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10 Things Employers Need to Know about Paid Family/Medical Leave

Posted by Brad MacDougall on Jan 31, 2019 10:42:45 AM

The Baker Administration last week published draft regulations for implementation of paid family and medical leave in Massachusetts.

Pregnant2-1Paid family and medical leave were approved by the Legislature and signed by Governor Charlie Baker last year as part of the so-called Grand Bargain between the advocacy group Raise Up Massachusetts and the business community. The newly published regulations represent the “rules of the road” that employers and workers will follow as the law takes effect beginning in July.

AIM has been working for months with the Executive Office of Workforce Development to address employer concerns about what will be a major new benefit program. More than 700 AIM members with an interest in paid family and medical leave are currently reviewing the draft regulations and formulating comments.

The state is conducting seven listening sessions though February 19 to provide employers and others an opportunity to comment on the draft regulations.

In the meantime, here are 10 facts that employers need to know about paid family and medical leave as outlined in the draft regulations:

  1. When it begins

    On July 1, employers and/or their workers must begin to pay 0.63 percent of all wages or other qualifying earnings or payments into the Family and Employment Security Trust Fund. Employees may take family or medical leave beginning January 1, 2021.

  2. Who pays?

    The employer is required to pay at least 60 percent of the medical leave contribution required for each employee. The employer is required to pay none of the contribution for family leave. Employers may, of course, pay a higher percentage for each category of leave or elect to pay the entire contribution for each employee. The employer may deduct the medical leave and family leave contributions directly from wages or other qualifying payments made to the employee or individual. Companies employing an average of fewer than 25 employees in Massachusetts will not be required to pay the employer portion of premiums for either family or medical leave.

  3. Surprise contribution for employees?

    Employers who elect to pay less than the entire family and medical leave contribution will need to communicate to employees the news that an additional several hundred dollars will be deducted from their paychecks each year. Few employees realize they may be required to pay into the family and medical leave system.

  4. How much leave?

    Beginning January 1, 2021, covered individuals are eligible for up to 26 total weeks, in the aggregate, of family and medical leave in a benefit year.

    Beginning January 1, 2021, covered individuals are eligible for up to 12 weeks of family leave in a benefit year for the birth, adoption, or foster care placement of a child, or because of a qualifying exigency arising out of the fact that a family member is on active duty or has been notified of an impending call to active duty in the Armed Forces.

    Beginning January 1, 2021, covered individuals are eligible for up to 26 weeks of family leave in a benefit year to care for a family member who is a covered service member.

    Beginning January 1, 2021, covered individuals are eligible for up to 20 weeks of medical leave in a benefit year if they have a serious health condition that incapacitates them from work.

    Beginning July 1, 2021, covered individuals are eligible for up to 12 weeks of family leave to care for a family member with a serious health condition.
  1. The pay in paid leave

    An individual’s paid family or medical leave weekly benefit amount is calculated as follows: (a) The portion of an individual’s average weekly wage that is equal to, or less than, 50 percent of the state average weekly wage is replaced at a rate of 80 percent; the portion of an individual’s average weekly wage that is more than 50 percent of the state average weekly wage is replaced at a rate of 50 per cent. The initial maximum weekly benefit amount is $850. Thereafter, the maximum weekly benefit amount for any individual will be 64 percent of the state average weekly wage.

  2. We are family

    The regulations define a family member as a spouse, domestic partner, child, parent or parent of a spouse or domestic partner of the covered individual; a person who stood in loco parentis to the covered individual when the covered individual was a minor child; or a grandchild, grandparent or sibling of the covered individual.

  3. Intermittent leave

    An employee may take family or medical leave on an intermittent basis for family leave to bond with a child during the first 12 months after the child’s birth, adoption, or foster care placement, but only if the employer and employee agree to it. Employees may also take intermittent family leave if medically necessary to care for a family member’s serious health condition; to care for a family member who is a covered service member, or for or the employee’s own serious health condition.

