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AIM, Coalition Ask Legislature to Limit MassHealth Assessment

Posted by Katie Holahan on Apr 8, 2019 3:34:04 PM

A diverse coalition of organizations ranging from AIM to groups representing human services providers and home-care aides urged key legislators today not to extend the two-year assessment imposed on employers last year to close a financial gap at the state’s MassHealth insurance program.

State House 2015In a letter to House Ways and Means Committee Chair Aaron M. Michlewitz and Vice Chair Denise C. Garlick, the coalition says that  the “burden of the (Employer Medical Assistance Contribution) EMAC Supplement falls particularly on certain industries, especially small employers with lower wage workers, many of whom are paid via state contracts.”

“This unbudgeted and unanticipated expense is threatening employers’ ability to make critically needed investments in our workforce and to maintain vital programs that support vulnerable members of our communities.”

The Ways and Means Committee is currently developing the state budget for the fiscal year that begins on July 1.

AIM has already urged the Legislature to end the EMAC assessment immediately because employers last year paid tens of millions of dollars more than anticipated under the levy. Businesses are on track to contribute some $519 million by the time the assessment sunsets at the end of this year instead of the $400 million envisioned under the 2017 legislation.

At the same time, enrollment in MassHealth has fallen as the Baker Administration has initiated steps to ensure that only people eligible for benefits receive them. 

The Center for Health Information and Analysis (CHIA) recently indicated that, in calendar year 2017, total MassHealth spending decreased by 0.2 percent, driven in part by a 2.4 percent decrease in enrollment. The trend indicates relief from the pressures of enrollment increases that have plagued the MassHealth program in recent years and produced the fiscal deficit that resulted in the EMAC Supplement policy.

“The conditions that led to the imposition of the surcharge no longer exist. Employers who have paid hundreds of millions of dollars in assessments believe it is fair to look at ending the surcharge in year two,” said John Regan, Executive Vice President of Government Affairs at AIM.

The next round of EMAC supplement billings will be delivered to employers in the next week.

The members of the coalition include BAMSI (Brockton Area Multi-Services, Inc.), Building Trades Employers’ Association, Home Care Aide Council, MAB Community Services, Massachusetts Staffing Association, New England MCA/MSCA, Providers’ Council, The ERISA Industry Committee, Italian Home for Children, Massachusetts Senior Care Association, the Nashoba Valley Chamber of Commerce and the Springfield Chamber of Commerce.

The coalition said the EMAC supplement has raised costs for Massachusetts nursing facilities alone by more than $16 million.

“As a Commonwealth, we face a renewed imperative to lower the cost of health insurance for everyone in Massachusetts via long-term, efficient strategies. Short-term, unpredictable financial obligations like the EMAC Supplement tax serve only to deter business expansion and employee recruitment, and to reduce our ability to provide vital services,” the group wrote.

The Legislature passed the assessment in July 2017 minus a set of structural reforms proposed by Governor Baker to place the MassHealth/Medicaid program on a firm financial footing. The surcharge raised the EMAC assessment from $51 to $77 per employee. Employers also were required to pay up to $750 for each worker who receives public health benefits.

Employers may request a waiver from the fees if they prove a hardship. Of 246 such waiver requests, administration officials said they have allowed 99.

Topics: Massachusetts House of Representatives, Employer Health Assessment, EMAC Surcharge

AIM Launches Diversity and Inclusion Initiative

Posted by Rick Lord on Apr 8, 2019 8:00:00 AM

Associated Industries of Massachusetts (AIM) has launched a comprehensive diversity, inclusion and equity initiative designed to ensure that the largest business association in the commonwealth represents the full variety of people and companies driving the state economy.

Juliette.MayersThe effort is being overseen by a committee of the AIM Board of Directors Chaired by Donna Latson-Gittens, Founder and Chief Executive Officer of MORE Advertising in Watertown, and Gregory Buscone, Executive Vice President and Senior Commercial Banking Officer at Eastern Bank in Boston.

AIM has already revamped its processes for nominating members of the board of directors, selecting candidates for statewide achievement awards and for assembling public programs. The association recently hired Juliette Mayers, a former executive director of multicultural marketing at Blue Cross Blue Shield of Massachusetts and CEO of Inspiration Zone LLC, as a consultant to help develop a long-term plan for diversity and inclusion.

