All Massachusetts employers should be aware that the minimum wage piece of the three-pronged “Grand Bargain” act, which Governor Baker signed into law in 2018, will change payroll practices starting on New Year’s Day.
Under this new legislation, the Massachusetts minimum wage will gradually be raised to $15 per hour over a five-year period. That’s a significant increase from the 2018 minimum wage of $11. The first increase, which raises the minimum wage to $12, takes effect on January 1, 2019.
The “Grand Bargain” also promises to amend wage policies for Sunday and holiday pay, gradually reducing premium pay requirements that employers currently must meet.
One of the most significant changes is set to affect the restaurant industry, and other industries that use tipped employees. The tipped minimum wage will increase by 60 cents per year over five years, from the 2018 wage of $3.75 to $6.75 by 2023.
In 2019, the tipped wage will be $4.35. But employers are still required to make sure that tipped employees are paid at least the minimum wage for each shift. (For example, if a server works for one hour at a wage of $4.35 and only earns $3 in tips during that hour, the employer is required to pay the difference between the server’s $7.35 earnings and the $12 minimum wage.)
Previous to the new bill, Massachusetts law required employers to make up any amount below minimum wage by the end of each pay period. The new legislation requires employers to make up the difference at the end of each employee’s shift.
The act also established the creation of a paid family and medical leave program and a permanent 2-day weekend sales tax holiday. The former gives contributing employees paid leave of up to 12 weeks per year to care for a baby or sick family member and up to 20 weeks per year to care for their own medical needs. The sales tax holiday is set to take effect starting in August, 2019.