AIMBlog_Logo_Resized

Leaders Agree to Delay Start of Paid Leave Assessments

Posted by Brad MacDougall on Jun 11, 2019 6:10:21 PM

Governor Charlie Baker on Thursday signed legislation that will extend by three months the July 1 starting date for contributions to the new Massachusetts paid family and medical leave program.

Baker, along with House Speaker Robert DeLeo and Senate President Karen Spilka, had committed to a delay on Tuesday.

statehousedome"To ensure businesses have adequate time to implement the state’s Paid Family and Medical Leave program, the House, Senate, and Administration have agreed to adopt a three month delay to the start of required contributions to the program. We will also adopt technical changes to clarify program design. We look forward to the successful implementation of this program this fall,” read a joint statement issued by the three leaders.

The action comes three weeks after AIM, Raise Up Massachusetts and other groups sought a delay to permit employers, employees and the marketplace to prepare for the sweeping new benefit approved last year. AIM and its 3,500 members are particularly concerned about the lack of clarity surrounding opt-outs and cost sharing with employees.

The delay will not reduce total contributions paid to the new family and medical leave trust fund because the state will increase the contribution rate from .63 percent to .75 percent of wages. The new contribution rate will raise the tax for an employee earning the state average weekly wage from $872 per year to $1,038 per year.

Workers will be able to access paid leave benefits beginning in January 2021.

“Associated Industries of Massachusetts (AIM) and its 3,500 member companies are gratified that the governor, House speaker and Senate president today committed to a three-month delay in the start of the paid family and medical leave program. The decision will allow employers and workers alike to prepare themselves for the era of paid leave and ensure that this landmark initiative gets off the ground successfully,” said John Regan, President and CEO of AIM.

“The state’s top elected leaders deserve tremendous credit for recognizing the need to adjust the timing of the program’s capitalization and to make minor adjustments to the law that was passed last year. AIM is also grateful to the 52 state legislators who sent letters to Beacon Hill leaders urging them to take this action.”

The proposed adjustments to the law include five amendments intended to provide clarity on issues such as intermittent leave and the definition of “serious medical condition.” The clarifying amendments will also align core principles of the Massachusetts paid family and medical leave law with the federal Family and Medical Leave Act (FMLA).

AIM-member employers sent more than 2,500 messages to Governor Charlie Baker and Beacon Hill leaders last month indicating that they do have adequate time or information to make decisions about how to much of the paid leave assessment to share with employees or whether to elect a private-sector alternative to the state program. One company wrote that it has been trying to determine how to implement the new law while preserving the paid medical leave benefit that it already offers its associates because it is more generous than the state law.

“I have contacted insurance companies to get a cost estimate for a paid family leave policy in order to determine our best course of action on that part of the law, but no one is ready to quote a product yet.   We don't even know if the deductions from employees pay should be pre- or post- tax,” the company wrote.

Joining AIM and Raise Up in calling for a delay were the Greater Boston Chamber of Commerce, The Coalition for Social Justice, Local 509 of the Service Employees International Union, Greater Boston Legal Services, The Massachusetts Business Roundtable, the Alliance for Business Leadership and the Springfield Regional Chamber of Commerce.

The administration attempted to allay employer concerns last month by extending the deadline for employers to secure private insurance that would allow them to opt out of the paid leave system. The administration also extended the deadline for employers to inform workers about opt-out plans from May 31 to the end of June.

The business and advocacy groups commended the administration’s efforts but said they will not solve the problem.

“Given the lack of employer clarity on the regulations, the importance of communicating with employees regarding payroll deductions, and the ability for insurance providers to offer a private-sector option, we continue to support and urge legislative action on the proposed amendment extending the deadline for private plan approvals and the commencement of required contributions from July 1, 2019, to October 1, 2019…” the group wrote.

The paid family and medical 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.

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 business community remains committed to the successful implementation of paid family and medical leave in Massachusetts,” Regan said.

Want updates on paid family and medical leave in Massachusetts? Contact Brad MacDougall, bmacdougall@aimnet.org.

 

Topics: Massachusetts Legislature, Charlie Baker, Mandated Paid Leave, Paid Family Leave

Baker Administration Seeks to Address Critical Problem with Paid Family/Medical Leave

Posted by Brad MacDougall on May 1, 2019 4:21:11 PM

The Baker Administration today extended by almost three months the deadline for employers to secure private insurance that would allow them to opt out of the Massachusetts paid family and medical leave system.