                     Juliette Mayers

“Diversity, inclusion and equity are central to the business success
of AIM,” said Daniel Kenary, Founder and CEO of The Harpoon
Brewery in Boston and chair of the AIM Board of Directors.

“Our ability to maintain a vibrant, influential association in the future will depend upon our willingness to seek out the broadest possible pool of people as members, as AIM staff people and as AIM directors.”

AIM has also integrated diversity into its public-policy agenda. The association has recently taken part in negotiations on laws governing pay equity and treatment of pregnant workers, consistent with the association's longstanding commitment to economic growth.

Latson-Gittens and Buscone noted that studies by the consulting firm McKinsey and the Peterson Institute for International Economics show that companies with diverse management generate higher profits than those that are less diverse.

Population demographics also underscore the case for diversity. Government and private statistics show that, for the first time in US history, a majority (50.2 percent) of children under the age of five are classified as being part of a minority ethnic group. The minority working-age portion of the workforce has doubled to 37 percent since 1980.

In addition to Latson-Gittens and Buscone, the Board of Directors committee leading the diversity initiative at AIM includes Kenary; Joanne Hilferty, President and CEO of Morgan Memorial Goodwill Industries in Boston; Phyllis Barajas, founder and CEO of Conexion in Boston; Tricia Canavan, President of United Personnel in Springfield; and Brian Burke, Northeast Director of State Government Affairs at Microsoft in Cambridge.

The objectives of the initiative include:

  • Increase the diversity of the AIM membership, Board of Directors and staff;
  • Strengthen governance and management of the association;
  • Expand membership by reflecting the full diversity of the Massachusetts business community and the larger community;
  • Enhance the organization’s reputation as the pre-eminent representative of Massachusetts employers on public-policy issues
  • Meet the expectations of respected AIM member companies that are already are doing this and expect partners to do the same;
  • Recruit and retain the most professional workforce possible, now and in the future.

AIM is a community of 3,500 employers re-imagining a better state of business for Massachusetts.

The association believes that business can be a positive force for change in creating a better, more prosperous world. AIM strives to bring together the best people, the best insights and the best resources to ensure that Massachusetts businesses thrive and create a hopeful future for everyone. 

Mayers expects AIM to have a long-term plan for diversity, inclusion and equity later this year.

“AIM is a high-profile organization that has a unique opportunity to take a leadership role in ensuring that everyone has a chance to share in the economic prosperity of Massachusetts,” she said.

Topics: Associated Industries of Massachusetts, Diversity & Inclusion

Employer Confidence Slips in March

Posted by Christopher Geehern on Apr 2, 2019 8:30:59 AM

Business confidence weakened slightly in March amid signs of both a cyclical global slowdown and persistent demographic factors limiting the growth of the labor force in Massachusetts.

BCI.March.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.3 points to 57.9 during March. Confidence remains within optimistic territory but has lost 5.6 points during the past 12 months.

The decrease reflected employer concerns about economic prospects for the next six months. Those concerns outweighed growing optimism among manufacturing companies and rising confidence in the Massachusetts economy.

The March Business Confidence survey took place as the government announced that Massachusetts created only 20,000 jobs during 2018 instead of the 65,500 previously estimated. The US Bureau of Labor Statistics reports that average payroll job growth in Massachusetts fell from 1.3 percent in 2017 to 0.9 percent last year.

“Massachusetts employers continue to struggle with the challenges of a full-employment economy complicated by demographic issues such as the retirement of large numbers of baby boomers,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“U.S. economic growth appears to be slowing, as well as world economic growth, but recession fears are still low.”

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

The constituent indicators that make up the overall Business Confidence Index moved in a narrow range during March.

The Massachusetts Index assessing business conditions within the commonwealth gained 0.9 points to 61.7. Confidence in the Massachusetts economy has declined 6.1 points since March 2018.

The U.S. Index measuring employer sentiment about the national economy slipped 0.5 points to 55.5, leaving it 9.7 points less than a year ago.

