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Slow and Steady Approach to Clean Energy Protects Ratepayers

Posted by Robert Rio on Aug 27, 2018 8:30:00 AM

The energy bill passed in July by the Massachusetts Legislature, signed by Governor Charlie Baker and supported by AIM has been criticized by environmental advocates for not being “aggressive” enough in promoting the use of renewable energy.

WindTurbinesOceanSmallThe new law doubled the requirement for purchasing new renewable power over the next ten years and allowed the procurement of an additional 1600 MW of offshore wind, in addition to the 1600 MW of offshore wind and 1200 MW of hydro power already on tap.

It’s true that AIM urged lawmakers to take a cautious approach on the measure, especially since a sweeping 2016 energy bill that created a host of new initiatives is still being phased in.

But AIM has learned over the years that moving slowly and deliberately often leads to a better environmental and economic outcome than reacting quickly to the latest fad.   

Remember Cape wind? 

Back in 2010 the same environmental advocates and the administration of then-Governor Deval Patrick fell all over themselves supporting the Cape Wind project, even when it became obvious the development was in trouble. AIM recognized Cape Wind for what it was – a no-bid project with sky high prices that would have added hundreds of millions of dollars to 
the electric bills of Massachusetts ratepayers.

The 30 cents-per-kilowatt hour average price of Cape Wind would have become even worse than it seemed at the time because the wholesale cost of electricity has plummeted over the last eight years due to low natural-gas prices. 

Abandoning Cape Wind allowed offshore wind technology (and the law) to catch up to a place where we now have zero carbon-energy at reasonable costs. New offshore wind turbines are expected to produce electricity at less than a third of the cost of Cape Wind.   

AIM and its 4,000 member employers deserve a share of the credit for that cost shift.

It was AIM, not the environmental advocates, that ensured that the 2016 energy bill required all future offshore wind contracts to be transparent and competitively bid, because we knew competition would drive down prices. The bidding process also attracted world-renowned companies because they knew the process would be fair and open.

The 2016 law included two other important provision pushed by AIM. First, any future offshore wind contracts would have to be cheaper than any existing contract, guaranteeing lower prices in the future as technologies and experience levels become better. Second, these contracts would have to be cost-effective to the ratepayers of Massachusetts.

When Thomas Jefferson wrote the first draft of the Declaration of Independence it was widely criticized. Eighty-six changes were eventually made to that first draft, and the final document was shortened by one-fourth.   

 Our country’s founders weren’t against independence – they just wanted to make sure they got it right.

It worked backed then and we think it’s the best approach now.    

Topics: Massachusetts Legislature, Massachusetts economy, Energy

AIM Urges Governor to Sign Energy Bill, Parts of Economic Development Bill

Posted by Christopher Geehern on Aug 6, 2018 8:00:00 AM

Associated Industries of Massachusetts on Friday urged Governor Charlie Baker to sign a clean-energy bill and approve portions of a $1.2 billion economic-development bill passed by the Legislature earlier in the week.

State_House_and_One_BeaconIn a letter to the governor, AIM expressed support for key portions of the economic-development bill ranging from an apprenticeship tax credit to imposition of reasonable limits on the use of non-compete agreements. But the largest employer association in the commonwealth urged the governor to strike other elements of the bill, including a “patent-trolling” provision that could prevent companies from protecting their intellectual property.

“The patent trolling language contained in the bill pending before you is materially different from the compromise language approved by the Joint Committee on Consumer Protection and Professional Licensure committee (S.2432),” AIM President and CEO Richard C. Lord wrote to Baker.

“The changed language appeared within the final days of the legislative session and has raised significant concerns from employers who believe it may limit the ability of companies to protect intellectual property.”

The economic-development and energy measures were part of a flurry of activity as the Legislature ended the formal portion of its 2017-2018 session early Wednesday morning. Governor Baker has 10 days to sign the bills, veto them or send back amended language.

