Changes to HR and Payroll: Five Things Every Massachusetts Worker Should Know About the Grand Bargain

October 13, 2018

In June, Governor Baker of Massachusetts signed the Grand Bargain, a piece of legislation that makes several fundamental changes to employment law in Massachusetts. The Grand Bargain was a compromise between labor and businesses that seeks to make changes requested by labor on a more gradual timeline. Most of the changes won’t go into effect completely until 2023.

Enough has been written about the changes coming to Massachusetts to fill in the Big Dig. Much of this writing comes from the employer’s point of view and, unless you have a background in HR and payroll, it can be very confusing. If you work in Massachusetts, or if you’re just confused about the Grand Bargain, here are some changes you should know about and understand.

Minimum Wage

The minimum wage in Massachusetts is currently $11 an hour. As of January 1, 2019, the state minimum wage will be $12 an hour. It will go up by $0.75 each year on January 1 until 2023, when the state minimum wage will be $15 an hour.

Sunday Overtime

As the state minimum wage goes up, Massachusetts will slowly eliminate Sunday overtime.

Currently, hours worked on Sunday in Massachusetts are paid at a rate 1.5 times the current rate of pay, the same rate of pay as Federal overtime. The amount of time paid out as Sunday overtime reduces the amount of Federal overtime. In other words, if an employee currently works 35 hours Monday through Friday in Massachusetts and 8 hours on Sunday, they’re paid 35 hours of regular time and 8 hours of Sunday overtime. If an employee makes $10 in this scenario, they will be paid $350 for Monday through Friday, plus $120, for a total of $470. If those 8 hours are worked on Saturday, the associate gets 40 hours at regular time at $400, and 3 hours of overtime at $45, for a total of $445. Three hours have been paid as Federal overtime, leaving 5 hours that were not because they were not worked on Sunday.

As of January 1, 2019, Sunday overtime in Massachusetts will be paid out at a rate of 1.4 times the employee’s rate of pay. The rate of overtime will continue to decline by 10% every year until 2023 when there will be no more Sunday overtime. Until that time, however, employees in Massachusetts will actually get more money if they work on Sunday than before the Grand Bargain.

Because Sunday overtime is no longer paid at 1.5 times the employee’s rate of pay, employees who work over 40 total hours for the week will get Federal overtime at 1.5 times their rate of pay. They will also get paid 1.4 times their rate of pay for hours worked on Sunday in 2019 (though the rate will decline in later years).

In the same scenario as above, 35 hours worked Monday through Friday and 8 hours worked on Sunday will result in 40 hours of regular time ($400), 3 hours of traditional overtime at 1.5 times the rate of pay ($45), and 8 hours at 1.4 times the rate of pay for Sunday overtime ($89.60), for a total of $534.60.

Confused? Put more simply, Massachusetts is getting rid of Sunday overtime. The rate of pay an employee will get for Sunday overtime will decrease each year until 2023 when there won’t be any Sunday overtime. However, while the rate is decreasing, Massachusetts employees will actually make more in total hours for hours they work on Sunday.

Given the change in Sunday overtime, employees would be well-advised to keep even closer track of whatever employee time tracker their employer is using. This is always a good idea, of course, but if employees have any hours on Sunday, it will be important to match their time with their payroll stub as Sunday overtime changes. Any employee who feels that their pay has not been calculated properly should contact Human Resources or payroll administration.

Leave of Absence

Under Federal law, as outlined by the Family Medical Leave Act, employees are eligible to take a leave of absence for their own serious medical condition or the serious medical condition of a close family member if they meet certain criteria. The employee has to have been working at a company with at least 50 employees for 12 months, and they have to have worked at least 1250 hours within that time. If an employee is qualified to take a leave of absence, they can take up to 12 weeks of unpaid leave.

Before the Grand Bargain, state laws about employee leaves of absence in the state of Massachusetts largely mimicked federal law. Beginning on January 1, 2019, however, state law will change dramatically. For instance, as of 2019 every employee is eligible to take a leave of absence, regardless of how long they’ve been with a company and how many hours they’ve worked. Also, an employee can take up to 20 weeks of leave for their own serious medical condition and up to 12 weeks off for the serious medical condition of a family member, for a maximum of 26 weeks in a year.

At the same time, under the Grand Bargain the definition of “close family member” has changed. Under the FMLA, “close family member” is defined as a parent, a child, or a spouse. Under the Grand Bargain, an employee may take a leave of absence for a parent, parent-in-law, a spouse, a domestic partner, a sibling, a grandparent, or a grandchild.

The Grand Bargain has made enormous changes as to how the state of Massachusetts treats employee leaves of absence. But the biggest change comes in the creation of paid leave.

Paid Leave

Beginning in January 2021, all employees in Massachusetts, even those who are self-employed, can take up to 20 weeks of paid leave for their own serious medical condition or the serious medical condition of a close family member. They can also take paid leave for up to 12 weeks of baby bonding. As stated above, leave is capped at a total of 26 weeks per year.

In order to claim disability, employees will need to file a claim with their employer 30 days before the start of the leave, if possible. The first seven days of the leave will not be covered by the paid leave program. However, an employee can use sick or vacation days to cover this time without any consequence.

The amount that employees will be paid for leave will be based on their income, with a cap at 64% of average pay in Massachusetts. As of this writing, the cap is projected to be $850 a week. That number is subject to change, of course.

Changes in Payroll Taxes

So where will the money for paid leave come from?  Beginning on July 1, 2019, a payroll tax of 0.63 percent of your earnings will be calculated and paid by employers of 25 employees or more. The tax will be employer-based but can be offset by certain deductions to employee wages.  Employers with fewer than twenty-five employees will not have to pay the tax.

There are a lot of changes coming to Massachusetts. The changes will not go into effect immediately, so people have time to prepare. For more information on how Commonwealth Payroll & HR can work with you on your strategic human resources planning, call us today at 877-245-1159

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