Alerts and Updates

Employers with employees in Massachusetts will need to review their wage payment practices to ensure compliance with the minimum wage and Sunday/holiday premium changes.

On June 28, 2018, Massachusetts Governor Charlie Baker signed into law An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday. The Act is a bipartisan compromise designed to avoid ballot questions in November 2018 regarding various employment-related initiatives, including increasing the state minimum wage and establishing paid family and medical leave. The Act provides for the following:

Gradual Minimum Wage Increases

The Act gradually increases the state minimum wage from $11 per hour to $15 per hour through annual increases. The minimum wage will increase to $12 on January 1, 2019; to $12.75 on January 1, 2020; to $13.50 on January 1, 2021; to $14.25 on January 1, 2022; and ultimately to $15 on January 1, 2023.

The law also will 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, at a rate of $0.60 per hour every year.

Phased Elimination of Sunday Premium Pay

The Act also gradually eliminates the existing time-and-one-half premium pay for retail workers on Sundays and certain holidays. Beginning on January 1, 2019, the phase out will decrease the applicable premium annually—to 1.4 times the regular rate of pay in 2019, 1.3 times the regular rate in 2020, 1.2 times the regular rate in 2021 and 1.1 times the regular rate in 2022—with elimination of the premium effective January 1, 2023.

New Paid Family and Medical Leave

Effective July 1, 2021, all private employers in Massachusetts (regardless of size) must provide employees with paid family and medical 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 aggregate of 26 total weeks of paid leave per benefit year. The paid leave is funded through a payroll tax of 0.63 percent, which the employer and employee will split.

Paid medical leave is to be available to any covered individual with a serious health condition. Paid family leave is to be available to any covered individual: (i) to care for a family member with a serious health condition; (ii) to bond with the covered individual’s child during the first 12 months after birth or the first 12 months after the placement of the child for adoption or foster care with the worker; (iii) because of any qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call or order to active duty in the armed forces; or (iv) in order to care for a family member who is a covered service member. In addition to current employees, a “covered individual” also includes a former employee who separated from employment within the preceding 26 weeks.

Paid family and medical leave under the Act will run concurrently with leave taken under the Massachusetts Parental Leave Act and the federal Family and Medical Leave Act (FMLA). There is a one-week waiting period following a qualifying event, during which time no benefits are paid. The Massachusetts Act provides for job restoration rights and protection of benefits accrual, and allows for intermittent leave (except for child-bonding leave, to which both employer and employee must agree).

Employers that have programs offering benefits greater than or equal to the state program may apply to opt out of the state benefit program.

The weekly benefit amount for employees is calculated based on a percentage of the average weekly wage, up to a maximum of $850 per week.

Starting July 1, 2019, Massachusetts employers will begin contributing to the Family and Employment Security Trust Fund. On that date, employers must also provide notice to employees of their rights under the Act.

Key Takeaways

Employers with employees in Massachusetts will need to review their wage payment practices to ensure compliance with the minimum wage and Sunday/holiday premium changes. They will also need to review leave policies to ensure compliance with the new leave requirements, and calendar July 1, 2019, as the date by which they must provide employees with notice of their family and medical leave rights under the Act.