On June 28, 2018, Governor Baker signed “An Act Relative to Minimum Wage, Paid Family Medical Leave and the Sales Tax Holiday” making Massachusetts one of very few states in the country to require employers to provide paid family and medical leave to employees. The Act also raises the state’s minimum wage from the current rate of $11 per hour for regular employees to $15 per hour by 2023 and gradually eliminates the premium pay requirement for retail workers on Sundays and holidays.
Paid Family and Medical Leave
Although the Act contains several noteworthy developments for employers, its creation of a paid family and medical leave program is undoubtedly the most significant. By its terms, the Act creates G.L. c. 175M entitled “Family and Medical Leave.” G.L. c. 175M, in turn, establishes a “Department of Family and Medical Leave within the Executive Office of Labor and Workforce Development” (the “Department”) to administer the leave program.
The leave program will initially be funded by a .63 percent payroll tax, taken from both employers and employees in varying percentages, that will be paid to a state fund known as the “Family and Employment Security Trust Fund.” Contributions to the fund will commence on July 1, 2019. Beginning in 2022, the amount of the payroll tax will be fixed by the director of the Department by October 1st of the preceding year. Notably, employers with less than 25 employees in Massachusetts are not required to pay the employer portion of the payroll tax.
In 2021, all employees may begin taking medical or family leave for one of the reasons enumerated by the Act including: (i) for the employee’s own serious health condition, (ii) to care for a family member with a serious health condition, (iii) to bond with the worker’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, (iv) 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 (v) in order to care for a family member who is a covered service member. After an initial seven-day waiting period, employees will be paid a percentage of their wages/salary from the fund in accordance with a specific statutory formula. Initially, an employee’s weekly benefit may not exceed $850, but the Department is directed to adjust that maximum annually to 64% of the state average weekly wage.
Employees are eligible for up to 12 weeks of paid family leave in a benefit year. If an employee’s family leave is taken to care for a covered service member, however, the employee is eligible for up to 26 weeks of paid leave. Employees who take medical leave are eligible for up to 20 weeks of paid leave. In no event, however, is an employee allowed to take more than 26 weeks of leave, in the aggregate, of family and medical leave, during the same benefit year. Leave taken under the Act will run concurrently with leave taken under the FMLA.
In addition, employers cannot compel an employee to exhaust his/her rights to any sick, vacation or personal time prior to or while taking leave under the Act. This reality, coupled with the fact that leave taken under the Act will run concurrently with leave taken under the FMLA, will require employers to revise FMLA policies to remove language requiring employees to use accrued paid leave, including sick or vacation time, or personal time, to cover some or all of the FMLA leave.
Employers are permitted to meet their obligations under the Act through a private plan. Employers seeking to go this route must first seek the Department’s approval and then participate in a private plan that confers all of the same rights, protections and benefits provided to employees under the Act.
One final point – the Act does not apply to municipalities, districts, or political subdivisions unless it is adopted by a majority vote of the local legislative body or the governing body.
Much needs to be fleshed out in regulations to come. The Act requires that the Department publish proposed regulations “necessary to establish procedures for the collection of contributions, and for the filing and timely processing of claims for benefits” no later than March 31, 2019, for public comment and hearing. Given the importance of this issue, we expect there to be significant debate leading up to and following the release of these regulations. Stay tuned.
In 2019, the minimum wage for regular employees (i.e., non-tipped minimum wage employees) will increase from $11 per hour to $12 per hour. Thereafter, between January 1, 2020 and January 1, 2023, the minimum wage will increase to $12.75, $13.50, $14.25 and $15.00, respectively.
With respect to the minimum wage for tipped employees, the bill will gradually increase the current rate of $3.75 per hour to $6.75 per hour in 2023. Specifically, on January 1, 2019, the minimum wage for tipped employees will increase to $4.35 per hour. Each year thereafter, the minimum wage will increase by $0.60.
Premium Pay for Retail Workers Abolished