Massachusetts Raises Minimum Wage in “Grand Bargain”

On June 28, 2018, Massachusetts Governor Charlie Baker signed into law the “Grand Bargain” bill, that, over the next five years, will gradually raise the minimum wage to $15.00 per hour, require paid family and medical leave for Massachusetts employees, and phase-out Sunday and holiday time-and-a half pay for certain retail employees.

Minimum Wage Increase

The first minimum wage increase will take effect on January 1, 2019, at which time the minimum wage will increase from its current rate of $11.00 per hour to $12.00 per hour.  Thereafter, it will increase by 75 cents on January 1st of each year until it reaches $15.00 per hour in 2023.  Over the same five-year period, the minimum cash wage applicable to tipped workers will increase from $3.75 per hour to $6.75 per hour, with the rate of pay increasing by 60 cents each January 1^st from 2019 to 2023.

Paid Family and Medical Leave

The new law also establishes one of the most generous family and medical leave programs in the nation, which will be phased in over several years.  While administrative regulations from a newly-created state agency, the Department of Family and Medical Leave, will be forthcoming and will provide more specific guidance to employers with regard to implementation of the law and obligations regarding family and medical leave, the key provisions are evident.

Effective July 1, 2019, employers must post a notice of benefits available under the act and provide employees with a similar written notice of the benefits within 30 days of the employee’s date of hire.  As of July 1, 2019, employers will also start contributing to the Family and Employment Security Trust Fund, which will fund the leave program, at a contribution rate of 0.63 % of each employee’s wages, which is subject to annual adjustment.  Employers may require employees to pay a portion of the contributions.  Employers with fewer than 25 employees in Massachusetts are not required to pay the employer share of the contributions.

Effective January 1, 2021, eligible employees will be able to take 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.  Employees are eligible for medical leave if they have a serious health condition.  Employees are eligible for family leave:

1. To care for a family member with a serious health condition;
2. To bond with a child during the first 12 months after the child’s birth or placement for adoption or foster care; or
3. To attend to exigent circumstances arising out of a family member’s active military duty or impending call to active military duty.

Note that if leave is taken to care for a family member with a serious illness arising out of military service, up to 26 weeks of leave may be taken in a benefit year.  Paid family or medical leave under the law will run concurrently with any leave available to the employee under the Family Medical Leave Act or the Massachusetts Parental Leave Act.

After a seven-day waiting period (during which an employee can use accrued sick or vacation time), the employee will be entitled to wage replacement from the Family and Employment Security Trust Fund equal to 80% of their wages, up to a maximum of 50% of the state average weekly wage, and 50% of their wages above that amount, up to a maximum of $850 per week or an adjusted amount that equals 64% of the state average weekly wage.

The law also includes a notable anti-retaliation provision.  Retaliation against employees for exercising their rights under the new law is prohibited.  Significantly, any negative change in the terms or conditions of employment that occurs during a leave or within six months of the leave creates a presumption of retaliation.  Employer can rebut this presumption only by clear and convincing evidence of a non-retaliatory and independent justification for the change.  The law also provides for a private right of action with a three-year statute of limitations.  Available remedies include reinstatement, payment of three times the employee’s lost wages and benefits, and reasonable attorneys’ fees and costs.

Gradual Elimination of Sunday Premium Pay

Currently, the Massachusetts “blue laws” require that most non-exempt employees who work in retail establishments must be paid time-and-a-half  on Sundays and certain holidays.  This requirement will be gradually phased out over the coming years.  On January 1, 2019, the premium rate will decrease to 1.4 times the regular rate of pay.  Thereafter, it will decrease by 0.1 each January 1, until it is eliminated altogether on January 1, 2023.

Next Steps

As a result of the “Grand Bargain,” Massachusetts employers will want to prepare for the wage adjustments to minimum wage and Sunday premium pay that begin to take effect on January 1, 2019 and will continue annually until 2023.  Although the law’s provisions regarding paid family and medical leave are not fully effective until 2021, regulatory guidance is expected in 2019 and certain provisions are effective in July 2019 as well.  Employers are well advised to review their current leave policies, explore and anticipate procedures and practices to meet the leave law requirements, and remain abreast of any forthcoming guidance and regulations.