AIMBlog_Logo_Resized

Raising Minimum Wage Would Boost Costs for Majority of Employers

Posted by Christopher Geehern on Jan 3, 2017 7:55:31 AM

Three-quarters of Massachusetts employers would face increases in their compensation costs if state lawmakers pass a $15 per hour minimum wage, according to two recent surveys by Associated Industries of Massachusetts.

TeenJobsCrop.jpgAnd those compensation increases would be enough to force some companies to postpone hiring or consider leaving the commonwealth altogether.

Both the monthly survey question attached to the AIM Business Confidence Index in December and the annual AIM HR Practices Survey, also taken a December, found that 13 percent of companies employed people at the former $10 per hour Massachusetts minimum wage, while another 24 percent employed people at between $10 and $15 per hour and would have to raise those wages if the minimum moved to $15.

Thirty-four percent of companies employed people at slightly more than $15 and would have to increase pay for some of those employees to deal with wage compression. Thirty-seven percent of companies said they pay much more than $15 per hour and will not be affected by a minimum-wage increase.

The Massachusetts minimum wage rose by $1 to $11 per hour on January 1, the final step in a three-year increase.

“While we are empathetic with the challenges facing lower wage staff, it is also the case that we will employ fewer hourly employees at higher minimum wages. Each dollar increase costs our company $1.5 million per year,” wrote one employer on the Business Confidence Survey.

Another commented: “This would be too much for the small business community to absorb. You'll lose many small businesses. The Massachusetts legislature should concentrate on cutting costs and make Massachusetts a more affordable place to live.”

AIM believes that raising the minimum wage to $15 per hour, while emotionally appealing and politically expedient, is an ineffective way to address income inequality.

Raising the minimum wage, in fact, represents a fundamental distraction from addressing the real economic impediments that prevent all Massachusetts citizens from sharing in the state’s prosperity. These are the same impediments, ironically, that contribute to the persistent skills shortage that threatens innovation and economic growth in Massachusetts.

Workers are ultimately compensated according to the skills, education, work ethic and value they bring to the enterprise.

Minimum-wage increases impose an arbitrary standard of value on entry-level jobs, disproportionately burdening small businesses while creating no long-term improvement in living standards for people at the lower end of the wage scale. The issue in an economy with a staggering 3.3 percent unemployment rate is not how to raise the wage but instead how to raise the economic value of each employee.

Consider a sandwich shop in Cambridge serving food to employees of companies such as Google, Biogen, or Novartis that have made Massachusetts a global center for information technology, biosciences, research and development. Many of the engineers, software designers, researchers and professional services workers who come to the restaurant for lunch make six-figure incomes from companies locked in a pitched battle for talent that will determine their success or failure in the global markets.

Given the degree to which those highly compensated employees are bidding up housing and other prices in Massachusetts, increasing the minimum wage for the restaurant workers represents a dead-end and pyrrhic victory that keeps them outside the economic mainstream.

The task instead should be to pave the way for those restaurant employees to cross the street and join the high-value economy, which will once and for all allow them to support their families and achieve financial stability.

How does that happen? Start by improving the ability of our educational system to teach all students; reduce the long waiting lists for vocational schools; make community colleges accountable for graduating students with the skills needed in the marketplace; create more high-tech software coding academies; and promote other efficient structures to provide people with the skills to succeed in the areas of fastest economic growth.

Those tasks are far more complex than raising the minimum wage but ultimately more effective. The alternative is not attractive.

“If we move to minimum wage of $15 per hour in Massachusetts, we would immediately terminate many unskilled positions and use temps.  That would allow us to better eliminate labor in the slower seasons.  Note that our competition is located outside Mass and would end up with a significant competitive advantage,” said one employer in the survey.

 

Topics: Compensation, Minimum Wage, Massachusetts Legislature

Beacon Hill Debrief: How Did Employers Do?

Posted by Christopher Geehern on Sep 29, 2016 2:45:43 PM

AIM Executive Vice President John Regan recently discussed the 2015-2016 Beacon Hill legislative session and what it meant for employers on Comcast Newsmakers.

Topics: Massachusetts Legislature, Associated Industries of Massachusetts, Massachusetts employers

Which Issues Matter to You? Take the AIM Issues Survey

Posted by John Regan on Sep 26, 2016 7:30:00 AM

The two major candidates for president will debate tonight. Will they address issues that matter to employers?

statehouse.jpgThe Massachusetts Legislature will kick off its 2017-2018 session in January. Will lawmakers identify the public-policy challenges that most concern Massachusetts employers as they seek to grow, create jobs and generate economic opportunity?

