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Ballot questions could prove costly for employers

finley-garyCome November, Massachusetts voters may have an opportunity to decide two ballot questions with significant — and potentially expensive — implications for employers in the commonwealth.

The proposals would (i) increase the Massachusetts minimum wage, in stages, to $15 an hour, and (ii) create a statewide program that would provide paid, job-protected family and medical leave for Massachusetts employees.

Though it is not yet clear whether the proposals will be placed on the ballot this fall, Massachusetts employers should keep a close eye on the process and consider how their operations might be impacted if the proposals become law.

Minimum wage

The first proposed ballot question would gradually increase the minimum wage for employees in Massachusetts, which is currently $11 an hour. Specifically, the proposed measure would raise the minimum wage to $12 an hour on Jan. 1, 2019; to $13 an hour on Jan. 1, 2020; to $14 an hour on Jan. 1, 2021; and, finally, to $15 an hour on Jan. 1, 2022.

Additionally, beginning in 2023, and each year after that, the commissioner of the State Department of Labor Standards would be required to adjust the minimum wage, based on the 12-month percentage increase, if any, of the Consumer Price Index, as published by the U.S. Department of Labor.

The proposed measure would also gradually increase the minimum guaranteed hourly wage for tipped employees. That minimum wage would increase from its current level — $3.75 an hour  — to $5.05 on Jan. 1, 2019; to $6.35 on Jan. 1, 2020; to $7.65 on Jan. 1, 2021; and, finally, to $9 on Jan. 1, 2022.

Thereafter, the minimum wage rate for tipped employees would also be subject to adjustment annually based on the Consumer Price Index.

Finally, the ballot question would create a process that could potentially increase wages for family child care providers who contract with the state to provide services to low-income or at-risk families.

Up until now, such workers have generally been excluded from minimum wage requirements. Under the proposed measure, however, the state attorney general would determine pay rates for such child care providers that are “substantially equivalent to the minimum wage.”

Paid family and medical leave

The second proposed ballot question would provide for employee leaves of absence similar to those protected under the federal Family and Medical Leave Act, but on a paid basis and for differing durations than under FMLA. The measure would apply to both private and public sector employees, though municipal employees would be covered only if the proposed law were adopted by a vote of the city or town.

Significantly, and unlike many similar leave statutes, a private employer would not have to have a minimum number of employees in order for its employees to be covered.

Under the proposed measure, covered workers would be permitted to take up to 16 weeks a year of paid leave to: (1) care for a child after the child’s birth, adoption or placement in foster care; (2) care for a seriously ill family member; or (3) address needs arising from a family member’s active duty military service.

Even more liberally, covered workers would have a right to take up to 26 weeks a year of paid leave to address their own serious medical conditions. Employees would be permitted to use medical leave for inpatient hospital, hospice or residential medical care, or continuing treatment by a health care provider.

In either case, an employee’s leave would run concurrently with any leave to which he might be entitled under FMLA or the Massachusetts Parental Leave Act. Further, an employee’s total annual leave entitlement under the new law would be capped at 26 weeks, even if the employee were to take separate leaves for family and for medical reasons.

Significantly, and unlike many similar leave statutes, a private employer would not have to have a minimum number of employees in order for its employees to be covered.

While on leave, an employee would be eligible to receive up to 90 percent of his average weekly earnings, up to a maximum of $1,000 a week.

The proposed law would also create a new Massachusetts Department of Family and Medical Leave, which would issue regulations implementing the law, process applications for benefits, and, when necessary, conduct hearings.

This new benefit would be funded through a trust fund into which employers would initially pay an amount corresponding to .63 percent of each employee’s annual wages, up to the Social Security contribution and benefit base limit. Up to one half of the .63 percent could be funded through deductions from employees’ wages.

Self-employed individuals who elect coverage and businesses that contract with self-employed individuals would each be required to pay one-half of the required .63 percent. This contribution rate would be reviewed and adjusted annually to ensure adequate funding.

Contributions to the trust fund would begin six months after the effective date of the proposed law, and covered workers could begin taking paid leave beginning 18 months after the effective date.

The proposed law would include an anti-retaliation provision, prohibiting employers from taking adverse action against employees for exercising their rights under the law. At the same time, the measure would offer some protections for employers, including by requiring employees to give reasonable notice of their intention to take leave and provide documentation establishing that the requested leave is covered by the law.

The ballot question process

The process for enacting these measures passed an important milestone last December, when Massachusetts Secretary of State William Galvin certified that supporters had obtained the necessary numbers of voter signatures for the proposals to be sent to the Legislature.

The Legislature may now approve or disapprove the two measures, propose one or more substitute measures, or take no action on them.

For each of the proposals, if the Legislature has not enacted the measure as filed by the first Wednesday in May of this year, proponents must then gather 10,792 additional signatures by early July. If enough signatures are gathered, the proposed law, along with any substitute measures proposed by the Legislature, would be submitted to Massachusetts voters in the next biennial state election — in this case, the November 2018 election.

Finally, if the proposed measures are successfully placed on the November ballot, enacting each of them into law will require that (i) a majority of the voters weighing in on the measure vote “yes,” and (ii) at least 30 percent of all voters casting ballots in the election vote in favor of the measure.

What Massachusetts employers should do

Both the proposed minimum wage increase and the proposed paid family and medical leave measure are likely to prove popular with voters if they make it onto the November ballot.

As employers will recall, it has been only four years since a similar measure, providing for mandatory paid sick leave, was easily approved by Massachusetts voters

Accordingly, Massachusetts employers would be wise to begin considering now the financial and operational impacts that these measures would bring for them.

In addition, employers are encouraged to consult experienced employment counsel to assist them in understanding the details of the proposed laws, particularly the paid family and medical leave statute.

Finally, employers with concerns about the proposed measures might consider joining advocacy groups in order to more effectively articulate their opposition and perhaps lobby for compromise legislation. In particular, the Associated Industries of Massachusetts, which represents approximately 4,000 member employers, has expressed opposition to both proposals, based on the substantial costs they would pose for employers.

Gary D. Finley practices at Schwartz Hannum in Andover, Massachusetts, which represents management in labor and employment law matters.

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