  4. Contractors

    An employer with a work force that is more than 50 percent self-employed individuals whose compensation is recorded on Internal Revenue Service form 1099-MISC shall treat those self-employed individuals as employees for the purposes of determining a company’s number of employees under the paid family and medical leave law.
  1. Exemptions

    An employer with an existing, private benefit plan that confers the same rights, protections and benefits provided under the state program make apply for an exemption from the public plan. An employer may apply for exemptions from medical leave coverage, family leave coverage, or both.

  2. Self-employed people

    A self-employed individual may elect coverage and become a covered individual for an initial period of not less than three years. A self-employed individual who elects coverage is responsible for the full contribution amount, based on that individual’s income from self-employment. If a self-employed individual elects coverage and fails to remit contributions owed for at least three years, the self-employed individual will be disqualified from electing coverage thereafter.

Want regular updates on paid family and medical leave in Massachusetts? Please contact Brad MacDougall at bmacdougall@aimnet.org

Topics: Paid Family Leave, Employment Law, Massachusetts employers

Few Employers Change Drug Tests with Legal Marijuana

Posted by Tom Jones on Jan 30, 2019 8:30:00 AM

Drugtest1.2019Only 10 percent of employers plan to change their drug-testing policies now that recreational marijuana is legal in Massachusetts, a new Associated Industries of Massachusetts survey shows.

The member survey, conducted by AIM HR Solutions, found that two-thirds of the 52 Massachusetts employers who participated say they drug-test employees or job candidates. Three quarters of the companies that conduct drug tests do so for marijuana (THC).

Kyle Pardo, Vice President of Consulting Services for AIM HR Solutions, said the limited number of companies planning to change their marijuana testing policies reflects widespread uncertainty among employers as legal cannabis impinges on the idea of a drug-free workplace.

“Testing detects the presence of marijuana long after an employee may have used the drug during non-work hours. But there is no clear test to determine whether or not that employee is impaired and may represent a danger to co-workers or customers,” Pardo said.

Drugtest2.2019“It has created a confusing situation for employers.”

Recreational marijuana became legal in Massachusetts in 2016 and retail pot dispensaries began to open throughout the state at the end of last year.

Massachusetts law does not require any accommodation of on-site medical or recreational use of marijuana in any workplace or permit employees to come to work under any controlled substance. A recent Massachusetts Supreme Judicial decision requires employers to address an employee with a medical marijuana card in the same manner as those using any other lawfully prescribed medication.

Adding to the confusion is that employers in some federally regulated industries such as trucking and transportation, as well as many federal contractors are required to drug-test employees. Marijuana remains illegal under federal law.

Pardo recommends that employers make sure their hiring process and progressive discipline policy contain information on the drug testing policy and that applicants and employees sign for and acknowledge their understanding of such processes and policies.

Topics: Employment Law, Marijuana, Massachusetts employers

Hold Your Applause on Supreme Court Arbitration Decision

Posted by Tom Jones on Jun 4, 2018 1:04:23 PM

supremecourt.smallThe decision by the United States Supreme Court last week upholding the use of arbitration agreements to prohibit class-action lawsuits generated widespread cheering in the business community.

But employers would be well advised to hold their applause. 

That’s because this Supreme Court decision is unusual in that it does not draw a bright line making it clear what employers may or may not do. It simply opens the door for employers to pursue mandatory arbitration as an option.

Most importantly, the decision does not allow employers to use arbitration agreements to escape the “onerous” aspects of legally established remedies.

The court has made clear that while arbitration involves a change of forum from the courts to the private arbitration arena, and an elimination of class actions, it does not change workers’ substantive rights. Arbitrators must apply the same law that a court would apply and award the same substantive remedies for proven violations.

Employees will still be able to file a claim for nonpayment of wages, sexual harassment, or other adverse consequence at work.  They just won’t be able to do it as a class action.

The best advice to employers any time they face a new legally justified option - take time to weigh the options before moving ahead.  