Employers were slightly more optimistic about current conditions than about the future. The Current Index, which assesses overall business conditions at the time of the survey, rose 0.6 points to 58.3 while the Future Index, measuring expectations for six months out, fell 1.3 points to 57.4. The Future Index has fallen 7.0 points during the past 12 months.

The Employment Index, measuring employer optimism about hiring, rose 1.2 points to 55.9.

Non-manufacturers (60.6) were more confident than manufacturers (55.4). Small companies (60.8) were more optimistic than large companies (55.2) or medium-sized companies (57.5). Companies in Eastern Massachusetts (60.0) continued to be more bullish than those in the west (55.0).

Northeastern University professor Alan Clayton-Matthews, a BEA member, said the downward revision of the Massachusetts job-growth numbers was consistent with demographic trends such as the large number of baby boomers retiring from the work force.

“The last New England Economic Project forecast projected a slowdown in payroll job growth from 1.7 percent in 2017 to 1.1 percent in 2018 and 0.6 percent in 2019 and a slowdown in labor-force growth from 1.6 percent in 2017 to 0.6 percent in 2018 and 0.4 percent in 2019. This forecast was largely based on demographic projections assuming a full-employment economy,” said Clayton-Matthews.

“The state economy seems to be running at full capacity, and the basic state indicators don’t suggest a lack of demand, though it’s hard to spot turning points until there is enough hindsight.”

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said employers remain concerned as Beacon Hill lawmakers undertake a broad discussion of how to fund expensive policy priorities such as transportation infrastructure, public education and clean energy. He noted that AIM will be part of a group assembled by the state Senate to look at the Massachusetts tax code.

“AIM undertakes these debates conscious of the oppressive cost burdens already facing Massachusetts employers. Massachusetts must develop a fair strategy to address its spending needs without harming employers who are already struggling to implement a $1 billion paid family and medical leave program along with the rising cost of both health insurance and energy,” Lord said.

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

School Funding Changes Must be Tied to Results

Posted by Tricia Canavan on Mar 27, 2019 2:23:26 PM

Editor’s note - Tricia Canavan, President and Owner of United Personnel Services in Springfield, is a member of the AIM Board of Directors and co-chair of Springfield Business Leaders for Education. She was an educator early in her career.

EducationUnited Personnel Services is a staffing company specializing in professional, information technology and manufacturing placement throughout Massachusetts and Connecticut. Headquartered in Springfield, we place more than 3,000 people a year in jobs ranging from entry level to highly technical and executive management positions.

We collaborate in our work with some of the region’s largest employers in manufacturing, health care and education. Those collaborations give us unique insights into the hiring needs and challenges of a variety of industries.

United Personnel and its clients experience firsthand the impact of the achievement gap on our young people and their ability to succeed at work and in post-secondary education. We also clearly understand how these educational deficits contribute to the significant skills gap that exists between the jobs available in the commonwealth and the qualifications of many of our residents.

Many young adults are entering the job market without the knowledge and skills needed to secure living-wage jobs, never mind the high-wage, high-potential jobs that would move them and their families on an upward trajectory. This disconnect impedes our economy, limits opportunities for future economic development, and, most importantly, is a real injustice to our kids here in Massachusetts.

In our Gateway Cities in particular, student achievement and mastery of key skills lag behind those of their peers at a sometimes-staggering rate throughout elementary and high school.

Consider the fact that 72 percent of jobs will require a career certificate or college degree by 2020.

In Springfield, 23 percent of our kids don’t graduate from high school in four years. Only 17 percent of our ninth graders earn a post-secondary degree or credential within six years of high school graduation, in part because many graduate unprepared for post-secondary success.

For those students who do pursue higher education, a huge number require remedial classwork – wasting valuable time and financial aid on classes that don’t get them closer to a degree.

Massachusetts needs to build upon its long tradition of educational excellence to ensure that all of our kids have the education they need to pursue the good jobs that exist in Western Massachusetts and throughout the commonwealth. These are jobs like nurses, advanced manufacturing machine operators, web developers and physical therapists – all sectors with hiring demands that exceed the supply of candidates – and all jobs that provide wages beyond the region’s median income.

