Massachusetts’ Grand Bargain: Paid Family Leave and Minimum Wage
Knowing that business groups, labor interests, and progressive activists were posed to present three separate ballot measures this fall, the Massachusetts legislature decided to act first, and in June passed a law dubbed the “Grand Bargain.” It creates a permanent annual tax holiday weekend, increases the minimum wage to $15 by 2023, slowly eliminates Sunday premium pay, and creates state-run paid family and medical leave.
Minimum Wage Increases and Premium Decreases Over the next five years, the minimum wage in Massachusetts will increase from $11.00 to $15.00 per hour and the base wage for tipped employees will increase from $3.75 to $6.75. At the same time, the Sunday overtime rate will be reduced gradually each year until eliminated. The changes, which take effect on January 1 of each year, are as follows:
Sunday Premium Rate 2019: 1.4 x regular rate of pay 2020: 1.3 x regular rate of pay 2021: 1.2 x regular rate of pay 2022: 1.1 x regular rate of pay 2023: 1.0 – premium pay eliminated
Paid Family Leave
Beginning in July of 2019, all employers in Massachusetts must participate in a state-run program to provide employees with paid family and medical leave. Although funding of the program will begin in 2019, employees will not be able to use the benefit until July 1, 2021.
The leave will be funded by a .63 percent payroll tax, the cost of which will be shared between the employer and employee if the employer has 25 or more employees. Employers with fewer than 25 employees are not required to pay the employer portion of the premium. Contributions must begin July 1, 2019 and will go into the Family and Employment Security Trust Fund (the Fund). Employees who qualify and apply for paid leave will be paid through the Fund.
When the benefit becomes available on July 1, 2021, employees will be eligible—after a seven-calendar day waiting period—for up to 12 weeks of paid family leave (26 to care for a covered servicemember) and up to 20 weeks of paid medical leave for their own serious health condition. Paid leave use will be capped at 26 weeks per year. This leave will run concurrently with other state and federal family and medical leaves.
The income received while on leave will be equal to 80% of an employee’s weekly wage up to 50% of the state average weekly wage (SAWW), and 50% of their weekly wages over that amount. Wage replacement will be capped at $850 per week.
Employers that offer a more generous benefit of their own may be exempt from the program, but they will need to apply for approval of their plan through the Department of Family and Medical Leave (not yet operational). Additional regulations will be released by the state before contributions must begin.