The Supreme Court ruled that companies may use arbitration clauses in employment contracts to prohibit workers from banding together to take legal action over workplace issues. The vote was 5 to 4, with the court’s more conservative justices in the majority. The court's decision could affect some 25 million employment contracts.

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

The ruling does not necessarily invalidate Massachusetts law on the topic of arbitration.

For example, a Massachusetts case from a few years ago centered around an arbitration waiver agreement that prohibited plaintiffs' recovery of multiple damages in any arbitration proceeding - a provision that directly conflicted with the Massachusetts mandatory treble damages law.

In 2013 the Massachusetts Supreme Judicial Court (SJC) declared the waiver of multiple damages in the arbitration agreement unenforceable, ruling that the FAA (Federal Arbitration Act) did not preempt the SJC from holding that waiver of multiple damages in these circumstances is void as contrary to Massachusetts public policy.

Given that arbitration is really a procedural strategy, there are many questions you should consider before adopting a change in your company’s practices. Some questions to ask yourself as a company include:

  • How will arbitration be a benefit to us?
  • How much will it cost to use it?
  • What is the potential cost vis-a-vis the likely benefit?
  • Will we be better off as an employer with such a policy in place?
  • If so, how?
  • How often do we get sued?
  • What issues do we get sued for? Wages? Discrimination?
  • If or when we do get sued, what is our success record under the current rules?

Consider that in discrimination cases filed at the Massachusetts Commission Against Discrimination (MCAD), the agency found “Lack of Probable Cause” (i.e. the case was dismissed) in 87 percent of the cases filed, according to its most recent annual report. Are you likely to do any better with an arbitrator?

One other thing to keep in mind is that federal and state administrative agencies, such as the Equal Employment Opportunity Commission (EEOC) or MCAD, are not bound by private arbitration agreements; they are able to sue over statutory rights where private claimants may not bring a case.

Before jumping on the bandwagon of arbitration, you need to engage in due diligence to see if it makes sense for your company.

Topics: Employment Law, U.S. Supreme Court

Legislature Tightens Access to Criminal Records; Adds Employer Protection

Posted by Brad MacDougall on Apr 4, 2018 4:46:57 PM

The Massachusetts Legislature today passed a criminal-justice reform bill that narrows the ability of employers to research the criminal records of job applicants, but also provides legal protection from negligent-hiring claims to companies that are unable to view a sealed criminal record.

ScalesofJusticeVerySmallThe state Senate and House of Representatives both passed the measure with overwhelming majorities. It now goes to Governor Charlie Baker, who has 10 days to sign or veto it.

Inclusion of the negligent-hiring provision grew out of discussions brokered by AIM last summer between sponsors of the bill and employers who rely upon criminal background checks through the Massachusetts Criminal Offender Records Information (CORI) system.  The provision protects employers that conduct background checks and end up hiring individuals with criminal records that are sealed, expunged, or no longer available to employers. 

Key elements of the reform bill for employers include:

  • Accelerates the ability of offenders to seal records from 10 years to seven years for felonies and from five years to three years for misdemeanors.
  • Raises the threshold that defines felony larceny from $250 to $1200, thus classifying more cases as misdemeanors that can be quickly sealed or expunged.
  • Assures that cases dismissed before arraignment do not appear on criminal records.
  • Assures that youthful offender cases tried in juvenile court are treated as juvenile instead of adult CORI.
  • Allows expungement of non-serious cases up to age 21 (both juveniles and young adults).
  • Prevents employers from inquiring about sealed or expunged cases.

Organizations that serve vulnerable populations, such as school systems or nursing homes, would continue to have broader access to criminal records.

AIM members with questions about the status of the legislation should contact Brad MacDougall at bmacdougall@aimnet.org. Members with questions about how the measure will affect their companies should call the AIM Employer Hotline at 800-470-6277.