The disconnect between the qualifications of our young adults and the jobs our employers need filled is the reason I co-chair Springfield Business Leaders for Education and serve on the Boards of Directors of the Springfield Regional Chamber of Commerce and AIM. Like so many of my colleagues throughout the state, I am deeply committed to our kids and our commonwealth and want to be part of the solution to these urgent issues.

We know that the way communities spend state education money has a direct impact on student knowledge acquisition and achievement. It is imperative, then, that any infusion of funding is tied to results – for our kids, their futures and the economic strength of Massachusetts. We also know that innovative reforms, such as the Springfield Empowerment Zone model that has potential to be expanded statewide, must be accompanied by renewed investment in education.

But we must be cautious as we pursue increased financial resources for our schools. Springfield Public Schools have received large boosts in funding before, through the introduction of federal grant programs like Race to the Top. But these infusions have not translated to sufficient progress which adequately addresses all that our students need. If we are successful in changing the current funding for our schools without using it as a leverage to do better for our kids, we will have failed.

The cost of the status quo – the achievement gap, the failure to maximize our kids’ promise, the inability of businesses to find the workers they need – is huge. Additional money needs to be used strategically, informed by data and evidence, to accomplish specific goals. We deserve to know what those goals are and whether our schools are meeting them - and if not, why.

Maximum Unemployment Duration Drops to 26 Weeks

Posted by John Regan on Mar 26, 2019 6:49:33 PM

An obscure provision of the 2005 Massachusetts Unemployment Insurance Reform Law will next week accomplish what employers have sought for several decades – a reduction in the maximum duration of unemployment benefits from 30 weeks to the 26 weeks common in most states.

The provision mandates that if the unemployment rate drops below 5.1 percent in the 10 labor market regions of the state, then UI benefits are available for 26 instead of 30 weeks.  The Executive Office of Labor and Workforce Development certified today that the jobless rate in all Massachusetts labor markets has dropped to less than 5.1 percent so new UI recipients as of next week will be able to collect for 26 weeks.

The benefit period will return to 30 weeks if during any month of a claimant's 26-week benefit period the 12-month average monthly unemployment rate in any one of the metro areas rises above the 5.1 percent threshold.

Cost savings associated with the 26-week maximum benefit period are $40 million in the first year and $84 million in the second year, state officials said

“I don’t think anyone at the time this provision was negotiated believed it would ever take effect,” said AIM President and Chief Executive Officer Richard C. Lord.

“The change underscores the fact the the duration of Unemployment Insurance remains one of the major competitive disadvantages that affect companies doing business in Massachusetts. We urge the Legislature to move to 26 weeks permanently.”

Topics: Unemployment insurance, Massachusetts employers

AIM Calls on Legislature to End MassHealth Assessment on Employers

Posted by Katie Holahan on Mar 26, 2019 1:52:06 PM

Editor's note - AIM Vice President of Government Affairs Katie Holahan today delivered the following testimony to the Legislature's Joint  Committee on Labor and Workforce Development in favor of ending the MassHealth employer assessment.

State House 2015Associated Industries of Massachusetts (AIM), on behalf of its member companies, supports H.1647, An Act relative to repealing the employer medical assistance contribution tax. We support an end to the two-year assessment imposed on employers to close a financial gap at the state’s MassHealth insurance program for low-income residents.

AIM believes the assessment is no longer necessary as employers last year paid tens of millions of dollars more than anticipated originally under the levy.

The prior, existing Employer Medical Assistance Contribution (EMAC) assessment increased from $51 to $77 per employee, and employers were required to pay up to $750 for each worker receiving public health benefits. By the time the EMAC assessment sunsets in 2019, Massachusetts businesses are on track to contribute $519 million instead of the $400 million envisioned under the 2017 legislation – or 30 percent more than originally estimated.

At the same time, enrollment in MassHealth has fallen as the administration has initiated steps to ensure that only those eligible for benefits receive them.

The Legislature passed the assessment in July 2017, minus a set of structural reforms proposed by the governor to place the MassHealth/Medicaid program on a firm financial footing. The assessment fell most heavily upon companies whose employees elect to use MassHealth rather than the employer-sponsored health plan.

