CLIENT ALERT: In “Grand Bargain” Massachusetts Enacts Paid Family Leave, $15 Minimum Wage

CLIENT ALERT

by

Mark J. Ventola

On June 28, 2018, Governor Baker signed a bill that will raise the state’s minimum wage to $15 an hour, mandate paid family and medical leave, eliminate premium pay for work on Sundays and holidays, and establish a permanent sales tax holiday.

The bill is being called the “Grand Bargain,” as it represents a compromise between Republican and Democratic lawmakers who sought to avoid a contentious battle over three pending ballot questions: whether the sales tax should be lowered to 5%, whether the minimum wage should be raised to $15 an hour by 2022, and whether the state should enact a robust and employee-friendly paid leave program.

Each of the provisions of this law will take effect incrementally. The minimum wage will increase to $12 an hour in 2019, and then go up in 75-cent increments each year until it reaches $15 an hour in 2023. The yearly sales tax holiday will begin in August 2019. And the paid family and medical leave program will begin in 2021, although aspects of it will impact employers and employees much sooner.

The paid family and medical leave program is the most complex and significant aspect of the law, as it will add another compliance obligation to the growing list that most employers face. Massachusetts now joins California, New York, and several other states that have already enacted such a benefit, although each state’s program is slightly different.

In Massachusetts, the law will apply to all employers, and employees will be eligible for up to 12 weeks of paid family leave (which can be used to care for a sick family member) and up to 20 weeks of paid medical leave (which can be used to attend to their own serious medical needs). The leave will be job-protected, meaning that an employee who takes either family or medical leave will be entitled to return to the same position (or an equivalent one), with the same status, pay, and benefits. The law, therefore, places more burdens than does the Federal Family and Medical Leave Act (the “FMLA”) and it applies to all employers; the FMLA only applies to employers of 50 or more, and does not make the leave paid.

The paid leave program will be administered by a new state agency – the Department of Family and Medical Leave – and will be funded through a new 0.63% payroll tax, which the employer and employee will split. By July 1, 2019, employers subject to the new program must inform employees of their new rights through notices, and both employers and employees must start making the tax contributions. Benefits payments themselves will not begin until 2021.

The Department of Family and Medical Leave will publish proposed regulations by March 31, 2019, which will provide further guidance for employers on how to comply with the new law. Employers should remain alert for additional information.

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Mark J. Ventola is a shareholder at Sheehan Phinney Bass & Green. Mark cochairs the firm’s Labor, Employment and Employee Benefits Group.

This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.