State House 2015The administration also extended the deadline for employers to inform workers about opt-out plans from May 31 to the end of June.

Both changes are intended to address a looming problem that could have forced employers to decide whether or not to opt-out at a time when insurance companies have yet to offer private alternatives.

Associated Industries of Massachusetts, which has conducted extensive conversations with the administration on the issue, plans to survey its member employers to determine whether the extension provides enough time to make a responsible decision about their companies’ approach to paid leave.

The paid-leave law passed by the Legislature and signed by Governor Charlie Baker last year allowed companies to bypass the state PFML system if they maintain disability or other insurance policies that provide benefits equal to, or better than, the state program. But companies face a Catch-22 because private insurance companies, citing uncertainty about key elements of the paid-leave regulations, have yet to introduce policies that would qualify as alternatives.

Starting paid leave with no option for companies seeking a private alternative would have contravened the spirit of the 2018 paid-leave law and generated a storm of opposition from the business community.

“The original deadline did not provide enough time for insurance companies to develop effective alternatives to the state paid leave program for employers who want them,” said John Regan, Executive Vice President of Government Affairs at AIM.

“Employers who have for years voluntarily provided some form of paid leave should be able to continue those benefits in the private market.”

The administration plan would give employers until September 20 to file for a private-plan exemption from the state paid-leave system. Employers would need to show proof of insurance by September 20 to remain out of the public system. If the request for exemption is disapproved, employers must then make their first-quarter payment on Oct 1.

Employers are also in the process of deciding how to split the cost of the new program with employees.

Meanwhile, there is also uncertainty surrounding the issue of whether employee deductions will be made pre-tax or post-tax and whether the federal government will tax paid family and medical leave benefits when they become available in January 2021.

The Massachusetts Department of Family and Medical Leave today sent guidance to employers about the impending paid-leave deadlines and the tax issue.

The paid family and medical 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.

Companies and workers are scheduled to begin paying into a paid leave trust fund on July 1. The initial payroll tax is 0.63 percent and will be adjusted annually.  The payroll tax is divided between medical (0.52 percent) and family (0.11 percent) leave. 

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.

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.

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.

The law requires that companies seeking to opt out must have private insurance that offers:

  • Same number of job-protected weeks of leave
  • Equivalent wage replacement
  • Employee contributions no more than required by law

Sign up here to receive regular updates on paid family and medical leave in Massachusetts, or contact Brad MacDougall at bmacdougall@aimnet.org

Topics: Charlie Baker, Mandated Paid Leave, Paid Family Leave

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

'Grand Bargain' Reached on Paid Leave, Minimum Wage, Sales Tax

Posted by John Regan on Jun 20, 2018 11:18:45 AM

The Massachusetts Legislature will today consider a sweeping compromise between the business community and progressive groups on the issues of paid family and medical leave, minimum wage and a reduction of the state sales tax. 

StateHouse-resized-600The so-called “grand bargain” follows months of negotiations among employers, labor unions, community groups and legislators seeking to eliminate three potential November ballot questions – one asking voters to approve paid leave, a second to raise the minimum wage to $15 per hour and a third to reduce the sales tax from 6.25 percent to 5 percent.

Debate on the compromise comes two days after the Massachusetts Supreme Judicial Court disallowed a proposed constitutional amendment that would have imposed a surtax on incomes of more than $1 million and earmarked the money for transportation and education.

“AIM has worked diligently under difficult circumstances to get the best deal possible for Massachusetts employers on all three issues,” said Richard C. Lord, President and Chief Executive Officer of AIM.  “We commend the representatives of the Raise Up Coalition, other business groups, and the members of the General Court for working long and hard to reach an agreement.”

“While everyone gives something during a negotiation, we are satisfied and believe that our member employers are better off with a legislative compromise than with voter approval of the language of the ballot questions as drafted.” 

The compromise will phase in mandated paid family and medical leave over three years for all Massachusetts employers. AIM and other business groups negotiated reductions in the duration of family leave from 16 weeks in the proposed ballot question to 12 weeks, and of personal medical leave from 26 weeks to 20 weeks.

The cost of the program may be split between employers and workers, though the sharing arrangements are different based upon the type of leave and the size of a company.

