A recent compromise between the business community and advocacy groups in the Bay State has resulted in “Grand Bargain” compromise legislation that the Governor signed into law at the end of June.
There are three major items that significantly affect Massachusetts employers: an increase in the state minimum wage to $15.00 per hour, a sales tax compromise, and the creation of a new state paid family and medical leave program.
Massachusetts minimum wage to increase to $15.00 per hour
Among other things, the legislation was designed to avoid a state ballot question on increasing the minimum wage. Employers can now plan for incremental increases in the state minimum wage, which will reach $15.00 per hour in 2023:
Effective Date Minimum Wage Rate
January 1, 2019 $12.00
January 1, 2020 $12.75
January 1, 2021 $13.50
January 1, 2022 $14.25
January 1, 2023 $15.00
Sales tax compromise
A compromise regarding the state sales tax rate included a phase-out of Sunday and holiday premium pay as well as the creation of a permanent, two-day sales tax holiday.
Currently, Massachusetts retailers are required to pay “time and a half” to employees who work Sundays and certain holidays. The legislation will phase out this requirement by lowering the premium each year until 2023, when it will be eliminated entirely. Employers should note that other applicable rules still apply – i.e., work must be voluntary and refusal to work cannot be grounds for any type of penalty.
Massachusetts paid family and medical leave
Finally, the legislation creates a new state-administered paid family and medical leave program to be phased-in over a period of three years. All employers in Massachusetts will be mandated to provide 12 weeks of paid family and medical leave.
The cost of the program may be split between employers and workers, with specific obligations dependent on the type of leave and the size of the organization.
The legislation includes an opt-out provision for employers who offer paid family and medical leave with benefits greater or equal to the state requirements.
Workers on paid leave will earn 80 percent of their wages up to 50 percent of the state average weekly wage, and then 50 percent of wages above that amount, up to an $850 cap.