Topics: CORI, Human Resources, Employment Law

AIM Weighs In On Key Employment-Law Issues

Posted by Brad MacDougall on Jan 12, 2018 12:48:37 PM

Associated Industries of Massachusetts weighed in yesterday on 73 bills pending before a key legislative committee considering employment-law issues ranging from independent contractors to the use of non-compete agreements.

State House 2015.jpgThe association delivered  a letter to members of the Joint Labor & Workforce Development Committee as the panel approaches a February 7 deadline to report out bills with either a positive or negative recommendation. AIM supports 29 bills now before the committee and opposes 44.

Among the measures that employers support are bills streamlining the complex definition of an independent contractor and compromise limitations on non-compete agreements that recognize the fact that employers often compensate workers for signing such agreements.

AIM opposes bills that would establish paid family and medical leave, increase the minimum wage, and impose vicarious liability for wage violations on any company that hires subcontractors. AIM also opposes legislation (S.1013) that would create civil liability and define workplace bullying.

“The February 7 deadline for Beacon Hill committees to report out bills under the Legislature’s Joint Rule 10 signals the start of a critical period for employers and the issues that affect them,” said John Regan, Executive Vice President of Government Affairs at AIM.

“There will be a flurry of activity between now and the end of the two-year legislative session on July 31. Employers need to pay close attention since important bills often move quickly during this period.”

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.

On non-compete agreements, AIM has fought relentlessly for several years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-competes to protect intellectual property. The association supports a compromise that would limit non-competes to one year and give employees the opportunity to consult a lawyer when signing a non-compete, but not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

AIM also supports a group of measures intended to address discrimination and harassment in the workplace. One bill would allow employers to ask previous employers questions about an applicant’s work history (H.1046), while a second would encourage employers to engage in voluntary training regarding non-discrimination (H.1037/H.1047) and third would rewrite a highly confusing and problematic statute that makes adding disciplinary matters to a personnel record difficult (H.1049/S.1044).

The paid family and medical leave and minimum wage initiatives opposed by employers mirror similar measures headed to the statewide ballot in November. A third ballot question would create a constitutional amendment imposing a 4 percentage-point surtax on incomes of more than $1 million for thousands of subchapter-S and other pass-through business in Massachusetts.

AIM President and Chief Executive Officer Richard C. Lord and four other prominent business leaders are challenging the proposed tax amendment in court.

Please contact me at bmacdougall@aimnet.org for more information on any of these issues.

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

Reduced Employer Access to Criminal Records Harms Ex-Offenders

Posted by Brad MacDougall on Nov 13, 2017 8:00:00 AM

Update: The Massachusetts House of Representatives passed a comprehensive criminal justice reform bill last week that will narrow employer access to the criminal records of job applicants. AIM believes such restrictions will hurt the very ex-offenders they are designed to help. 

It also seeks to expunge some offenders’ criminal records. Both the House and Senate bills would allow convictions to be sealed after seven years for a felony and three years for a misdemeanor, down from 10 and five years today.

The House bill would also allow someone to seal a conviction for resisting arrest, which currently cannot be sealed.

The House bill expands the ability for someone who had a record sealed to be able to say he has no record in applications for housing or professional licenses.

The House and the Senate will next convene a committee of conference to negotiate the differences in the two pieces of legislation and then send it to Gov. Charlie Baker’s desk.

AIM told members of the state House of Representatives this morning that  the proposed narrowing of employer access to the criminal records of job applicants will reduce employment opportunities for former offenders.

ScalesofJusticeVerySmall.jpgAIM is concerned about language in a criminal justice reform to be debated today that would make access to information through the Criminal Offender Record Information (CORI) more difficult by sealing records and limiting access.

AIM believes the changes would harm the very people those the measure is designed to help.  Without access, employers are left without relevant information about potential hiring decisions. Restricting an employer’s access to information has been shown to hinder job applicants and employer’s ability to maintain a safe workplace. 

The commonwealth’s largest employer association has provided feedback in a number of ways during the current legislative session. AIM sent letters to the Joint Committee on the Judiciary on April 28, 2017 and on July 17, 2017, and also hosted a briefing on this topic with the legislative sponsor and AIM members.