More importantly, the compromise includes an opt-out provision for employers with programs that offer benefits greater than or equal to what an employee would receive in the state program.

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.

The compromise envisions that the Retailers Association of Massachusetts will drop its proposed ballot question on reducing the sales tax. In return, the compromise will phase out the requirement that retail workers earn time-and-a half for working on Sundays; create a permanent, two-day sales tax holiday; and will not include an automatic indexing provision of the minimum wage, currently $11 per hour and increasing to $15 per hour over five years.

The negotiations were carried out against the backdrop of polls indicating overwhelming support for all three ballot questions, not surprising given that the proposals appeared to offer something for nothing. Recent polls put support for the paid family and medical leave question at 82 percent and support for a $15 minimum wage at 78 percent.

Experts believe that a campaign to defeat questions with those sorts of poll numbers could cost $10 million per initiative. The ballot process is one-sided, winner-take-all. Coming to a legislative compromise avoids that by allowing a broader group of people to have input into key decisions to create policies that work for everyone.

AIM’s objectives for the negotiations were clear:

  • Encourage a legislative compromise that is balanced and fair, and that protects a strong Massachusetts economy.
  • Create programs that are accountable, have strong controls, and allow employers the flexibility to offer benefits that will attract and retain their employees.

Topics: Minimum Wage, Mandated Paid Leave, tax

Why We're Negotiating over Ballot Questions

Posted by Rick Lord on Jun 12, 2018 3:21:21 PM

Associated Industries of Massachusetts has been negotiating for more than six months to reach reasonable compromises on three potential ballot questions that collectively could wreak havoc on the Massachusetts economy.

Lord.SpeakingI write today to report on where we stand in those negotiations and how the outcome may affect your company and the 4,000 other employers who make up the largest employer association in the commonwealth.

The proposed ballot questions put forward by a coalition of unions and progressive groups would ask voters in November to:

  • mandate paid family and medical leave for Massachusetts employees;
  • increase the state minimum wage to $15 per hour; and
  • reduce the sales tax from 6.25 percent to 5 percent.

A fourth question, a constitutional amendment that would impose a 4 percentage-point surtax on incomes of more than $1 million, has been challenged by myself and four other prominent business leaders in the courts. The Massachusetts Department of Revenue estimates that 80 percent of the returns that would be affected by the surtax include some amount of business income.

We engaged in these negotiations for several important reasons.

First, the AIM Board of Directors and the larger membership of the association believed it was in the best interests of employers to pursue a negotiated settlement that might moderate the radical nature of the three initiatives.

Second, House Speaker Robert DeLeo and Senate President Harriett Chandler asked AIM, other business groups and sponsors of the three initiatives in early April to expand the discussions and work toward a “grand bargain” that would allow the Legislature to resolve all the issues before they reached the ballot. AIM agrees with the legislative leaders that initiative petitions represent an inefficient method of addressing public policy decisions that should be left to elected lawmakers.

There is, finally, the sobering reality that the questions enjoy overwhelming support in early voter polls, not surprising given proposals that appear to offer something for nothing. Recent polls put support for the paid family and medical leave question at 82 percent and support for a $15 minimum wage at 78 percent.

Experts believe that a campaign to defeat questions with those sorts of poll numbers could cost $10 million per initiative. The ballot process is one-sided, winner-take-all. Coming to a legislative compromise avoids that by allowing a broader group of people to have input into key decisions to create policies that work for everyone.

Our objectives for the negotiations have been clear:

  • Encourage a legislative compromise that is balanced and fair, and that protects a strong Massachusetts economy.
  • Adopt a compromise that protects jobs by keeping Massachusetts a competitive place to do business for employers.
  • Create programs that are accountable, have strong controls, and allow employers the flexibility to offer benefits that will attract and retain their employees.

Any compromise on the three issues will have to be wrapped up before ballots go to print in early July. And to make matters even more confusing, conclusion of a “grand bargain” is inextricably tied to an imminent decision by the Massachusetts Supreme Judicial Court on the graduated income tax proposal.

AIM has said virtually nothing publicly about the ongoing negotiations because participants agreed at the outset to maintain the confidentiality of the discussions. The idea was that it would be harder to reach common ground if everyone litigated the issues in the news media. We have honored our confidentiality promise, and, even now, cannot disclose all the details of the negotiations until a deal is in place.