Employers have an important role to play in the debate over how to improve the Massachusetts economy. How can you ensure that your opinions and good ideas are heard? Start by participating in the biennial Issues Survey from Associated Industries of Massachusetts.

The commonwealth’s largest and most powerful employer association wants to hear from you so it can accurately represent the interests of employers both large and small before Massachusetts state government. Which issues pose a threat to your business? What steps could Massachusetts take to improve the business climate? How can Massachusetts assure its global competitiveness in a world in which economic growth is becoming ever more concentrated?

AIM will use responses from the Issues Survey to construct a pro-growth Legislative Agenda for the 2017-2018 Beacon Hill session. Legislators rely upon the AIM Legislative Agenda to identify the issues of importance to the Massachusetts employer community.

All responses will remain confidential.

Why participate? As AIM’s Chairman Dan Kenary remarked at this year’s Annual Meeting:

“The late House Speaker Tip O’Neill’s maxim that ‘all politics is local’ has never been truer that it is today. And if all politics is local, the employer community represents a sleeping giant with enormous potential to drive sound public policy from the bottom up.  Call it entrepreneurial populism - those of us who risk everything to employ our neighbors in Boston, Worcester, Springfield or more than 348 other communities in Massachusetts must tell our stories to the representatives, senators and member of Congress in whose districts we operate.”

We stand at a singular moment in the history of Massachusetts as the forces of political moderation struggle to hold back furious attacks from progressive insurgents who see business and employers as the problem rather than a force for good. The ability of employers to ensure economic stability and continued opportunity rests entirely on their willingness of individuals to add their voices to the public debate.

AIM will publish its Legislative Agenda in January, immediately after President and Chief Executive Officer Richard C. Lord delivers his annual State of Massachusetts Business address.

AIM represents the interests of 4,000 companies from every sector of the economy.

Take the Issues Survey

 

Topics: Massachusetts Legislature, Massachusetts employers

Legislative Scorecard Paints Tale of Two Chambers

Posted by John Regan on Aug 29, 2016 7:35:05 AM


Associated Industries of Massachusetts (AIM) today released its 2015-2016 Legislative Scorecardd, the most widely read report on the voting record of Massachusetts legislators on issues important to employers. AIM releases the Legislative Scorecard at the end of each two-year session to ensure that members know legislators’ records on key economic and public-policy issues, and to recognize lawmakers who understand the importance of a vibrant economy for all residents.

Scorecard2016.jpgThe 2015-2016 legislative session was a tale of two chambers. While the House of Representatives and Speaker Robert DeLeo successfully forged consensus on important measures such as wage equity and energy, the Senate hewed to a more progressive, ideological approach that produced a steady stream of bills with the potential to harm the Massachusetts economy. The divergent approaches are reflected in the Legislative Scorecard results.

Virtually every member of the House of Representatives earned grades of 50 percent or higher and 126 reps ended the session at 75 percent or better. The ratings were based on a dozen roll-call votes dealing with issues ranging from economic development to restricting the use of non-compete agreements.

In the Senate, meanwhile, only five of 40 members managed grades above 50 percent and a staggering 15 Senators posted scores of 18 percent. The highest score in the Senate belonged to Senator Don Humason of Westfield at 59 percent.

The Senate scores were based upon many of the same issues debated by the House, as well as additional votes on so-called wage theft and efforts to modify the commonwealth’s punitive treble damages law. Two key Senate votes – on energy and non-compete agreements – were not included because they were conducted as voice votes.

The Legislative Scorecard selects votes that reflect the objectives of The Blueprint for the Next Century, AIM’s long-term plan for economic prosperity in Massachusetts. The plan maintains that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.

The Blueprint contains four specific recommendations against which AIM measures public policy issues:

  1. Develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic structure across all industries, geographic regions and populations, rather than picking winners and losers.
  3. Establish a world-class state regulatory system that ensures the health and welfare of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on business growth.
"We hope that employers find the Legislative Scorecard informative, and that they will share the results with your colleagues and associates," said Richard C. Lord, President and Chief Executive Officer of AIM.