AIM appreciates that those and other conversations resulted in the inclusion of a negligent-hiring provision contained in SECTION 87 subsection 100S of the proposed reform bill.  AIM is also supportive of a provision that would enable the commonwealth to move towards fingerprinting and exchanging data with the National Criminal Information Center (NCIS) to ensure that records are accurate and connected to the correct person.

The Massachusetts Senate approved its own version of criminal justice reform on October 26.

AIM is concerned about the following provisions:

Sections 81-86 and 87: Sealing and Expungement of a Criminal Record: As proposed, the language would reduce the wait time to seal a misdemeanor conviction from five years to three years and a felony conviction from 10 years to seven years.  To address this AIM supports:

  • Amendment #50 to remove sealing and expungement provisions
  • Amendment #132 to allow employers that have employees with access to financial information, cash instruments and vulnerable populations to retain access to five years of misdemeanors and 10 years for felony convictions as currently provided under law
  • Amendment #134, to provide employers with six months to make changes to job applications, internal policies and to conduct training for hiring managers

Section 84 and 87 Job Applications: This language requires employers to amend job applications to acknowledge the candidate’s proposed rights under the expungement provision.  Employers would be required to add the language from section 84 and section 87, which contains similar language for job applications.  To address this AIM supports:

  • Amendment #130 and #131, to retain currently proposed language into one paragraph to address a candidate’s rights regarding sealing and expungement.
  • Amendment #120, to provide employers with six months to a year to fully implement changes in job applications, internal policy documents and to conduct training for hiring managers.

AIM supports amendment #50 to strike the language and amendment #118, which would provide for six months for employers to be in compliance and conduct training for hiring managers.

Sections 49-56, 62: Felony Thresholds: This language will make it challenging for employers to address growing concerns with larceny and ongoing threats related to personal information and credit card fraud.  AIM supports amendment #126, which would strike these provisions.

Takeaways:

 

 

Topics: Massachusetts House of Representatives, CORI, Employment Law

AIM, Citing Safety Concerns, Opposes Criminal Justice Bill

Posted by Brad MacDougall on Oct 25, 2017 10:00:00 AM

Associated Industries of Massachusetts (AIM) this morning announced its opposition to the state Senate’s criminal justice reform bill because the measure would unduly restrict the ability of employers to ensure the safety of employees, customers and others in the workplace.

ScalesofJusticeVerySmall.jpgThe proposed legislation will, in fact, harm the very people the proponents of the bill seek to help. AIM-member employers met with the legislative sponsor of the bill in July and made clear that candidates for jobs are less successful in achieving gainful employment when employers have less information.

“An employer is more likely to hire an ex-offender when that employer has the information available to make a balanced decision,” said John Regan, Executive Vice President of Government Affairs at AIM.

AIM has a long history of involvement with efforts to balance the need for employers to conduct responsible criminal background checks with the ability of offenders to find employment.

The association helped to forge the 2009 Criminal Offender Records Information (CORI) legislative compromise and worked on the recent regulatory changes to CORI. The business community made significant concessions in the 2009 bill, but the current legislation goes far beyond what employers agreed to in 2009.

Employers believe that criminal background checks are necessary to ensure that the company or institution is complying with state and federal regulations, in addition to international standards. These standards apply for a variety of businesses including hospitals and financial institutions.

Employers also believe that inability to access criminal histories makes companies vulnerable to claims for everything from negligent hiring and failure to meet regulatory obligations to failure to protect client data and failure to protect visitors from harm.

“Employers face significant risk and legal liability for hiring and retaining employees who pose a risk. As written, the legislation does not acknowledge that employers would still be responsible for negligent hiring and negligent retention without a waiver of liability,” Regan said.

The Senate is expected to debate S.2185 and several amendments tomorrow.

