Massachusetts Passes Act to Create Paid Family and Medical Leave and to Raise the Regular Hourly Minimum Wage to $15.

June 29, 2018

On June 28, 2018, Governor Charlie Baker signed into law An Act Relative to Minimum Wage, Paid Family Medical Leave and the Sales Tax Holiday (the “Act”). The Act raises the hourly minimum wage for non-tipped employees (i.e., the “regular” hourly minimum wage) to $15 over a five-year period. It also creates a paid leave program that allows employees to take up to 12 weeks of paid family leave to care for a family member or bond with a new child, and take up to 20 weeks to address personal medical issues.

Massachusetts employers should be aware of the following key take-aways from the Act:

  • The regular hourly minimum wage, currently $11, will increase to $12 on January 1, 2019. Starting in 2020, it will increase between $0.25 and $0.75 per year, ultimately reaching $15 in 2023.
  • The hourly minimum wage for tipped employees, currently $3.75, will increase to $4.35 on January 1, 2019. It will reach $6.75 in 2023.
  • Time-and-a-half pay for retail workers working on Sundays and holidays will be phased out from 2019 to 2023.
  • Starting July 1, 2019, all Massachusetts employers will be required to contribute an amount equal to 0.63% of each employee’s wages to the Family and Employment Security Trust Fund. Employers with fewer than 25 Massachusetts employees are exempt from this provision. All other employers will be able to deduct a portion of their contribution from employees’ wages.
  • The Paid Family and Medical Leave Program will take effect on January 1, 2021. Unlike the Family and Medical Leave Act, the Act covers all employers.
    • Starting July 1, 2019, employers must post notice of the available benefits and provide employees with written information explaining the benefits within 30 days of the employee’s start date.
    • Employees will be eligible for up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave, not to exceed 26 weeks in a 52-week period.
    • After the first seven calendar days, employees will receive a percentage of their salary, up to a weekly maximum of $850.

The Act resulted from the “grand bargain,” an agreement between the Governor state legislature, and interest groups designed to keep off the November ballot certain questions relating to minimum wage, family leave, and a proposal to cut Massachusetts sales tax. The Act makes Massachusetts the third state, after California and New York, to adopt a $15 regular hourly minimum wage. Massachusetts joins California, New Jersey, New York, and Rhode Island in requiring paid family leave.

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