Topics: Massachusetts Legislature, Massachusetts senate, Massachusetts economy, Massachusetts House of Representatives

Employer Confidence Falls Again in July

Posted by Christopher Geehern on Aug 2, 2016 9:19:26 AM

A resurgent US stock market, better-than-expected job growth and growing labor-force participation failed to make believers of Massachusetts employers during July as business confidence fell for a second consecutive month.

BCI.July.2016.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) declined one point to 55.1 last month, leaving it more than four full points lower than in July 2015. The confidence reading remained above the 50 mark that denotes an overall positive economic outlook, but optimism dimmed across the board on employment, the Massachusetts economy and employers’ outlook on their own companies.

The BCI has now declined in three of the past four months.

Economists suggest that employers may be caught between the expectation of an expanding US economy and concern about anemic growth and instability overseas. It’s a paradox that has resulted in the stock and bond markets, which usually move in opposite directions, rising in tandem this year.

“We see a familiar pattern in what is now the fourth longest economic expansion since World War II - employers remain optimistic about the state of the economy but it is an optimism marked by fits and starts and reactions to all sorts of political and economic events,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The index has remained above 50 since October 2013.

Constituent Indicators Fall  

Most of the sub-indices based on selected questions or categories of employer declined during July.

The Massachusetts Index, assessing business conditions within the commonwealth, dropped 1.3 points during July and 0.3 points over the year to 57.2. The U.S. Index of national business conditions, in contrast, bucked the downward trend of the past year (in which it dropped 3.0 points) by gaining 1.5 points. Even so, employers have been more optimistic about the Massachusetts economy than about the national economy for 75 consecutive months.

The Current Index, which assesses overall business conditions at the time of the survey, fell 0.2 points to 55.3 while the Future Index, measuring expectations for six months out, slid 1.8 points to 54.8.

“July marked the first time since September 2015 that employers were more positive about current conditions than those six months from now. It’s something to watch, since confidence drives employer decisions on hiring and investment moving forward,” said Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC.

“It’s also worth noting that employer confidence in their own companies has declined by 5.8 points, albeit from a high level, during the past 12 months.”

Operational Views Dim

Indeed, the three sub-indices bearing on survey respondents’ own operations all weakened.

The Company Index, reflecting overall business conditions, fell 1.8 points to 55.9, while the Sales Index lost 1.4 points to 55.6 and the Employment Index dropped 2.0 points to 52.5.

The AIM survey found that nearly 39 percent of respondents reported adding staff during the past six months while 19 percent reduced employment. Expectations for the next six months were stable – 37 percent hiring and only 10 percent downsizing.  

“A tightening labor market is finally beginning to put upward pressure on wage growth as employers compete for skilled workers,” said Professor Michael D. Goodman, Executive Director of the Public Policy Center (PPC) at UMass Dartmouth.

“Wages rose 2.6 percent for the 12 months ended in June, the fastest annual growth rate since 2009. While this is welcome news for the state’s working families, whose wages have been stagnant for an extended period, it represents a challenge for those employers with limited pricing power who can expect it to be increasingly difficult and expensive to obtain the labor they need to support expected growth in coming months. ”

 Confidence levels in July were higher in Greater Boston (56.8) than in the rest of the commonwealth (52.2).  Non-manufacturing companies enjoyed a significantly brighter outlook at 58.0 than manufacturing employers, who posted an overall confidence level of 52.6. 

Beacon Hill and Business

AIM’s President and CEO Richard C. Lord, a BEA member, said employers should take encouragement from the moderate approach to business issues taken by state lawmakers during the two-year legislative session that ended Sunday night. Beacon Hill balanced a difficult budget with no tax increases, passed economic development and energy legislation, and developed a consensus pay-equity measure that balances the needs of employers and workers.

“The Legislature and the Baker Administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said.

“We give particular credit to House Speaker Robert DeLeo, who forged meaningful compromises on pay-equity, non-compete agreements and other key issues.”

Topics: Massachusetts Legislature, AIM Business Confidence Index, Massachusetts economy

Lawmakers OK Energy, Economic Bills; Non-Competes Remain Unchanged

Posted by John Regan on Aug 1, 2016 8:40:56 AM

A frenzied conclusion to the 2015-2016 Beacon Hill legislative session produced far-reaching measures on energy and economic-development, but no agreement on restricting the use of non-compete agreements.

statehousedome.jpgA consensus pay-equity bill supported by the business community passed a week earlier and is due to be signed by Governor Charlie Baker today.

