On June 28, Massachusetts Governor Charlie Baker signed H. 4640—An Act relative to minimum wage, paid family medical leave and the sales tax holiday, also known as the “Grand Bargain.” The compromise legislation will create a permanent sales tax holiday, increase the minimum wage over the next five years and create a new Paid Family and Medical Leave program in Massachusetts. The “Grand Bargain” will keep these issues off the ballot in 2018. While there are similarities between the Act Governor Baker signed and the now-removed ballot questions, there are several key areas of difference.

 

The bill will gradually raise the Commonwealth’s minimum wage to $15 per hour over five years, with an initial increase taking effect in January 2019. The ballot question would have shortened this timeline to four years. Coupled with that increase will be a rais

e to the minimum base wage rate for tipped workers, up to $6.75, that will also phase in over a five-year period commencing in January of 2019. The ballot question would have raised the tipped wage to $9 per hour and would have done so by 2022 instead of the “Grand Bargain’s” end date of 2023. Additionally, the ballot question would have indexed both the standard minimum wage and the tipped employee wage to inflation. Wage policies for Sunday and Holiday pay will also be reformed and brought in line with most other states across the country, versus the ballot question which would have made no change.

 

The third major component of H. 4640 introduces a new Paid Family and Medical Leave program for in Massachusetts employers and employees. The new 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 benefi

t of $850. Under the ballot question, the weekly cap would have been $1,000. Self-employed persons may opt into the program. For the law to apply to municipal employees, the city or town involved must vote to accept participation in the program.

 

Massachusetts State Rep. Randy Hunt complied a full comparison of the “Grand Bargain vs. the ballot question.

 

The changes to wages as per the “Grand Bargain”, coupled with the 2018 Massachusetts Equal Pay Act, could result in some Wage & Hour violations if employers aren’t careful. In our next blog post, we’ll discuss insurance considerations for Wage & Hour issues. Sneak preview: many employers believe they have adequate protection for Wage and Hour violations under their Employment Practices Liability (EPL) policy…but in many instances, that’s not accurate.