The language in the economic-development bill governing use of non-competes mirrors a compromise that AIM and other business groups reached two years ago with House Speaker Robert DeLeo. The measure limits non-competes to one year and gives employees the opportunity to consult a lawyer when signing a non-compete but does not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

AIM fought relentlessly for more than 11 years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-competes to protect intellectual property. The new bill accomplishes that goal.

The new energy bill authorizes an additional procurement of offshore wind power, increases the renewable portfolio standard that governs the amount of clean energy utilities must purchase, and establishes an energy storage target. The renewable portfolio standard will increase by one percent until the end of 2019, then by two percent each year until the end of 2029. It would then set the state on a track of one-percent increases each year thereafter.

The bill “is a measured approach to public policy. It changes only those programs that need changing without disrupting newly established programs before they have had a chance to work. It will reduce greenhouse-gas emissions in Massachusetts while being considerate of our high electric prices,” Lord wrote in a separate letter to the governor.

Topics: Massachusetts Legislature, Economic Development, Energy, Charlie Baker

Beacon Hill Passes Energy, Non-Compete Bills; No Agreement on Health Measure

Posted by John Regan on Aug 1, 2018 8:16:11 AM

The Massachusetts Legislature ended its 2017-2018 formal session last night by mandating increased use of clean energy, establishing limits on the use of non-compete agreements and curbing the practice of “patent trolling.”

statehousedome1Lawmakers meanwhile were unable to reach agreement on a massive health-care bill that had generated concern among employers because it leveled assessments on medical providers and insurers that would eventually be passed on to consumers. The bill also contained no reform of the MassHealth program even as employers contribute $200 million per year to close a budget gap in the health-insurance program for low-income people.

Beacon Hill lawmakers crossed the finish line early this morning after a frenetic day that saw passage of bills covering everything from economic development to opioid care.

Governor Charlie Baker now has 10 days to review all the legislation. AIM will consult with member employers on the issues before recommending that the governor sign or veto each measure.

The new energy law authorizes an additional procurement of offshore wind power, increases the renewable portfolio standard that governs the amount of clean energy utilities must purchase, and establishes an energy storage target.

The compromise calls for the renewable portfolio standard to increase by one percent until the end of 2019, then by two percent each year until the end of 2029. It would then set the state on a track of one-percent increases each year thereafter.

Associated Industries of Massachusetts had supported a measured approach that would neither harm ratepayers nor elbow out other zero-carbon generation such as hydro-electric power. AIM supports the final bill.

“H.4857 An Act to Advance Clean Energy constructively builds upon the success of last year’s omnibus energy legislation,” said Robert Rio, Senior Vice President of Government Affairs at AIM.

“By following this measured approach, Massachusetts avoids disrupting the energy sector by making significant changes to programs that are themselves in the middle of being finalized. AIM feared that course would have delayed our effectiveness in meeting our greenhouse gas reduction goals.

“The measure will continue our aggressive transition from fossil fuels to a zero-carbon future while at the same time recognizing the importance of cost on Massachusetts ratepayers.”

(Contact Rio at rrio@aimnet.org or 617.262.1180 to learn more.)

The law governing use of non-competes, included in an economic development bill, mirrors a compromise that AIM and other business groups reached two years ago with House Speaker Robert DeLeo. The measure limits non-competes to one year and gives employees the opportunity to consult a lawyer when signing a non-compete but does not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

“AIM has fought relentlessly for more than 11 years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-competes to protect intellectual property. The new bill accomplishes that goal and reflects the productive compromise brokered two years ago by the speaker,” said Brad MacDougall, Vice President of Government Affairs.

The economic development bill also contains a provision to limit the practice of patent trolling, in which third parties demand financial settlements for alleged infringement on patents they do not even own. AIM maintains concerns about the language of the provision because some employers may be unable to engage in legitimate protection of their intellectual property amid an avalanche of state litigation.

“The language of the bill is materially different from the compromise language previously approved by the Joint Committee on Consumer Protection and Professional Licensure,” MacDougall said.

“This is an important and legally complex issue, one that should be addressed by federal law.  However, given Congress’ failure to act, if Massachusetts is to establish a policy, we need to get right for our AIM members who are victims of patent trolls and patent holders.”

