On June 28, 2018, Governor Charlie Baker signed An Act Relative to Minimum Wage, Paid Family Medical Leave and the Sales Tax Holiday (the “Act”). Commonly known as the “Grand Bargain,” the passage of this law will avert the push for a ballot measure this November regarding minimum wage and paid family leave in Massachusetts. In addition to increasing the minimum wage in Massachusetts for non-tipped workers to $15 by 2023 (beginning with an increase in January 2019 to $12 an hour), and gradually doing away with a required premium for certain hourly workers on Sundays and holidays, the law will mandate paid family and medical leave for employees across the Commonwealth.
Unlike the federal Family and Medical Leave Act, which applies only to larger employers, the Massachusetts version of family and medical leave will affect all employers with an employee in Massachusetts. This new law will permit an employee with a serious health condition to take up to 20 weeks of paid medical leave when the employee is experiencing a serious health condition. Additionally, eligible employees will be able to take 12 weeks of paid family leave (or 26 weeks in the case of caring for a family member who is a service member). This family leave entitlement encompasses not only leave to assist a family member with a serious health condition, but it also allows for leave to bond with a recently born or adopted child. In the event that an employee has reason to take both medical leave and family leave within the same year, he or she will be capped at a total of 26 weeks of benefit under this law.
Although employees will not be able to take advantage of the leave benefits until 2021, the new payroll tax that will be the funding source for the medical leave (discussed below) will kick in on July 1, 2019.
Leave taken under this Act will run together with, not in addition to, leave taken under either the existing Massachusetts Parental Leave Act or the federal Family and Medical Leave Act. However, taking leave under this Act does not prevent an employee from taking medically necessary leave during pregnancy or to recover from childbirth. Family and medical leave can be taken intermittently or on a reduced schedule; however, employees and employers must both agree to this alternative schedule for leave taken to bond with a new child.
The newly formed Department of Family and Medical Leave, which will oversee this paid leave program, will determine specified contribution rates for employers each year, with an initial rate of 0.63 percent of each employee’s salary, beginning on July 1, 2019. To cover these contributions, an employer can deduct up to 40 percent of the contribution from the employee’s wages for medical leave and up to 100 percent of the contribution from an employee’s wages for family leave. Smaller employers—those with fewer than 25 employees in Massachusetts—will not be required to pay any portion of the contribution or family and medical leave. It is expected that the to-be-released regulations regarding this leave program will address exactly how an employer can properly make these deductions. If an employer fails to make its required contribution, it will be taxed 0.63 percent of its total annual payroll as well as the cost of any benefits provided to its employees under the Act, provided, however, that employers that provide more generous benefits than those required by law may apply to the Department of Family and Medical Leave for approval to opt out of the state program.
The weekly benefit provided to employees on leave, which will generally be available after a seven-day waiting period (during which an employee can used accrued vacation or sick leave), will be determined by the employee’s salary. If the employee’s average weekly salary is equal to or less than 50 percent of the state’s average weekly salary, the employee will receive 80 percent of her pay while on leave. If the employee’s average weekly salary is more than 50 percent of the state average weekly wage, then that employee’s wage on leave will be equal to 50 percent of her usual salary. The maximum benefit an employee can receive on leave is currently set at $850 per week. However, this amount will be adjusted annually to reflect an amount equal to 64 percent of the state’s average weekly wage.
Employers will bear the burden to prove that they are complying with the law and will be required to post a notice of this benefit in the workplace, beginning January 1, 2019. Within 30 days of an employee’s start date, the employer must also provide employees and self-employed contractors with written information regarding the availability of family and medical leave benefits, details about the plan, and how to file a claim for leave. Any employer found in violation of this Act will first be fined a $50 civil penalty for each employee. A subsequent violation will result in a civil penalty of $300 per employee.
This law also includes protections against retaliation. The taking of family or medical leave cannot affect an employee’s right to reinstatement, eligibility for bonuses, or right to accrue vacation or to receive other benefits. Any discharge, suspension, or discipline of an employee within six months after that employee took family or medical leave will be presumed to be retaliation by the employer.
The Department of Family and Medical Leave will propose regulations and procedures for public comment no later than March 31, 2019, but we encourage employers to begin preparing for this new law prior to then, as the notice obligations will begin in January 2019.