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Massachusetts Enacts The “Grand Bargain”

Published by and on August 21, 2018

This new bipartisan law will bring major changes to Massachusetts wage laws over the next five years. Employers should prepare for compliance now.

On June 28, 2018, Massachusetts Governor Charlie Baker signed into law H.4640 An Act relative to minimum wage, paid family medical leave and the sales tax holiday, also known as the “Grand Bargain.” The bipartisan legislation increases the minimum wage and decreases Sunday and Premium Pay over the next five years create a new paid family and medical leave program in Massachusetts, and creates a new payroll tax designed to implement the paid leave. Below is a summary of the major provisions of the law.

Minimum Wage

The law incrementally raises the current $11-an-hour minimum wage to $15 an hour by 2023, beginning in 2019. The law also incrementally raises the minimum wage for tipped employees from $3.75 per hour up to $6.75 per hour by 2023. Employers are advised to note the increases now and ensure they are prepared to implement them on the first of each year.

The increases will be as follows:

YearMinimum WageTipped Minimum Wage
2019$12.00 per hour$4.35 per hour
2020$12.75 per hour$4.95 per hour
2021$13.50 per hour$5.55 per hour
2022$14.25 per hour$6.15 per hour
2023$15.00 per hour$6.75 per hour

Sunday Premium Pay

The Massachusetts blue laws require most retailers to pay employees Premium Pay—-at least one and a half times their regular rate for hours worked on Sundays and certain holidays. The law incrementally reduces the multiplier for Sunday premium pay over the course of five years until it is eliminated. This will similarly apply to the premium pay requirements for most holidays.

The reduction will be as follows:

YearMultiplier
20191.4
20201.3
20211.2
20221.1
20231.0

Paid Family and Medical Leave

The law also establishes a new Paid Family and Medical Leave program for Massachusetts employees. Employees may begin taking paid leave in 2021. The program will provide employees who contribute to the program the ability to take paid leave for up to 12 weeks a year care for a family member or bond with a new child, 20 weeks a year to deal with a personal medical issue, and up to 26 weeks to deal with an emergency related to deployment of a family member for military service. Weekly benefit amounts will be calculated as a percentage of the employee’s average weekly wage, with a maximum weekly benefit of $850. Self-employed persons may opt into the program.

The benefits would be paid out from a newly established Family and Employment Security Trust Fund, which will be funded in part through required payroll contributions equal to 0.63 percent of an employee’s weekly wages to be divided equally between the employer and employee. The fund will begin collecting contributions on July 1, 2019.

Employers should be prepared for this new payroll tax and must also begin preparing to implement new paid leave programs. Regulations implementing the law will be released in 2019 and will assist in ensuring compliance.

Welter Insight

Employers with operations in Massachusetts are almost guaranteed to be affected in one way or another by the Grand Bargain and are advised to begin preparations to ensure compliance.

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