Richard C. Lord, President and CEO of AIM, said employers should take encouragement from the fact that the final bills that passed around midnight Sunday largely reflected the moderate approach to business issues taken by the House of Representatives.

“The House and the Baker Administration again showed an understanding of the factors that contribute to business growth and job creation,” Lord said. “We give particular credit to House Speaker Robert DeLeo, who forged meaningful compromises on pay-equity, non-compete agreements and other key issues.”

He also noted that lawmakers and Governor Baker worked responsibly to balance a difficult budget with no tax increases.

The energy bill commits Massachusetts utilities to purchasing up to 30 percent of the state’s electricity from offshore wind generation and hydropower imported from Canada or upstate New York. The final version rejects a troublesome proposal to double the state's minimum requirements for renewable energy and also maintains funding mechanisms for development of natural gas pipelines.

“The bill will raise electricity rates as the commonwealth transitions to non-carbon fuel sources. That said, lawmakers approached the issue in a careful and thoughtful manner that recognizes the need to include a variety of generation sources for electricity,” said Robert Rio, Senior Vice President of Government Affairs at Associated Industries of Massachusetts.

Average electric rates in Massachusetts are the third highest in the nation for industrial ratepayers, and more than twice as high as companies pay in the competitor state of North Carolina. Those costs place employers at a significant disadvantage when competing with businesses located in other areas of the country.

The breakdown of negotiations on non-compete agreements brought a stunning, if temporary, end to a contentious effort by venture capitalists to do away with current law governing non-competes. AIM has waged a protracted battle to defend the vast majority of Massachusetts employers who wish to preserve the use of non-competes, but the association nevertheless negotiated a reasonable compromise measure that passed the House of Representatives.

The House bill would have limited the duration of non-competes to one year and required employers who did not compensate workers at the time they signed a non-compete to pay 50 percent of the worker’s salary during the non-compete period. A separate Senate bill would have limited the term of non-competes to three months and required employers to pay 100 percent of a worker’s salary regardless of existing financial compensation.

The deadlock means that opponents of non-competes will have to return to square one and refile their proposals when the 2017-2018 legislative session begins in January.

“The outcome of negotiations on the use of non-competes is disappointing to the business community, which worked in good faith with the House on a reasonable compromise. AIM continues to believe that non-compete agreements with common-sense limitation protect intellectual property and stimulate investment and innovation in Massachusetts,” said Brad MacDougall, Vice President of Government Affairs at AIM.

The economic development bill includes $500 million in authorized borrowing for the MassWorks infrastructure program, $45 million in capital dollars for brownfields environmental projects and $45 million for equipment for career and technical education, among other measures. The bill also features a new tax deduction intended encourage families to save for college tuition costs.

The pay-equity bill is intended to promote salary transparency, limit upfront questions to job candidates about salary history, and encourage companies to conduct reviews to detect pay disparities. It explicitly recognizes legitimate market forces such as performance and the competitive landscape for certain skills that cause pay differences among employees. 

  Register for AIM Brown Bag Webinar:   Legislative Wrap-Up

 

Topics: Massachusetts Legislature, Economic Development, Non-Compete Agreements, Energy

Beacon Hill Energy Bill Won't Lower Electric Bills

Posted by Bob Rio on May 31, 2016 7:30:00 AM

Those expecting the long-awaited Beacon Hill omnibus energy bill to lower the state’s highest-in-the-nation electricity costs will be disappointed.

Electriclinessmall.jpgIn fact, the bill will likely increase energy costs for employers and consumers.

The Legislature’s Joint committee on Telecommunications, Energy and Utilities released H.4336 on May 23.  The measure now goes to the House Ways and Means Committee for review.

The bill contains only two provisions – a requirement for utilities to solicit contracts for hydroelectric power combined with onshore wind; and a similar requirement to purchase offshore wind.

AIM supports the concept of soliciting for clean energy resources, provided the following guidelines are included:

  • Any contract must be cost-effective for Massachusetts ratepayers (i.e. the benefits of any contract to the ratepayer must be greater than its costs);
  • The procurement process must be competitive and decision-makers must have an ability to refuse any bids that do not meet standards (i.e. no carve outs for favored technologies);
  • Any above-market or below-markets costs of the contract must be allocated fairly among  all customers; and
  • The clean energy procured must qualify to be used for compliance with the state’s Global Warming Solutions Act (GWSA), which requires a 25 percent reduction in statewide greenhouse gas emissions by 2020 and an 80 percent reduction by 2050.

