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Beacon Hill Flurry a Mixed Bag for Employers

Posted by Christopher Geehern on Jun 12, 2014 11:41:00 AM

A flurry of activity on Beacon Hill yesterday produced a decidedly mixed bag of legislation for Massachusetts employers.

Non-compete agreementsOn the positive side, a House-Senate conference committee agreed upon a reform of the Unemployment Insurance system that will stabilize UI tax rates and create relief for companies that seldom lay off workers. The agreement came hours after the House of Representatives approved an economic development bill that preserved the ability of employers to use non-compete agreements to protect intellectual property.

AIM remains disappointed, however, that the same conference committee voted to increase the Massachusetts minimum wage from the current $8 per hour to $11 per hour by 2017. Lawmakers rejected a Senate provision to index the minimum wage to the rate of inflation, but required that the state wage be 50 cents more than the federal minimum.

The Unemployment Insurance reform will:

  • Expand the wage base upon which UI benefits are calculated from $14,000 to $15,000 in 2015.
  • Incorporate an expanded rate table that makes rates more dependent on the hiring and firing record of individual companies.  Rates for 2015, 2016 and 2017 will be frozen at Schedule C on the new table.
  • Expand the current one-year window for determining the experience rating of employers to three years.
  • Prohibit self-employed “persons of influence” from laying themselves off on a seasonal basis and collecting unemployment benefits.
  • Increase the definition of season employee from 16 to 20 weeks.

The measure does not include provisions supported by AIM to reduce the maximum duration of benefit weeks from 30 to 26 or increase the time people must work before collecting benefits.

“The UI reform takes some positive steps toward improving the efficiency of the system used to pay jobless benefits. The most important change is that employers will be rewarded for the stability of their work forces and rates are locked in for the next three years.” said John Regan, Vice President of Government Affairs at AIM.

The bill would boost the minimum wage to $9 per hour on January 1, 2015, $10 per hour on January 1, 2016 and $11 per hour on January 1, 2017. That increase would provide an average pay increase of $2,573 to 491,900 Massachusetts workers who currently earn between $8 and $11 per hour.

It would also indirectly push up wages by an average of $727 for an additional 317,200 workers because of union contracts linked to the minimum wage and general upward pressure on wages. The total tab for Massachusetts employers will come to $1.5 billion.

“AIM has argued that there are sound economic reasons not to increase the minimum wage. Far from helping poor people, moving the minimum wage to $11 an hour will simply ensure that people whose skills do not justify that wage will not find jobs,” Regan said.

The Senate is expected to vote on the unemployment insurance/minimum wage compromise today. State House News Service reports that the House may take up the measure next week.

The economic development bill approved by a vote of 125 to 23 in the House includes a $15 million middle skills jobs training grant fund, $10 million for brownfields redevelopment, efforts to boost jobs in so-called Gateway Cities and a Big Data Innovation and Workforce Fund. House members declined to include the controversial ban on non-competes.

AIM has led the opposition to proposals from Governor Deval Patrick and a group of venture capitalists to ban the enforcement of non-competes in Massachusetts. A recent survey conducted by the association found that every one of the hundreds of employers who answered favors preserving the options of employers and workers to use the agreements.

Topics: Minimum Wage, Unemployment insurance, Non-Compete Agreements

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