Takeaways:

 

Topics: CORI, Employment Law, Massachusetts senate

Employers Renew Commitment to Pay Equity

Posted by Joanne Hilferty on Oct 20, 2017 8:30:00 AM

Editor's Note - Joanne Hilferty is President and Chief Executive Officer of Morgan Memorial Goodwill Industries in Boston and a member of the AIM Board of Directors.

Massachusetts employers say they are committed to accelerating the modest progress they have made to close the gender pay gap.

Fourpeople.jpgScores of business leaders shared challenges and success stories recently at the third annual Boston Women’s Workforce Council (BWWC) Best Practices Conference at the Colonnade Hotel in Boston. Associated Industries of Massachusetts is a signatory to the Boston 100 Percent Talent Compact developed by the Council, Boston University and the City of Boston to ensure that men and women enjoy equal compensation opportunities in the work force.

Several prominent members of AIM have also signed the document, including Blue Cross Blue Shield of Massachusetts, Boston Children’s Hospital, Eastern Bank, Eversource, Harvard Pilgrim, MassMutual, MORE Advertising, National Grid, Putnam Investments, Staples and State Street Corporation. I am proud to say that the organization I lead, Morgan Memorial Goodwill Industries, is also a signatory.

Companies that sign the compact commit to reviewing their compensation practices to ensure fairness. These companies provide compensation data anonymously to researchers at Boston University who use it to develop a broad assessment of wage equality in Massachusetts. 

“AIM signed the Compact because Massachusetts employers operate in a competitive, talent-driven economy in which companies that reward skilled workers equally will come out on top,” said Rick Lord, President and Chief Executive Officer of AIM.

“Wage equity will ultimately be driven by the marketplace, which is desperately short of the employees needed to drive economic growth in the next decade.”

The 2017 Best Practices Conference drew more than 220 participants.

Business leaders noted that companies looking at signing the compact have expressed concern about the need to guarantee the confidentiality of any compensation data they provide to the project. Council executives say they can guarantee confidentiality but need to better communicate that point to employers.

The conference also provided an opportunity for the BWWC’s Co-Chairs, Cathy Minehan and Evelyn Murphy, to share the highlights from the 2017 data analysis, the full results of which will be published in the organization’s 2017 report, out later this year.  The key takeaway was that there has been some progress – albeit limited – in addressing the wage gap.

Governor Charlie Baker last year signed a compromise pay-equity law that is intended to promote salary transparency while recognizing legitimate market forces such as performance and the competitive landscape for certain skills that cause pay differences among employees.  AIM supported the compromise.

Topics: wage equity, Massachusetts employers, Employment Law

Infographic: Paid Leave Law Raises Benefit Costs by 87 Percent in California

Posted by Brad MacDougall on Jun 26, 2017 8:30:00 AM

The Massachusetts Legislature is considering a paid leave bill that would establish the right of employees to receive job-protected paid family and paid medical leave.  Benefits would include up to 16 weeks of paid family leave, and 26 weeks of paid medical leave.  Weekly benefits would begin at 50 percent of the employee’s weekly wage and capped at $1,000 per week.

But benefit costs would accelerate quickly if the bill becomes law. The 50 percent salary replacement level required at implementation in January 2019 would increase to 90 percent by January of 2021.

How fast will costs increase? Consider the following information about California's decade-old paid family leave law:

Paid Leave.jpg

 State of California
Labor and Workforce Development Agency

Register for the Paid Leave Webinar

 

Topics: Paid Family Leave, Employment Law, Mandated Paid Leave

Paid Leave Proposals Not Reasonable or Manageable

Posted by John Regan on Jun 13, 2017 1:00:00 PM

Editor’s Note: The following testimony opposing paid leave was delivered to the State House by AIM today. The testimony was provided to the Joint Committee on Labor and Workforce Development regarding HB 2172 and SB 1048.

My name is John R. Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts (AIM.); the state’s largest nonprofit, nonpartisan association of Massachusetts’ employers.