The last guideline is important in light of a May 17 Massachusetts Supreme Judicial Court (SJC) ruling that the state Department of Environmental Protection (DEP) has not acted aggressively enough to enforce regulations to meet the GWSA emission-reduction targets. DEP must now develop new regulations that reduce emissions in Massachusetts, especially in the transportation and energy generation sectors.

The court decision complicates the omnibus energy bill because virtually all of the clean energy envisioned in the omnibus bill would be purchased from out of state and would thus not directly reduce emissions in Massachusetts.

AIM is seeking to add language in the energy bill to ensure that any emission credits received from procuring clean energy under the bill are properly credited in accordance with the SJC decision. If clarification language is not included, and further interpretation of the decision finds that greenhouse gas reduction from all this clean energy cannot be used as a compliance tool with the GWSA, billions of dollars will be wasted to “comply” with the law and policymakers will no doubt impose more Draconian limits and costs on ratepayers.

The House has the opportunity to improve this legislation.    

While the bill sets up a process to solicit hydro and offshore wind, there is no definition of “cost-effective” or “reasonable,” two standards that appear numerous times in the procurement language of the bill. A definition of those terms is sorely needed because current law classifies even expensive projects like Cape Wind as “cost-effective” even though the energy they produce is several times more expensive than other clean power.  

Legislators should also change what appears to a special status created for offshore wind at the expense of large hydro and onshore wind. The bill establishes a ceiling on the amount on amount of large hydro/on shore wind that can be procured at about 20 percent of the of the states total electric load, while establishing a minimum amount of procurement for offshore wind at about 10 percent of the state electricity load.

The language is puzzling. It puts a limit on what may be the cheapest sources of power (large hydro/wind), while encouraging virtually unlimited amounts of the highest-cost power (offshore wind). The inevitable result will make Massachusetts dependent upon high-cost energy sources at multiple times the cost of conventional power.  

A recent analysis performed through the AIM Foundation found that Massachusetts employers and consumers already pay more than $800 million in additional costs on their electric bills to support renewable energy. Add carbon taxes for power plants (passed on to the ratepayer) and energy efficiency surcharges and the cost balloons to $1.5 billion, not including the cost of the actual electricity.

Businesses pay nearly 55 percent of these costs. More importantly, business that have used the AIM Energy Calculator have found that these hidden costs can add up to 25 percent of a total electric bill.

AIM is working with the House Ways and Means Committee to ensure that these items are addressed.

Topics: Electricity, Massachusetts Legislature, Energy

Speaker Pushes Statewide Economic Growth

Posted by Christopher Geehern on May 13, 2016 2:59:38 PM

The Massachusetts House of Representatives shares with Associated Industries of Massachusetts a commitment to ensure that the economic growth buoying the Boston area spreads through the commonwealth, House Speaker Robert A. DeLeo told the AIM annual meeting today.

DeLeogood.jpg“For the past two years, extending the circle of economic prosperity from Boston to each corner of the commonwealth has been a chief priority of the House. I’m proud to say that through economic development bills, trips around the state, and a recently launched initiative called the Bay State Business Link, we are making gains,” DeLeo told more than 750 executives gathered at the Westin Boston Waterfront Hotel.

DeLeo noted that he last keynoted the AIM annual meeting during the height of the recession in 2009.

“I’m proud to say that in the past seven years we have overcome adversity and set a foundation for sustainable recovery,” he said.

 “In the House, we embrace our legacy of creating workable, practical solutions. Our goal is to create sustainable legislation that will result in positive long-term consequences. From workforce training; to economic development bills that focus on diverse regions and industries; to education; to our nationally-heralded gun safety legislation: we are known for pairing bold ideas with commitment to collaboration.”

DeLeo’s remarks followed the presentation of the inaugural AIM Vision Awards for contributions to the Massachusetts economy to General Electric Company of Boston, Nuance Communications of Burlington and noted brain researcher Dr. Ann McKee of Boston University. AIM also presented the John Gould Education and Work Force Development Award to Morgan Memorial Goodwill Industries of Massachusetts.

