On June 28, 2018, Massachusetts Governor Charlie Baker signed a landmark bill creating a paid family and medical leave program and gradually increasing the state minimum wage to $15.00 per hour. Described as a “grand bargain,” the bill reflects a compromise between legislators, labor and community groups, and business groups, and is intended to keep proposed ballot questions concerning paid leave, minimum wage, and a sales tax reduction off the November 2018 ballot.
The paid family and medical leave program will be funded by a payroll tax and will take effect July 1, 2019. Employees can begin taking paid family and medical leave under the program in 2021. The program is summarized below.
Paid family leave program
Under the new law, following a three-year phase-in period, Massachusetts workers will be entitled to up to 12 weeks of paid leave to care for a sick family member or a newborn, and up to 20 weeks of paid medical leave to attend to their own serious health condition. They will also be entitled to 26 weeks of paid family leave to care for a covered service member. In all three cases, employees’ jobs will be protected.
For the purposes of family leave, the law broadly defines “family member” to include a domestic partner, grandparents, grandchildren, siblings, and the parents of a spouse or domestic partner. Similarly, the law adopts a relatively broad definition of “serious health condition.”
The law will apply to all employers with at least one employee working in Massachusetts, regardless of the employee’s tenure with the company or weekly hours. Some former employees and self-employed workers will also be entitled to paid leave under the law.
The state will administer the new leave program, which will be funded through a 0.63% payroll tax split between the employer and employee. There will be a seven-day waiting period before workers can use the leave. Thereafter, they will begin earning 80% of their wages (capped at 50% of the state average weekly wage) and then 50% of their wages beyond that amount (capped at $850 per week).
Employer responsibilities
- By July 1, 2019, the newly established Massachusetts Department of Family and Medical Leave, which was created under the new legislation, employers must inform employees of their new rights by (1) conspicuously posting a notice of benefits, and (2) issuing written policies to new employees. Employers who are found not to have satisfied these notice requirements will face fines.
- Starting on July 1, 2019, Massachusetts employers must begin contributing 0.63% of each employee’s wages to the state trust funding the paid leave. Employers with more than 25 employees will be required to make the full contribution but can deduct certain percentages of the contribution from the employee’s wages — up to 40% for medical leave and up to 100% for family leave. Employers with fewer than 25 employees will not have to contribute.
- Employers must continue to honor employee accrual of benefits (e.g., vacation, sick leave, seniority, and bonuses) and to contribute to employer-sponsored health insurance during an employee’s period of family/medical leave.
- Employers will remain bound by all preexisting laws, company policies, and/or collective bargaining agreements providing greater leave benefits, though employers with greater leave benefits may apply for an exemption from the program.
- Employers may not retaliate against employees for exercising their rights under the law, and any adverse employment action taken against an employee during or within six months of their leave will be considered presumptively retaliatory.
Minimum wage increases
Over the next five years, the state will raise the hourly minimum wage from $11.00 to $15.00 through annual increments — $1.00 for 2019 and $0.75 for each subsequent year. Tipped employees will also see an hourly increase from $3.75 to $6.75. In addition, the state will phase out required time-and-a-half pay on Sundays during the same five-year period. Additionally, as a concession to Massachusetts retailers, the state will now have an annual two-day sales tax holiday in August.
Next steps for employers
- By March 31, 2019, the Department of Family and Medical Leave will publish proposed regulations, which will take effect July 1, 2019, and will provide more details regarding implementation of the new program.
- As more guidance and regulations on this law become available, we will notify our clients of any additional details.
This content is provided with the understanding that HR Knowledge is not rendering legal advice. While every effort is made to provide current information, the law changes regularly and laws may vary depending on the state or municipality. The material is made available for informational purposes only and is not a substitute for legal advice or your professional judgment. You should review applicable laws in your jurisdiction and consult experienced counsel for legal advice. If you have any questions regarding this content, please contact HR Knowledge at 508.339.1300 or email us.