Massachusetts just became the sixth state to enact paid family leave, adopting the most generous benefits of any state yet.  Starting on January 1, 2021, employees will be eligible to take up to 12 weeks of job-protected paid family leave to care for a new child or an ill family member.  Employees will also be eligible for up to 20 weeks of paid medical leave due to their own medical needs.  Employees may take a maximum of 26 weeks of paid family or medical leave combined in a benefit year.

The law applies to all employers, regardless of number of employees.

Paid family leave will be administered through the state and funded by a 0.63% payroll tax, split across employees and employers.  The payroll tax takes effect on July 1, 2019, allowing the state to build a reserve prior to the implementation of paid leave in 2021.

Employers with fewer than 25 employees in Massachusetts are exempt from the employer portion of the payroll tax.  However, if an employer’s workforce is more than 50% independent contractors, the employer must count those individuals as employees for determining the payroll tax exemption.

Eligible employees will be paid a portion of their salary, calibrated against the state average weekly wage.  Starting in 2021, the maximum benefit will be $850.00 per week.  The maximum rate will be recalculated each year.

Paid family leave can be used to care for a newborn child, adopted child, or recently-placed foster child, or to care for sick family members, including children, spouses/domestic partners, parents, grandparents, grandchildren, and parents-in-law.  Employees can also use paid medical leave to address their own serious medical conditions.

Massachusetts Paid Family and Medical Leave will run concurrently with any leave taken under the federal Family and Medical Leave Act of 1993 (“FMLA”).

In addition to the paid family leave provisions, the bill also raises the minimum wage from $11 to $15 in set increments between 2019 and 2023.  Massachusetts joins California and New York to become the third state to adopt a $15 minimum wage, in addition to several cities and the District of Columbia.

The first increase will be to $12.00 on January 1, 2019, followed by incremental increases each year until 2023:

2019: $12.00
2020: $12.75
2021: $13.50
2022: $14.25
2023: $15.00

The new law gradually increases the tipped employee minimum wage from $3.75 to $6.75 by 2023, with incremental increases of $0.60 each year.

The new law also eliminates Sunday and holiday premium pay for retail workers by 2023.  Currently, retail workers must be paid time-and-a-half for working on Sunday and holidays.  This premium pay will be decreased to 1.4x in 2019, followed by additional 0.1 decreases each year until 2023.

As always, please feel free to contact us at any time if you have questions about how these changes will affect your business going forward.