“In general this is something that far too few people have access to, especially in a lower income bracket, which may not be the case for robotics companies,” he said. “I think it is very positive.”
However, Simek said the fact that the law came on very quickly with limited planning and little instruction and guidance for the business community made it difficult for Locus, at least, to manage.
“It did come on as a mandate. It was passed in January and we were all supposed to inform our employees in May and begin withholdings in July [the deadline was extended until Oct. 1], for a program that will not take effect until 2021,” he said. “And that’s difficult to justify when you are talking a [0.75] percent withholding rate of a person’s salary, which is impactful to people at any level. It is an impactful new deduction.”
Locus, which currently has 85 employees, said it plans to take advantage of the exemption and offer its workforce a private plan that will provide the same benefits as the state’s plan.
Despite concerns about the planning process, Simek said Locus is still positively inclined toward the PFML law.
“I think a lot of businesses in Massachusetts – I wouldn’t say all of them because I don’t speak for every robotics company or business – but I think a lot of people believe this is a step in the right direction,” he said.
Simek also said the PFML offers Massachusetts a competitive advantage when it comes to recruitment. “Whether employers decide to have their employees bear the withholding or take it themselves, I still think we are competitively positioned in terms of the state tax loads to other localities where you find centers of robotics development,” he said. “So if you’re talking about the [San Francisco] Bay Area . . . and Pittsburgh, another robotics hub, I think we are favorably positioned.”
Competing with other states
Like Simek, Heather Ames, co-founder and COO at Neurala in Boston, said Massachusetts comes out ahead when comparing its payroll tax with that of California.
“So a small incremental tax, I don’t think is going to deter people from getting jobs in our field here,” she said. “These are higher salary jobs, anyway.”
Currently, Neurala offers its 40 employees 12 weeks of parental leave at 100% of their salaries. Although Neurala could potentially opt out of the state’s PFML program, the company has decided to implement that plan – at least for now.
“After speaking with our attorneys, that’s what we’ve decided to,” Ames said. “The real question for us is: how does our benefit adjust on top of that? If we’re paying into this then maybe it comes at a savings to us as a company where we can have the employee take this benefit and we just pay the rest of their salary on top of that.”
For example, if a person goes out on a parental leave and that individual gets the $840 a week benefit from the state, but she’s actually getting paid $1,000 a week, then Neurala would pay the difference. That’s a possibility, but benefits can’t be taken until 2021, so Neurala still has a little time to figure that out, she said.
“I think it’s really important as a community in AI and robotics and technology that we acknowledge the importance of parental leave,” Ames said. “This is a step in the right direction for the state to recognize that as well in terms of paid leave. And we as a community should advocate for it if we ever want to increase diversity in our companies.”