AIM member employers are proud to lead the nation in providing health care coverage to their employees. Sixty-five percent of Bay State companies offer health insurance coverage to their workers, compared with 56 percent of employers nationwide. A full 100 percent of Massachusetts employers with 200 or more employees offer coverage.

As health-care premium and utilization costs continue to grow, employers have fewer options and less flexibility to keep year-over-year increases in check, raising important concerns about their ability to offer comprehensive insurance to their employees. Adding the cost of the state’s public health insurance program is not a sustainable financial plan, long-term.

Employers stand ready to work with policymakers to make comprehensive structural reforms to both the MassHealth program and commercial insurance markets to make the financing of health care for all Massachusetts residents sustainable this year and for many years to come.

Topics: Massachusetts Legislature, Health Care Costs, Health Insurance

Senate President Calls for 'Bold Steps'

Posted by Christopher Geehern on Mar 15, 2019 11:20:37 AM

 

Senate President Karen E. Spilka today called for Massachusetts to take “bold steps” to address issues such as transportation, education, health-care costs and economic development in the face of relentless changes to the state economy.

SP.Spilka“The common thread of all the challenges we face is unprecedented change. The success of our Commonwealth will ultimately be measured by how well we navigate and harness the potential of this change,” Spilka told more than 300 business leaders at the AIM Executive Forum on Waltham.

She said Massachusetts finds itself in a unique political moment that will determine the future course of its economy.

“It would be a mistake to waste this moment on incremental changes and small ideas,” she said. “Now is the time to be bold. That said, we have to find a way to reach consensus on our bold ideas.”

Spilka said state leaders must replicate the collaborative model of last year’s “grand bargain,” which brought together employers, advocacy groups and legislators to hammer out a compromise on paid family leave and the minimum wage. She thanked the business community for engaging in those conversations and invited employers to continue to participate in major policy debates.

The Senate President cited the growth of the Metrowest district she represents as an example of the challenges and opportunities facing the Massachusetts economy. Technology and innovation have transformed Metrowest from a Boston bedroom region to the home of major employers like Staples, TJX and Boston Scientific, but that growth has stressed the transportation infrastructure and priced some workers out of the housing market.

She acknowledged that resolving these issues carries a large price tag.

“I firmly believe we must create an economic development and tax framework for the 21st century where innovative technology-driven businesses can develop and thrive here but where we also capture new revenue to continue providing essential services, and fund our vision for our future,” she told the audience.

“So far, we have been addressing these new industries on a piecemeal basis, which only serves to breed confusion for business, government, and consumers. We must work together to find a balance that benefits us all, especially as we will be relying on these industries to continue to fuel our economic success.”

Spilka said the Senate will address health-care costs by looking at the price of prescription drugs and the cost transparency of the medical system. She praised the initiative led by AIM and the Massachusetts Taxpayers Foundation to reduce unnecessary use of emergency rooms.

Topics: Massachusetts Legislature, AIM Executive Forum, Senate President Karen Spilka

Government Proposes to Raise Overtime Threshold

Posted by Tom Jones on Mar 11, 2019 8:00:00 AM

The long-running saga of federal rules governing overtime pay took another twist last week when the U.S. Department of Labor (DOL) announced that it will increase the overtime-wage threshold to $35,308 per year from the current $23,660 per year.

The change would mean that workers who make less than $35,000 a year would be considered non-exempt and eligible for overtime pay no matter what their current classification. So, employers with exempt employees earning between $23,660 and $35,308 would need to reclassify them as non-exempt and pay them overtime if warranted or pay them at least $35,308 per year and provide them with sufficient duties to justify classifying them as exempt.

There are no proposed changes in the federal regulations to the white-collar duties test.

If adopted, the higher wage level will significantly increase the number of workers eligible for overtime pay. It does not appear as though the proposal will include any specific duty adjustments, but it remains possible. As part of the rule-making process, the DOL sent the proposal to the White House Office of Management and Budget in mid-January.

There is no clear timetable for when the draft regulation will be released or when it will take effect. Moreover, many groups on both sides of the issue are already talking about possible legal challenges, a process that could delay implementation by months or years.

It has been more than 15 years since the government changed the overtime rules.

