By Stephanie Smith
With the eggnog-laden holiday season squarely behind us, it is time to review some of the major 2018 developments in employment law and gear up for 2019.
Minimum Wage Increases in Several States, Including Massachusetts
A number of states, including Massachusetts, approved increases in the minimum wage.
In June 2018, Massachusetts Governor Charlie Baker signed a law which is commonly referred to as the “Grand Bargain,” because it represented a compromise that averted ballot initiatives regarding minimum wage and paid parental leave (and a reduction in the sales tax). Among other things, the Grand Bargain provides for a five-year, gradual increase in the state’s minimum wage, starting with an increase to $12 per hour as of January 1, 2019 ($4.35 per hour for tipped workers), to $15 per hour effective January 1, 2023 ($6.75 per hour for tipped workers).
The Grand Bargain also decreased Massachusetts’ premium pay requirements for retail employees working on Sundays and certain holidays (so-called “Blue Laws”), to 1.4 times the employee’s regular rate of pay in 2019. The decrease is the first step in gradually phasing out the premium pay requirement for these workers, which will be completely eliminated by 2023.
Three other New England states also increased their minimum wage rates effective January 1, 2019 (Maine: $11 per hour; Rhode Island: $10.50 per hour; and Vermont: $10.78 per hour). California and New York states also increased their minimum wages. Additionally, the minimum wage rate for federal contractors has increased to $10.60 per hour for workers on covered contracts ($7.40 per hour for tipped employees).
The above list is not meant to be exhaustive, and other state increases took place, which are not listed above. Also, certain cities and counties have adopted their own, higher minimum wage rates. Therefore, employers should consult with employment counsel to confirm the minimum wage is applicable to their workforce.
Family Care/Parental/Sick Leave Benefits
An ever-increasing patchwork of state and local legislations is making it more challenging for multi-state employers to figure out how much time off to provide workers for various family, medical or other personal reasons, and whether that time must be paid or unpaid.
In Massachusetts, the Grand Bargain created a new paid family and medical leave benefit, but the payments will be made through a state agency. Starting January 1, 2021, Massachusetts workers will be eligible for up to 12 weeks of paid leave per “benefit year” to care for a family member (up to 26 weeks, if caring for a “covered servicemember”), and up to 20 weeks of paid medical leave per year to care for their own “serious health condition.” Eligible employees will be allowed to take a maximum of 26 weeks of paid leave per benefit year (family and medical leave combined).
The amount of benefits paid will be a function of the employee’s income: after an initial 7-day elimination period, eligible employees will receive 80% of their average weekly wages, up to a maximum of 50% the state’s then-average weekly wage, plus 50% of the employee’s wages above the state’s average weekly wage. The benefit will be capped at $850 per week (to be adjusted annually).
This income replacement benefit will be paid from a newly created Family and Employment Security Trust Fund, overseen by the Department of Family and Medical Leave (“Department”). The wage replacement will be funded through payroll contributions to the Fund, equal to 0.63% of each employee’s wages.
All private employers with at least one employee are subject to the law. Employers with at least 25 employees may deduct up to 40 percent of the required contribution from an employee’s wages for medical leave (with the remaining 60 percent to be paid by the employer), and up to 100 percent of the required contribution from the employee’s wages for family leave. The statute does not explain how those deductions are to be implemented. Employers with less than 25 employees are not required to pay the employer portion of the payroll contributions for family and medical leave. Importantly, the law does not displace employer plans or policies providing similar benefits. Employers who offer paid leave benefits to their employees that are at least as generous as what the law requires, may apply to the Department for an annual exemption from the state program.
Although this benefit will not be available to workers until January 1, 2021, Massachusetts private employers will begin contributing to the Fund on July 1, 2019. Employers must also post a notice explaining employee rights under the law no later than July 1, 2019.
For up-to-date information on this program, visit the Department’s website, at: https://www.mass.gov/orgs/department-of-family-and-medical-leave. Additional guidance is expected no later than March 31, 2019 on the application of the law, including employer contributions, employee wage deductions to fund this benefit and procedures for opting out of the program. In the meantime, employers should be prepared to provide the applicable notice regarding this new benefit and review their existing policies and practices to consider the financial impact of the required contributions in light of benefits currently being provided to employees.
Massachusetts joins a handful of other states (including California, New York and Rhode Island) providing for paid family and medical leave funded through payroll taxes, and several other jurisdictions, both at the state and local level, considering some form of paid family or sick leave. Until a national standard is enacted, employers must ensure compliance with all applicable local requirements.
Updated Ban-the-Box Legislation
In 2018, Mass. Governor Baker also amended Massachusetts’ “ban-the-box law.” As of October 13, 2018, employers cannot ask applicants (either orally or in writing) about misdemeanor convictions that are three or more years old (down from five years) from the date of application, unless the applicant has been convicted of any offense in that same period. Additionally, employers are prohibited from asking applicants about criminal records that have been sealed or expunged. These requirements are in addition to the existing prohibitions, including the ban on inquiring into criminal records as part of the initial job application, as well as the ban on inquiring about a candidate’s salary history, which is now prohibited under the Massachusetts Pay Equity law that went into effect on July 1, 2018.
Finally, an employment application seeking information about prior arrests or convictions must include the following statement:
“An applicant for employment with a record expunged pursuant to section 100F, section 100G, section 100H or section 100K of chapter 276 of the General Laws may answer ‘no record’ with respect to an inquiry herein relative to prior arrests, criminal court appearances or convictions. An applicant for employment with a record expunged pursuant to section 100F, section 100G, section 100H or section 100K of chapter 276 of the General Laws may answer ‘no record’ to an inquiry herein relative to prior arrests, criminal court appearances, juvenile court appearances, adjudications or convictions.”
Under the amendment, employers now enjoy greater protection from negligent hiring or negligent retention claims and will be presumed to have no notice or ability to know of a criminal record that has been sealed or expunged or about which the employer is legally prohibited from inquiring.
Employers should review their application materials and ensure that they comply with these new requirements and train all relevant personnel to ensure compliance with the law. Massachusetts employers who are recruiting applicants in other states must also comply with any other applicable state or local requirements (in addition with the federal Fair Credit Reporting Act, if applicable).
Are You in Compliance with The New Massachusetts Law Regarding Non-Competition Agreements?
As we previously reported, in 2018 Massachusetts enacted sweeping reform to the state’s non-competition agreements. As of October 1, 2018, new non-competition agreements entered into at the time of hire must be provided to the candidate either with the formal offer letter or 10 business days before the start of employment, whichever is earlier. Among other requirements, in order to be enforceable, the agreement must include a garden leave clause, providing the individual with payment during the restricted period of at least 50% the employee’s highest annualized base salary within the last two years, or “other mutually-agreed upon consideration” (which the law does not define). The law also makes non-competition agreements unenforceable against certain categories of employees, including non-exempt employees.
Employers with employees based in Massachusetts who have not done so already should review their form agreements and decide whether to continue seeking non-compete provisions from new hires (in which case, the agreement will need to be revised to bring it into compliance with the new requirements) or rely on other types of restrictive covenants, such as customer non-solicitation provisions, which do not fall within the purview of the law.