Here is what we can tell you.

Negotiations on the paid family and medical leave question began in November and significant progress has been made toward compromise. The talks have been intense but respectful on a complex and multi-faceted proposal that could add more than $1 billion in benefit costs to employers and workers if passed in November.

Challenging issues remain and anyone involved in negotiations knows that the final compromises are always the most difficult. But it’s fair to say that we are confident about reaching an agreement on a paid leave plan that will be far less economically punitive than the one set out in the ballot question.

That question would allow covered workers to take up to 16 weeks of family leave or 26 weeks of medical leave. Workers could take family leave to care for a child after the child’s birth, adoption, or placement in foster care; to care for a seriously ill family member; or to address needs arising from a family member’s active duty military service.

The prospects for agreement on minimum wage and the sale-tax decrease are more uncertain.

Raise Up Massachusetts, the coalition behind the minimum wage, paid leave and the income surtax, sent a letter last week to DeLeo and Chandler indicating that the talks had reached a “standstill” over proposals from the Retailers Association of Massachusetts to eliminate time-and-a-half for Sunday retail work and creation of a minimum wage for teen-aged workers.

Progressive groups have since stepped up their public campaign with a massive lobbying effort on Beacon Hill and a separate protest for the $15 per hour minimum wage that tied up traffic for hours on Monday in Boston’s financial district.

Jon Hurst, President of the retailer’s organization that is sponsoring the proposal to reduce the sales tax, said last week that business groups remain committed to finding a solution on all issues.

“Although our ballot proposal has the support of almost 70 percent of voters in a recent public poll, we remain committed to working with legislators, other employer organizations, and other negotiators to see if a legislative solution can be reached,” Hurst said.

AIM members need to understand that we will be satisfied but far from happy if we reach a grand bargain. None of the potential agreements on paid leave, minimum wage or sales tax will be the ones employers would have designed. We may be able to improve some potentially catastrophic ballot initiatives, but employers will still ultimately face the unsavory trifecta of mandated paid leave, an accelerating minimum wage and possibly an income tax surcharge.

The long-term lesson may be a fundamental change in the way employers approach ballot questions. Stay tuned.

Please contact John Regan, Executive Vice President, Government Affairs, at jregan@aimnet.org for updates on these issues.

Topics: Minimum Wage, Massachusetts Legislature, Mandated Paid Leave

$15 Minimum Wage, Paid Family Leave Approved for Ballot

Posted by Christopher Geehern on Sep 6, 2017 2:46:50 PM

Attorney General Maura Healey today certified proposals for mandated paid family leave and a $15 per-hour minimum wage for inclusion on the 2018 statewide ballot questions.

Votingsmall.jpgThe two initiative petitions were among 21 potential ballot questions certified by the attorney general. Also approved were petitions to reduce the sales tax and re-establish an annual sales-tax holiday. Of concern to the business community were petitions to raise the annual percentage of renewable energy use in Massachusetts and mandate nurse-staffing ratios by statute.

The decisions mean that the 2018 ballot may contain three major proposals of concern to business – the paid leave and minimum wage petitions, and a constitutional amendment that would establish a 4 percent surtax on incomes of more than $1 million.

“The employers of Associated Industries of Massachusetts are deeply disappointed with the decision to certify the paid-leave and minimum-wage increase questions. The paid-leave petition would create a new $1.3 billion benefit program that could increase by 40 percent every year,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

“Employers will review the attorney general’s certification before deciding on the next step.”

The paid-leave proposal would allow covered workers to take up to 16 weeks of family leave or 26 weeks of medical leave. Workers could take family leave to care for a child after the child’s birth, adoption, or placement in foster care; to care for a seriously ill family member; or to address needs arising from a family member’s active duty military service.

Workers taking family or medical leave would receive 90 percent of their average weekly earnings, up to $1,000 per week. Beginning January 1, 2021, the weekly cap on benefits could be adjusted annually based on the Consumer Price Index published by the United States Department of Labor for the Boston metropolitan area.

The proposed law would create a trust fund into which employers would pay 0.63 percent of each employee’s annual wages, up to half of which could be deducted from employee wages. Beginning October 1, 2021, the contribution rate would be reviewed and adjusted annually to ensure funding of at least 140 percent of the amounts paid out during the previous year.

