On June 28, 2018, Massachusetts Governor Charlie Baker signed a bill titled “An Act Relative to Minimum Wage, Paid Family Medical Leave, and the Sales Tax Holiday” (H.4640).   The new law, dubbed the “Grand Bargain,” implements incremental increases in Massachusetts’ minimum wage over the next five years, and creates a new paid family and medical leave program in the Commonwealth. A full text of the bill can be found here.

Minimum Wage Increase

The law increases the minimum wage from $11.00 to $15.00 over the course of five years.  In 2019, the minimum wage will increase from $11.00 to $12.00.  Thereafter, it will continue to increase each year in $0.75 increments until it reaches $15 in 2023. The Grand Bargain also results in a five-year phase out of the requirement of premium pay for hours worked on Sunday.

Tipped employees will also receive a boost from the current $3.75/hour tipped minimum wage, which will increase by $0.60 increments each year until 2023 when the tipped minimum wage will be $6.75/hour.

Paid Family and Medical Leave Program

Reflecting a nationwide trend, the law establishes a Paid Family and Medical Leave program to take effect on January 1, 2021. The program will entitle eligible employees to take up to 12 weeks of paid family leave and up to 20 weeks of paid medical leave, with a maximum of 26 combined weeks of paid leave in the same year.

Individuals eligible for leave include employees, self-employed individuals, and certain former employees.  The program will be funded by employers and employees through a payroll tax.

Family leave can be taken for the following reasons:

1. To bond with a child within 12 months of the birth of the child or 12 months after the employee adopts a child or accepts a child for foster care;

2. A qualifying exigency under the Act due to a family member who is on active duty or has been notified of an impending call or order to active duty in the Armed Forces;

3. To care for a family member who is a covered servicemember (i.e. a current or former member of the Armed Forces who meets the requirements under the Act);

4. To care for a family member with a serious health condition.

The law defines a “family member” much more broadly than the federal Family and Medical Leave Act (FMLA) and applies not only to children, spouses and parents, but extends to grandparents, grandchildren, siblings, parent in-laws, and domestic partners. Employees would be permitted to take up to 20 weeks paid leave for their own “serious health condition,” which is defined as an illness, injury, impairment, or physical or mental condition that involves either (1) inpatient care in a hospital, hospice, or residential medical facility, or (2) continuing treatment by a health care provider. Unlike the federal FMLA, the Act applies to all employers, regardless of the number of people they employ. Towns and municipalities can opt into the program.

What are the employers’ obligations when the employee returns to work?

The Act requires that an employee returning from leave be restored to the same or equivalent position.  An employee need not be restored if his or her position would have been terminated while on leave due to layoffs or changes in operating conditions unrelated to the leave.

How is the employee compensated?

The Act establishes a Family and Employment Security Trust Fund, to which the employer and employee contribute, and will be administered by the newly created Department of Family and Medical Leave.  Contributions to the Fund will commence on July 1, 2019.   Employees will be paid a weekly benefit amount from the Fund based on a percentage of the state average weekly rate with a maximum weekly benefit of $850/week. This amount will be adjusted each year by the commissioner of unemployment assistance.

The weekly benefit amount is prorated if an employee is taking intermittent leave or on a reduced leave schedule, which is permitted except for leave taken for the birth, adoption or placement of a child.

Employers who wish to administer their own benefits can opt out of the public plan by applying for approval for a private plan to provide either family or medical leave coverage, or both.  In addition, employers with less than 25 employees in the Commonwealth will not be required to pay the employer portion of premiums for family and medical leave.

What are the employees’ obligations?

The employee must provide at least 30 days’ advance notice to the employer of the need for leave, which must include the anticipated start date of leave, anticipated length of leave, and the expected date of return.  If the employee is unable to provide 30 days’ notice due to reasons beyond the employee’s control, the Act requires notice as soon as practicable.

Covered individuals must also comply with certain certification requirements detailed in the Act, depending on the reason for the leave.

How does this Act affect other laws in place?

Leave taken under the Act must run concurrently with leave provided by the Massachusetts Parental Leave Law or federal FMLA.

Looking Ahead

The new family and medical leave law is complex and will change the way employers in the Commonwealth administer leave benefits.

By July 1, 2019, the Department of Family and Medical Leave will issue regulations for implementing the Act, which is set to go into effect in January 2021.

As January 2021 nears, we encourage Massachusetts employers to familiarize themselves with the newly-enacted provisions and to update their family medical, sick, and paid-time-off policies.  As always, we will continue to keep you informed of developments.