Massachusetts Legislature Passes Bill Providing $15 Minimum Wage And Paid Family And Medical Leave: What Employers Need To Know

Author:Mr Daniel Klein
Profession:Seyfarth Shaw LLP

Seyfarth Synopsis: On June 20, 2018, the Massachusetts Legislature overwhelmingly passed a bill providing a number of important provisions impacting employers in the Commonwealth. The so-called "grand bargain" bill resulted from a compromise among legislators, the business community, labor unions and community groups designed to eliminate three potential November ballot questions on proposals concerning paid leave, the minimum wage, and a reduction in the state sales tax. The bill will now advance to Governor Baker's desk for his consideration by June 30.

The "grand bargain" bill would gradually raise the state minimum wage from the current $11 per hour to $15 per hour by 2023. It would also phase out over five years the time-and-a-half premium pay requirement for retail workers working on Sundays and holidays.

The bill also provides for paid family and medical leave. While the statutory language raises a number of questions that will need to be addressed through the regulatory process, the principal terms are mostly clear. Over a 3-year phase-in period, the Family And Medical Leave Law would provide Massachusetts workers up to 12 weeks of paid family leave, and up to 20 weeks of paid medical leave for the employee's own serious health condition. After a 7-day waiting period, workers on paid leave would earn 80% of their wages up to 50% of the state average weekly wage, and then 50% of their wages above that amount, up to an $850/week cap (which may be adjusted annually). The benefit will be paid by a state trust fund which will be funded by a payroll tax on employers at an initial contribution rate of 0.63% of the employee's wages. The cost may be shared between employer and employee at varying percentages, based on the type of leave and the size of the company. Unlike the federal FMLA, the state law will apply to all employers of one or more employees working in Massachusetts. Job-protected, paid leave will seemingly be available to eligible new employees without any hours worked or service time requirements. That law also will apply to certain former employees after separation and self-employed workers. The key provisions are unpacked below, subject to regulatory clarification.

Minimum Wage And Premium Pay

If signed, the bill will gradually raise the state minimum wage over 5 years from the current $11 per hour to $15 per hour by 2023, including annual increases to $12, $12.75, $13.50, $14.25, and $15. The bill also will gradually increase the alternative minimum "service rate" for eligible customarily tipped employees from $3.75 per hour to $6.75 per hour by 2023.

The bill will phase out over five years the time-and-a-half premium pay requirement for retail workers working on Sundays and holidays, decreasing annually from 1.5 times to 1.4 to 1.3 to 1.2 to 1.1 and ultimately to straight time. However, retail work on Sundays and certain...

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