Seyfarth Synopsis: As we prepare to enter 2020, employers with a presence in Massachusetts should be mindful of certain changes to the wage and hour laws that will take effect in the new year. Most of these changes stem directly from the Massachusetts “Grand Bargain” legislation of 2018.
On January 1, 2020, the regular minimum wage in Massachusetts will increase to $12.75 per hour. Employers should take note that this rate will continue to increase by $0.75 each calendar year until it reaches $15.00 in 2023.
For tipped employees, meaning those who customarily receive more than $20.00 in tips each month, the service rate will increase from $4.35 to $4.95 per hour. Employers must ensure that that the combination of wages and tips received by an employee during a shift meets or exceeds the new standard minimum wage ($12.75 per hour). If not, the employer must supplement the employee’s wages to account for the difference. Employers should be aware that the service rate for tipped employees will continue to increase by $0.60 each calendar year until it reaches $6.75 in 2023.
Premium Pay for Sunday and Holiday Work
The laws in Massachusetts governing work on Sundays and holidays, commonly referred to as the "Blue Laws," are complex. Retailers that employ more than seven employees may operate on Sundays and certain holidays, provided that the premium pay and voluntariness requirements of the Blue Laws are met. The Grand Bargain legislation provides for the gradual elimination of this premium pay obligation.
As to Sunday work, retailers must continue to pay “premium pay” to employees who work on Sundays in 2020, but the rate of pay will decrease. As of January 1, 2020, employers are required to pay employees 1.3 times the regular rate of pay for Sunday work. This is a drop from the 1.4 times the regular rate of pay that employers paid in 2019.
For certain holidays, the premium rate of pay will similarly decrease to 1.3 times the regular rate of pay. These holidays are Memorial Day, Independence Day, and Labor Day.
The Massachusetts Attorney General takes the position that the rate of premium pay for several holidays was unchanged by the Grand Bargain legislation, so the rate of pay for those particular holidays remains 1.5 times the regular rate of pay. These holidays are New Year’s Day, Columbus Day, and Veterans Day.
The reduction in the premium rate of pay for Sundays and certain holidays does not impact an employer’s responsibility to pay overtime at the rate of 1.5 times an employee’s regular rate of pay for all hours worked in excess of 40 during a workweek. For example, if an employee works five hours on a Sunday and those hours represent overtime (having already worked 40 hours that week), the employee is entitled to 1.5 times their regular rate of pay for those five hours, as opposed to 1.3 times.
The requirement that work on Sundays and holidays be voluntary remains unchanged. An employer operating in Massachusetts cannot force an employee to work on a Sunday or recognized holiday and cannot take action against an employee who refuses to work on those days.
Massachusetts Paid Family and Medical Leave (PFML) Contributions
By January 31, 2020, employers who have not been approved for a private plan exemptions must submit their quarterly filing and contributions for October-December 2019 through MassTaxConnect.
In addition to the above state law changes, beginning January 1, 2020, the minimum salary level required for an employee to be exempt from overtime under the so-called “white collar exemption” to the Fair Labor Standards Act (FLSA) increases to $684 per week ($35,568 annually). Generally, employees who make less than that amount cannot qualify as exempt employees – and so they fall within the minimum wage and overtime pay requirements of the FLSA. Employers can account for up to 10% of the standard salary level with nondiscretionary bonuses and incentive payments that are paid at least annually. The other requirements for the executive, administrative, and professional exemptions remain unchanged. For more information, see “Part 541 Salary Level Increases to $684/Week” on the Seyfarth Wage & Hour Litigation Blog. Because Massachusetts law looks to the federal definitions for these exemptions, these new minimal salary levels will apply to state overtime law as well.