The Massachusetts Legislature passed a bill late yesterday that would resolve a number of pending legislative and ballot proposals in one fell swoop. Hailed as the “Grand Bargain,” the legislation makes important changes to the minimum wage and the Blue Laws, mandates paid family and medical leave for employees, and establishes an annual sales tax holiday weekend. Governor Baker is expected to sign the bill.
We will be studying the anticipated new law and its implications for employers in the coming weeks, and we will be presenting a detailed Breakfast Briefing in July to educate employers about these changes and their compliance obligations. For the moment, however, these are the highlights of the proposed law:
- As of January 1, 2021, Massachusetts employees will be eligible to take up to 12 weeks of paid family leave (up to 26 weeks in certain circumstances) and up to 20 weeks of paid medical leave.
- All private Massachusetts employers are covered by the new law.
- Employers will be required to post notice of the new program and to provide written information about the new program to new hires within 30 days.
- Any employee who meets the financial eligibility requirements for unemployment compensation will qualify for paid family and medical leave benefits. In most cases, leave may be taken intermittently or on a reduced schedule basis.
- Employers must continue employee health insurance benefits and premium contributions during any period of family or medical leave.
- Employers must restore employees who return from leave to their previous, or an equivalent, position, with the same status, pay, benefits and seniority, barring intervening layoffs or changed operating conditions.
- Employers may not retaliate or discriminate against employees for exercising their rights under the new law, may not otherwise interfere with their exercise of those rights, and may not retaliate or discriminate against employees for filing a civil complaint to enforce such rights.
- Any negative change in the terms or conditions of employment that occurs during a leave, within six months after an employee returns from leave, or within six months after an employee files a civil complaint is presumed to be unlawful retaliation. Employers can rebut the presumption only by clear and convincing evidence of an independent justification for the change.
- Employees will have three years to sue an employer for a violation of the new law. Employers found liable may be ordered to reinstate the employee and to pay three times the employee’s lost wages and benefits, plus reasonable attorneys’ fees and costs.
- The program will be administered by a new state agency, the Department of Family and Medical Leave, and will be paid for by mandatory employer contributions to a state trust fund. Employers may require employees to pay a portion of those contributions, and employers with fewer than 25 employees are exempt from paying the employer share of the contributions.
- Employers will have the option of providing equivalent benefits to their employees through an approved private plan or self-insurance.
- The new department must craft proposed regulations by March 31, 2019, and will start collecting the new tax on July 1, 2019.
- The minimum wage will increase from $11 to $15 over the next five years. It will increase to $12/hour on January 1, 2019, and will then go up by $0.75/hour every year until it hits $15/hour on January 1, 2023.
- The minimum wage for tipped employees, known as the “service rate,” will increase from $3.75/hour to $6.75/hour over the next five years, at a rate of $0.60/hour every year.
- Mandatory time-and-a-half for employees who work in retail establishments on Sundays and certain holidays will gradually be eliminated. Retailers will see the overtime rate drop from 1.5 times the regular rate to 1.4 times the regular rate on January 1, 2019, to 1.3 times the regular rate on January 1, 2020, and so on, until January 1, 2023, when the mandatory overtime requirement is eliminated altogether.
- Residents will enjoy a permanent sales tax holiday weekend in August starting in 2019.
We will continue to keep employers apprised of any new developments. In the meantime, stay tuned for more information about our upcoming Breakfast Briefing, where we will break down these important changes in detail and make sure local employers understand what they need to do to comply and avoid costly liability.