Employers should remember in the meantime that paying an employee a salary does not make the employee exempt. Classification is nearly always about the duties.

Any employer questioning if one or more of its employees is currently misclassified or should be reclassified, needs to take the time to review the employee’s current duties to see if they meet the law’s requirements. While there is some degree of nuance in interpretation in deciding whether an employee is exempt, an employer needs to be able to justify its classification if challenged.

DOL has detailed information on its Web site.

If you have any questions about this or any other HR matter, please contact the AIM  Employer Hotline at 1-800-470-6277.

Topics: Employment Law, Overtime, Fair Labor Standards Act

Business Confidence Rebounds in February

Posted by Christopher Geehern on Mar 5, 2019 8:30:00 AM

Business confidence rebounded modestly during February as optimism about the state and national economies outweighed a darkening outlook among Massachusetts manufacturers.

BCI.February.2019The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 0.5 points to 58.2 after dropping in January to its lowest level since October 2016. Confidence remains within optimistic territory but has lost 6.8 points during the past 12 months.

The February increase was driven by a 3.4-point jump in employer views of the state economy and a 3.3-point rise for the national economy. The government announced last week that the US economy grew at a 2.9 percent rate in 2018, matching 2015 as the biggest increase since the end of the 2007-2009 Great Recession.

“Employers remain generally optimistic about a state economy that continues to run at full-employment levels and a US economy that is projected to grow by 2.2 percent this year” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, the erosion of confidence among Massachusetts manufacturers during the past 12 months raises some concern about the long-term sustainability of the recovery.”

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

The constituent indicators that make up the overall Business Confidence Index were mostly higher during February.

The 3.4-point increase in the Massachusetts Index assessing business conditions within the commonwealth left that indicator at 60.8. Confidence in the Massachusetts economy has declined 7.7 points since February 2018.

The U.S. Index measuring employer sentiment about the national economy rose to 56.0, its highest level since November. The reading was still 10.9 points less than a year ago.

Employer views about the future were more optimistic than the present for the first time in 11 months. The Current Index, which assesses overall business conditions at the time of the survey, fell 0.5 points to 57.7 while he Future Index, measuring expectations for six months out, increased 1.5 points to 58.7.

Non-manufacturers (61.7) were significantly more confident than manufacturers (53.3). Large companies (62.3) were more optimistic than either medium-sized companies (57.1) or small companies (55.2). Companies in Eastern Massachusetts (59.6) continued to be more bullish than those in the west (56.3).

“Employers last month welcomed several developments, including the end of the government shutdown and the Federal Reserve’s decision to pause increases in interest rates,” said Sara L. Johnson, Executive Director, Global Economics, IHS Markit and Vice Chairwoman of the BEA.

“The overall picture of business confidence reflects the economy itself – slowing a bit but still strong overall.”

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said the comments provided by employers on the February AIM Business Confidence Index Survey show that many companies remain bullish about 2019, while others remain concerned about issues ranging from gridlock in Washington to the persistent shortage of skilled employees.

“There are plenty of mixed signals 10 years into the economic recovery,” Lord said.

“Massachusetts employers face rising wage costs, rising raw-material costs and the challenge of integrating new public-policy mandates such as an increased minimum wage and paid family and medical leave. It’s the right time in the business cycle for state and federal government to follow the lead of the Federal Reserve and pause the imposition of expensive new initiatives.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

AIM Submits Comments on Proposed Paid Leave Regulations

Posted by Brad MacDougall on Mar 4, 2019 9:00:00 AM

Associated Industries of Massachusetts (AIM) today submitted to state regulators recommendations intended to clarify the impending rules for paid family and medical leave.

The recommendations range from aligning the definitions of paid leave with those of the federal Family and Medical Leave Act (FMLA) to defining the conditions under which employers may opt out of the state program and use a private insurance plan. More than 500 AIM member employers submitted comments to the association while the state Executive Office of Labor and Work Force Development conducted listening sessions on the issue.

TimelineAIM also suggested for the first time the possibility of postponing the July 1 implementation of contributions to paid family and medical leave if the system is not ready.