AIM Board Chairman Daniel Kenary announced in his annual remarks that the AIM Board of Directors has approved a restructuring that will allow AIM’s human resources operation to accelerate its growth, while the larger organization recommits itself to being the best public policy advocacy group in the nation.

AIM HR Solutions, formerly known as the Employers Resource Group, will become its own business center with the goal of building on annual revenues of $2.1 million. AIM HR Solutions will help employers wrestle with the complexity of managing a work force and comply with an ever- growing maze of employment laws.

“The change is intended to allow our managers to push full throttle on two business units that are already remarkably successful.  There isn’t an association anywhere in the world that would not give its right arm to have these two businesses. Your Board of Directors is excited about the possibilities this change will create,” said Kenary, Co-Founder and Chief Executive Officer of The Harpoon Brewery.

Kenary also suggested that AIM is at a crossroads born of an increasingly volatile political environment that is challenging employers to articulate a positive and compelling vision for the role they play in the larger society. He called for employers to adopt an “entrepreneurial populism” under which they engage with the political process in their home communities.

“The late House Speaker Tip O’Neill’s maxim that ‘all politics is local’ has never been truer that it is today. And if all politics is local, the employer community represents a sleeping giant with enormous potential to drive sound public policy from the bottom up,” Kenary said.

Topics: Massachusetts Legislature, Economic Development, Massachusetts House of Representatives

Why We Support Pay Equity...And Oppose the Pay Equity Bill

Posted by Brad MacDougall on Apr 19, 2016 7:30:00 AM

A company CEO called Associated Industries of Massachusetts last week to express concern because she had been told that the association opposed equal pay for women.

Two_Women.jpgNothing could be further from the truth.

AIM and its 4,500 member employers unequivocally support the principle of equal pay for equal work. We support and the federal and state laws that protect fair compensation.  We believe that the best long-term strategy to achieve pay equity in the workplace is to ensure that both women and men possess the education and skills that allow our enterprises to succeed an in increasingly complex global economy.

What we do not support is the deeply flawed legislation that well-intentioned lawmakers are debating on Beacon Hill in response to the wage gap. An Act to Establish Pay Equity, which was passed by the Senate on a voice vote and is now pending before the House of Representatives, represents a classic example of “right goal, wrong approach.”

The bill is duplicative and unnecessary. Its ambiguous language raises the possibility that the privacy of our employees will be compromised. It may limit our ability as employers to financially reward the star performers in our companies. And most importantly, the bill will not achieve our shared objective of ensuring that women earn the same as men for the same work.

The important point is this: Don’t confuse employer opposition to the bill with lack of support for pay equity.

AIM and its member employers are committed to providing fair compensation to employees according to the value and success they bring to our enterprises. In an economy where skilled workers remain at a premium, any company that does not value all of its employees equally is unlikely to be around very long.

Martha Sullivan, President and CEO of Sensata Technologies in Attleboro said it best during AIM Executive Forum panel discussion – “When you look at how much work you have to do to bring along great talent out of the engineering pool, the idea that you would not reward that talent based on meritocracy, based on performance and in an equitable way is just a really bad business decision,” she said.

That is why AIM is a charter member and supporter of the 100 Percent Talent Compact sponsored by the Boston Women’s Workforce Council. AIM and other signers of the compact agree to assess their own data to see if wage gaps exist, take steps to address those gaps, and anonymously provide data to BWWC to assess progress for the city as a whole in eliminating the wage gap.

That is also why AIM supports the online calculator developed by Massachusetts Treasurer Deborah Goldberg to allow women to calculate the wage gap in the industries in which they work and send anonymous notifications to employers to make them aware of the problem. Anything that stimulates employer introspection on wage equity brings us closer to solving the problem.

Cathy Minehan, former President of the Federal Reserve Bank of Boston and Co-Chair of the Boston Women’s Workforce Council, told the AIM Board of Directors on March 18 that pay equity is an enormously complex issue. She said differentials reflect factors ranging from the availability of reasonably priced and high quality day care; affordable housing and transportation; the fields women choose; and unconscious bias baked into workplace culture.

Regarding the Senate legislation, Minehan indicated “The law does not, and in many ways cannot, deal with these key issues.”

AIM strongly agrees. There are far more effective paths to pay equity than overly proscriptive legislation that endangers the privacy of employees and inhibits the ability of employers to run their businesses. We stand ready to work with all parties to locate those paths.

