2018 has been a busy year for employment law in Massachusetts, featuring a number of significant legal changes. Before ringing in 2019, take a moment to review four major developments of 2018, which will impact employers and employees next year and beyond. Now is the time to prepare and take action to ensure compliance in 2019.
Minimum Wage Hikes Approved
On June 28, 2018, Governor Charlie Baker signed into law a major wage and benefits bill that makes Massachusetts the third state, after California and New York, to adopt a $15 regular hourly minimum wage. Between 2019 and 2023, the law will incrementally increase the hourly minimum wage for both tipped and non-tipped employees, as well as phase out Sunday and holiday overtime pay for retail workers.
Paid Leave Program Created
The same law described above implements a mandatory paid leave program, which 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. While existing laws such as the Massachusetts Parental Leave Act require employers to provide job-protected, unpaid leave in certain circumstances, this law permits employees to take job-protected paid leave. By passing this law, Massachusetts joins California, New Jersey, New York, and Rhode Island in requiring paid family leave.
Employers should prepare now for the payroll deductions that will fund this law. Starting July 1, 2019, all Massachusetts employers with 25 or more Massachusetts-based employees 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 will be able to deduct a portion of their contribution from employees’ wages. The deductions warrant transparent communication with employees, especially since trust fund contributions will begin next year, but the Paid Family and Medical Leave Program will not take effect until January 1, 2021. Employers should prepare to notify their employees, and answer any questions, about these payroll deductions.
Equal Pay Law Takes Effect
On July 1, 2018, an updated equal pay law went into effect in Massachusetts, providing more clarity on what constitutes unlawful wage discrimination and adding new protections to make workplaces more fair and equal. The new law, An Act to Establish Pay Equity, updates the Massachusetts Equal Pay Act (MEPA).
The new law states that no employer can pay an employee less for “comparable work” on the basis of gender. Comparable work is defined as work that requires “substantially similar skill, effort, and responsibility” and is performed under the same working conditions. The law also prohibits an employer from paying a female worker less than a male worker because of her salary history. Under the new law, employers cannot prohibit employees from discussing their wages.
Employers that violate the law would be liable for twice the amount of unpaid wages owed to the employee. As such, employers and their legal teams should review the guidance and resources issued by the Attorney General’s office to assist employers in complying with the law, and consider conducting an internal review of practices and salaries in order to develop a plan to remain in compliance. These efforts will be vital to getting ahead of any potential historical gaps.
Non-Compete Law Takes Effect
On October 1, 2018, new restrictions on non-compete agreements between employers and workers took effect, which change how these agreements are enforced throughout the state. The law limits non-competes to one year, requires that an employee have at least 10 days before they begin employment to review the agreement, and exempts lower-paid employees. The law also precludes enforcement of non-competes for employees 18 years old or younger, those who have been terminated without cause or laid off, student interns, and employees classified as nonexempt under the Fair Labor Standards Act.
In addition, non-compete agreements must either provide for “garden leave” or pay some “other mutually agreed upon consideration” during the restricted period. Garden leave is defined as at least 50 percent of the departed worker’s base salary during the restricted period, or other “mutually agreed upon consideration.” In light of these new restrictions, some employers will need to update their non-compete language.
Year-end is upon us, and these changes undoubtedly spur a need for employers to revise their employee handbooks, offer letters, contracts, and other workplace policies in the year to come. Employers should consult with their legal counsel to mitigate any risks and ensure full compliance with these changes.
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