“Our overriding objective throughout this process is to ensure that the new program is launched efficiently, with minimal confusion or disruption for employers or their employees.  We are particularly concerned for our smaller employers for whom any new state mandate is challenging given their staffing levels,” AIM Executive Vice President John Regan noted in his comments to the new Department of Family and Medical Leave.

“Keeping this in mind, we are committed to staying in close communication with you, the Legislature, and the advocates with whom we have worked previously regarding the need for some delay which would ensure a first-class launch of this important program.”  

Regan commended state officials for listening to the suggestions of employers and others before developing draft regulations for the leave law passed by the Legislature and signed by Governor Baker last year. The administration has conducted listening sessions in Boston, Springfield, Lawrence, Worcester, Greenfield, Hyannis, Fall River and Pittsfield, with more sessions scheduled this week in Northbridge and Fitchburg.

The sweeping paid leave law provides workers with 12 weeks of family leave and 20 weeks of personal medical leave. Workers on paid leave will earn 80 percent of their wages up to 50 percent of the state average weekly wage, then 50 percent of wages above that amount, up to an $850 cap.

“Ensuring that these regulations provide clarity for employers and employees about how this new law will be implemented by the agency and operationalized by employers is a monumental task both for state government and the private sector.  We must continue to work collaboratively to get this right, because the risk of getting it wrong is intolerable,” Regan wrote.

AIM’s comments offer 12 specific suggestions:  

  1. Alignment with FMLA: Definitions wherever possible should be aligned with those of the FMLA to lessen compliance burdens. Using FMLA definitions makes it easier for employers and employees to avoid confusion.  It was agreed during legislative negotiations last year that definitions should be aligned with FMLA, especially because significant case law and clarity around law is already available.
  2. Private-plan option:  More clarity should be given to how this provision would work, including when aplan would need to be approved and what employers are to do if private plans are not available by July 1.
  3. Abuse: As proposed, the definitions, and other aspects of the proposed regulations, must set clear expectations for both the employer and employee and must provide clarity regarding employers' ability to address abuse. 
  4. Former employee coverage: The bill states that former employees have the right to job-protected leave and that they can take that leave on an intermittent or reduced schedule.  How does that work when they are no longer employed? Accruals:  As proposed, the regulations would allow an individual to accrue benefits while on leave, which is different than the earned sick time regulations and different from standard practices.
  5. Covered Individual:  As proposed, many temporary workers, vendors and subcontractors with their own companies being issued a 1099 will be captured by this and possibly required to make double payments.
  6. Benefit tracking and stacking: Regulations must provide clarity regarding how an employer can track the leave and make clear that benefit stacking with unemployment, workers compensation insurance and other benefits is not permitted.
  7. Job protection:  The law provides for job protection, which was enabled by the statute.  However, there are several instances, especially in temporary work, where back-filling and rapidly changing business environments would create an enormous cost and compliance burden.
  8. Health insurance contributions while on leave:  As proposed, the regulations do not provide a mechanism for employees to contribute to ongoing health-care coverage or a process by which an employer may transition and employee from current health-care coverage to COBRA per current practices. 
  9. Multiple employers: How will benefits be administered when an employee is employed on a part-time basis by two or more employers? Specifically, when one employer opts out of the state program and the other does not.
  10. Payroll Tax:May employers elect to cover the employee portion of the payroll tax for some classes of employees but not all classes of employees? 
  11. Timing of payroll tax: Large employers typically pay insurance premiums on or about the month for which the insurance coverage applies. The pre-payment of the payroll tax is problematic in the sense that it will be impossible for an employer to know if they are going to self-insure or use a private plan for January 1, 2021 by July 1, 2019. Likewise, insurance companies will not have developed private plans in time for July 1, 2019
  12. Appealing a Private-Plan Denial:allowing individuals to appeal private plan denials will result in all private plan denials being appealed, thus reducing the administrative efficiencies of offering private plans. 

AIM submitted to the state a relined version of the proposed regulations with all the comments proposed by AIM members.

Employers who wish to review the relined document or who wish to receive regular updates on paid family and medical leave may contact Brad MacDougall, bmacdougall@aimnet.org.

Topics: Regulation, Mandated Paid Leave, Paid Family Leave

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