If you want to see AIM’s specific concerns with the pay equity bill, click here.

Topics: Massachusetts Legislature, Employment Law, Pay Equity

Non-Compete, Independent Contractor Issues Define State Approach to New Economy

Posted by Christopher Geehern on Jun 23, 2015 9:10:32 AM

Microsoft Founder Bill Gates once said that “The intersection of law, politics and technology is going to force a lot of good thinking.”

jobsearchcomputer.smallPerhaps, but it is also forcing a lot of muddled thinking as state and federal policymakers struggle to define a rapidly evolving economy with traditional laws and regulations. Associated Industries of Massachusetts will today seek to change some of that thinking on two issues that are critical to the commonwealth’s economic future – the ability of employers to protect intellectual property with non-compete agreements and the ability of entrepreneurs to work as independent contractors.

AIM plans to provide testimony on the two issues at a hearing of the Massachusetts Legislature’s Joint Committee on Labor and Workforce Development. The association opposes efforts to ban or limit the use of non-compete agreements and favors changing the law that prevents virtually any individual in Massachusetts from unambiguously passing the legal test to qualify as an independent contractor.

“The 4,500 member employers of AIM believe that government should encourage the research, innovation and investment that make the Massachusetts economy unique. Maintaining non-competes and broadening the definition of independent contractors will ensure that great ideas continue to generate good jobs here in the commonwealth,” said John Regan, Executive Vice President of Government Affairs.

Massachusetts lawmakers last year rejected efforts by a small group of well-heeled venture capitalists to ban the use of non-compete agreements in the commonwealth. AIM believes the non-compete issue is about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefit as long as the employee is a part of the process.

Employees already enjoy legal protection against overly restrictive non-compete agreements.  Case law dictates that enforcement of agreements occurs only when:

  • they are narrowly tailored to protect legitimate business interests;
  • they are limited in time, geography, and scope;
  • they are consonant with public policy; and
  • the harm to the employer from non-enforcement outweighs the harm to the employee.

“Non-compete agreements may not be used to curtail ordinary, fair competition or to prevent employees from using their general skills. Massachusetts has a long history of case law that strikes the right balance between employee freedom of mobility and financial incentives with employer interests in protecting intellectual property (IP), trade secrets, confidential information, and goodwill,” says Brad MacDougall, Vice President of Government Affairs at AIM.

The association surveyed its members last year and found that non-competes are used widely in every segment of the Massachusetts economy, including manufacturing, life sciences, medical devices, finance, retail, marketing, publishing, construction, energy, professional services, insurance and health care. A manufacturing company with fewer than 50 employees wrote on the survey that eliminating non-competes “could put us out of business.”

The independent contractor issue revolves around an overly restrictive statute that leaves Massachusetts on the sidelines of one of the fastest developing sectors of the economy.

One out of every three American workers, from software engineers and researchers to graphic designers, freelance journalists and nannies, today works independently outside the bounds of traditional 9-to-5 employment. The trend includes the so-called sharing economy that provides apps allowing individuals to exchange goods and services ranging from rides to housecleaning.

But Massachusetts' share of that job growth is threatened by a state law that imposes a confusing and complex three-factor test to determine whether a worker is an employee or independent contractor.

Employees must currently meet three requirements to be considered an independent contractor:

  1. The individual is free from control and direction in connection with the performance of the service, both under his/her contract for the performance of service and in fact; and
  2. The service is performed outside the usual course of the business of the employer; and,
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 

An advisory from the Massachusetts attorney general in 2004 concluded that “the new law is so broad in its definition of employee that virtually every occupation, individual entrepreneur and every employer, including the public sector, have been affected, putting Massachusetts at odds with every other state in the country.”

Simply replacing the word “and” with “or” after Section 2 would bring Massachusetts into alignment with the 20-factor IRS test for determining employment versus contractor status, and validate normal and accepted employment practices in many sectors of the economy.

It’s a modest change that would help thousands of legitimate Massachusetts independent contractors who choose to manage and operate their own business and earn a living outside a traditional employer-employee relationship.

Both the non-compete and independent contractor issues underscore the fact that Massachusetts must regulate a 21st century economy with 2st century laws.

Topics: Independent Contractor Law, Massachusetts Legislature, Non-Compete Agreements

Subscribe to our blog

Browse by Tag