AIM estimates that the likely cost per week per employee to fund the program will exceed $520 per employee yearly, more than the average $508 per employee that companies now pay for the $1.3 billion Massachusetts Unemployment Insurance program.

The minimum wage proposal would boost the commonwealth’s base wage from the current $11 per hour to $12 in 2019; $13 in 2020; $14 in 2021; and $15 in 2022. The proposed law would also raise the minimum cash wage that must be paid to tipped employees, which was $3.75 per hour as of January 1, 2017, to $5.05 in 2019; $6.35 in 2020; $7.64 in 2021; and $9 in 2022.

Topics: Minimum Wage, Massachusetts economy, Mandated Paid Leave, Paid Family Leave

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: Employment Law, Mandated Paid Leave, Paid Family 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

Employers Face Flood of Ballot Questions

Posted by Brad MacDougall on Aug 10, 2015 9:59:51 AM

Massachusetts employers face a potential flood of statewide ballot initiatives in the next several years that could fundamentally alter the role of government in regulating private enterprise.

VoteHereSignTwenty four groups filed 35 initiative petitions with the attorney general’s office last Wednesday for proposed laws or constitutional amendments to go before voters in 2016 or 2018. The proposals range from mandating paid maternity leave to expanding dysfunctional renewable-energy targets to levying financial penalties for retail stores or fast-food restaurants that change an employee’s schedule within 14 days of a shift.

A proposed constitutional amendment that would impose a 4 percent surtax on income more than $1 million could reach the ballot by 2018. The change would boost the overall tax rate by 80 percent on any income more than $1 million, which could have devastating consequences for the large number of Massachusetts businesses organized as subchapter S corporations or limited liability corporations.

The Wednesday filing deadline started a long process by which initiative petitions qualify for inclusion on the statewide election ballot. The attorney general will initially review the petitions to determine whether they meet constitutional requirements. Decisions on certifications will be released on Sept. 2.

The number and variety of potential questions impacting employers would be unprecedented if even a portion of the proposed laws and amendments make it to the ballot.

Associated Industries of Massachusetts (AIM) will participate in discussions with the attorney general as an opponent of the parental leave, surtax, scheduling and solar energy questions. The association’s Board of Directors will review the remaining employer-related questions shortly and determine the positions that AIM will take.

AIM opposes ballot questions generally as an inefficient and clumsy method of resolving complex economic policy decisions.

Progressive groups, emboldened by their success in securing approval for paid sick time last November, are increasingly taking workplace social policy issues directly to voters.

“These initiatives, taken together, represent a broad assault on the ability of employers to create jobs and economic opportunity here in Massachusetts. It appears that social causes now trump economic policy,” said John Regan, Executive Vice President of Government Affairs at AIM.

The parental leave question would require employers to pay women who take leave to give birth or to adopt a child for at least two weeks of that leave. The law would require notice to be posted in any workplace in which females are employed.

One of the renewable energy questions would require that Massachusetts meet all of its electricity needs with renewable power by 2050. The second would increase subsidies to developers of solar power.

Here are all the proposed employer-related ballot questions that have been filed, with links to the text:

15-03 Constitutional Amendment Corporations Are Not People and May Be Regulated.  Money is Not Free Speech and May Be Regulated.

15-04 Constitutional Amendment Corporations Are Not People and May be Regulated.  The General Court May Limit Political Spending and Contributions.

15-06 Paid Parental Leave (AIM opposes)  

15-12 Initiative Petition for a Law Relative to Ending Common Core Education Standards.

15-17 An Initiative Petition for an Amendment to the Constitution of the Commonwealth to Provide Resources for Education and Transportation through an additional tax on incomes in excess of One Million Dollars.

15-18 Initiative Petition for a Law Relative to Renewable Energy.

15-19 Massachusetts Fair Health Care Pricing Act.

15-20 Massachusetts Equitable Health Care Pricing Act.

15-26 Initiative Petition for a Law Relative to Solar and Renewable Energy.

15-31 An Act to Allow Fair Access to Public Charter Schools.

15-35 An Initiative Petition for a Law Relating to Fairer Scheduling for Workers

A list of all 36 petitions may be found on the attorney general’s Web site.

 

Topics: Energy, Ballot Questions, Mandated Paid Leave

Subscribe to our blog

Posts by popularity

Browse by Tag