Massachusetts Governor Charlie Baker just signed into law the so-called “grand bargain” bill, which contains provisions that will have a significant effect on employers in the state. The law is a compromise designed to avoid potential ballot questions about an increase in the state minimum wage, paid leave, and a reduction in the state sales tax. It contains key employment-related provisions, including:
- a gradual increase of the state’s minimum wage from the current $11.00 per hour to $15 per hour by 2023;
- a phase-out of the requirement that certain employees be paid time-and-one-half for Sunday and certain holiday work (a requirement found in the state’s blue laws); and
- a phase-in of paid family and medical leave. (Specifically, employees will be able to take up to 12 weeks of paid leave to care for a sick family member or new baby, and up to 20 weeks of paid leave to attend to their own medical needs.)
Minimum Wage Increase and Premium Pay Elimination
The law will result in a gradual increase of the state minimum wage to $15.00 per hour through annual increases to $12.00, $12.75, $13.50, $14.25, and ultimately $15.00 in 2023. The law will also gradually increase the minimum wage applicable to tipped employees from the current rate of $3.75 per hour to $6.75 per hour in 2023.
In addition, the law will phase out time-and-one-half premium pay for retail workers on Sunday and certain holidays. The phase-out will decrease the applicable premium slightly each year, with no premium starting in 2023. The other Sunday and holiday work rules will still apply (work must be voluntary and refusal to work cannot be grounds for any type of penalty).
Paid Family and Medical Leave
The new paid leave requirements will be phased in over several years. Effective July 1, 2019, employers will be required to post a notice of the newly-available benefits and provide employees with specific written information about the benefits within 30 days of an employee’s start date. In addition, starting July 1, 2019, Massachusetts employers will begin contributing to the Family and Employment Security Trust Fund at a contribution rate of 0.63 percent of each employee’s wages (the contribution rate may be adjusted annually). . Employers with fewer than 25 employees in the state are not required to pay the employer portion of the leave premiums. We expect the details of this payment system to be clarified through regulations.
Starting January 1, 2021, employees may begin taking paid leave. The law provides for up to 12 weeks of paid family leave per benefit year and up to 20 weeks of paid medical leave per benefit year, with a maximum of 26 total weeks of paid leave per benefit year. After an initial seven-day waiting period (during which employees may use accrued sick or vacation time), employees will be entitled to receive wage replacement from the trust fund described above equal to 80 percent of their wages, up to a maximum of 50 percent of the state average weekly wage, and 50 percent of their wages above that threshold, up to a maximum of $850 per week, though this amount will be subject to annual adjustment. (Note that the benefit amount will be reduced by the amount of wage replacement that an employee receives for the same time period under governmental programs such as workers’ compensation; in addition, employees will be required to cover some or all of the contribution to the trust fund, depending on the type of leave they are taking
The paid family and medical leave will be available for largely the same reasons as those set forth in the federal Family and Medical Leave Act (FMLA). The Massachusetts law also provides for intermittent family and medical leave, as well as job restoration rights and protection of benefits accrual. Most of the definitions used in the federal FMLA apply under the new state law, with certain notable exceptions: employees will be eligible for the state benefit regardless of their length of service or hours worked, and certain definitions, including “family member,” are broader under the Massachusetts law than they are under the federal law. Leave under the new state law will run concurrently with leave taken under the federal FMLA.
Employees are required to file claims for benefits with a supporting certification, and filing a claim more than 90 days after the start of a leave may result in reduced benefits.
Note that employers that have programs offering benefits greater than or equal to the state program may apply to opt out of the state benefit program. Also, the law provides benefits to certain former employees if their leave starts within 26 weeks following their separation from employment.
Key Takeaways
Employers with employees in Massachusetts may want to review their wage payment practices to ensure that they are prepared for the minimum wage and Sunday/holiday premium changes as they go into effect. They may also want to begin to review leave practices and policies and set up systems for incorporating the new leave requirements.