StateHouse-resized-600.pngWith thousands of members employing nearly one out of every five workers in Massachusetts, AIM’s mission is to promote the well-being of its members and the prosperity of the Commonwealth of Massachusetts by improving the economic climate, proactively advocating fair and equitable public policy, and providing relevant, reliable information and excellent services.

Thank you for the opportunity to present our testimony today.

We respectfully ask that HB 2172, SB 1048, and any similar bills receive adverse reports from this Committee.

We agree with the proponents of these bills that Massachusetts’ citizens need to balance the needs of work and family. In fact, according to the 2016 AIM Benefit Survey, 87% of responding companies offer short-term disability to their employees with benefits ranging from 51 to 70% salary replacement; 79% offer long-term disability insurance and 59% have a leave of absence policy, all in addition to the leave benefits under FMLA.

However, we do not agree, and do not believe, that the legislation before you is a reasonable, manageable, or affordable approach to address those needs, either from an employee or employer perspective.

Last session, we asked a series of questions that we would like to ask this Committee again.

We strongly believe that the Committee should have answers to each of these questions before any bill can be reasonably released from your consideration. (For this portion of our testimony, we will be using section references to the language of Senate 1048. Similar language and concepts are found in the House bill as well.)

  • Section 2, of the proposed new Chapter 175M, creates a new office within the Executive Office of Labor will be created to administer the new leave program for the Commonwealth; does the Committee know the costs associated with this new office?1
  • Sections 3 & 4 creates the benefit durations and levels of wage replacement for the leave program; does the Committee know what the estimated take-up rate is for individuals taking both the maternity leave and disability leave? For cost estimating purposes, take-up rates per program are critical to know.
  • Further, what is the Committee’s estimate of the total program costs incurred by employers and the Commonwealth for administering this program and providing these new benefits?2
  • In Section 8, the director of the fund is charged with “assessing” the tax to fund this new program. Is this Committee aware of any precedent for the creation of this type program as well as the power to set and raise revenue by a non-elected individual? Are we sure that this is constitutional?
  • The director will become responsible for numerous operational duties in managing the funds related to this bill. Is there a cost estimate for this function?
  • In addition, has anyone determined what the tax assessment per employee might be for this program and, if so, could we see that analysis?3
  • Lastly, the bill requires that claims for family and medical leave benefits shall be filed with the department and handled under the procedures prescribed in sections 1, 10, 11, 12, 14, 15, and 16 of chapter 30A. Is there an estimate of the number of claims to be adjudicated and the costs for that process?4

The terms of this legislation are far-reaching. Although the initial implementation in January of 2019 would require 50% salary replacement levels, that level is increased to 90% by January of 2021 and the average weekly wage is then tied to the Consumer Price Index for the Boston-Cambridge-Quincy consolidated metropolitan statistical area. Not only is this an extraordinarily high rate of compensation, but it also derives the wage rate from on the area of the Commonwealth with the most expensive cost of living. This will not accurately reflect the economic complexity of different areas in Massachusetts, placing an undue burden on employers and employees living in less costly areas.

Of late, many have wondered why with a recovered economy and lower unemployment rates Massachusetts own-source revenue continues to fall below even relatively conservative benchmark levels. One reason cited by our members is lack of wage growth.

According to the Pew Charitable Trust, personal income growth in Massachusetts has only grown by 2.0% since Q4 of 2007.5 Employers in the Commonwealth are faced with considerable non-wage job costs for health care, unemployment insurance, workers compensation insurance, and other Massachusetts-only high costs, like electricity rates. Combine these with higher than average base wage costs, and you restrict employers’ ability to raise wages in a manner similar to other post-recessionary recovery periods.

Inevitably and necessarily, this lack of wage growth affects tax revenue growth for Massachusetts.

A new, and expensive paid family and medical leave program, as envisioned by these bills, will contribute to a diminished pool from which to fund additional jobs and additional wage growth.

Register for the Paid Leave Webinar

Topics: Employment Law, Mandated Paid Leave, Paid Family Leave

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