(Sign up for future updates here on non-compete and patent legislation, or contact MacDougall at bmacdougall@aimnet.org or 617-262-1180 to learn more.)

The demise of the health-care bill turned on differing approaches by the House and Senate to capitalizing community hospitals. 

House Majority Leader Ronald Mariano told the State House News Service early this morning, "We were just too far apart philosophically to a come to a resolution that fit our agenda."

The Quincy Democrat said the House was focused on trying to find a way to financially stabilize community hospitals in the short-term with assessments on insurers and large hospitals, while he said the Senate "wanted a market driven approach." "We just thought we couldn't wait," Mariano said.

Katie Holahan, Vice President of Government Affairs at AIM, said, the lack of agreement on health care reflects the enormous complexity of the issue. She said AIM and its employer-members will continue to work with the Legislature to find ways to moderate the cost that companies face in providing health coverage for employees.

“While final action was not taken on major health-care legislation, we remain gravely concerned that – without long-term reform to MassHealth and the commercial market – Massachusetts’ health-care costs will continue to increase unchecked. Until reform is achieved, no relief is in sight for employers and their workers seeking to access care at a reasonable cost,Holahan said.

The conclusion of formal sessions on July 31 of even-numbered years generally means the end of the line for controversial bills. Lawmakers will meet for the remainder of 2018 in informal sessions, when a single lawmaker may stop any measure with an objection.

(Contact Holahan at kholahan@aimnet.org or 617.262.1180 for more information.)

Topics: Massachusetts Legislature, Non-Compete Agreements, Energy, Health Care

Health Care, Energy, Non-Competes on Table in Final Days for Legislature

Posted by John Regan on Jul 30, 2018 9:12:20 AM

Beacon Hill lawmakers will complete their version of final-exam week Tuesday at midnight as the Legislature races to complete bills before the end of formal meetings for 2017-2018 Beacon Hill session.

State House 2015The conclusion of formal sessions on July 31 of even-numbered years generally means the end of the line for controversial bills. Lawmakers will meet for the remainder of 2018 in informal sessions, when a single lawmaker may stop any measure with an objection.

The most important issues to employers have already been resolved in advance of this year’s end-of-session rush. The Massachusetts Supreme Judicial Court last month invalidated a potential income-tax surcharge constitutional amendment, while negotiations over three other ballot questions produced agreement on a compromise paid family and medical leave law, as well as a minimum-wage increase.

Three key employer issues remain on the table during the waning hours of debate:

  • Health care reform – The House and Senate passed different versions of health reform and a conference committee is working to hammer out a consensus bill. AIM remains concerned about both bills because they include expensive assessment. Neither bill reforms the MassHealth program for low income residents, where employers are paying a $200 million assessment to close a funding gap.
  • Energy – Measures passed by both the House and Senate could significantly increase the percentage of clean-source electricity used by Massachusetts consumers. AIM believes the bills could have the perverse effect of squeezing out clean hydro power and interrupting the successful roll-out of the 2016 energy law.
  • Non-compete agreements – The Senate, as part of an economic development bill, largely adopted the same modest restrictions on non-competes that AIM and other business groups supported two years ago as part of a compromise with House Speaker Robert DeLeo. But deep-pocketed venture capitalists continue to press for an outright ban and prospects for passage remain uncertain.

Employers also received some good news last week when Governor Charlie Baker signed the budget for the fiscal year that began July 1. The budget authorizes the administration to develop a hardship waiver for employers liable for the MassHealth surtax. Details remain to be developed.

The budget also provided full funding for the Massachusetts Manufacturing Extension Partnership.

Please contact me at 617.262.1180, or jregan@aimnet.org if you need more information on any of these issues. 

Topics: Massachusetts Legislature, Controlling Health Care Costs, Non-Compete Agreements, Energy

History and Hope in the Massachusetts Senate

Posted by Rick Lord on Jul 26, 2018 8:00:00 AM

SP.SpilkaJPGThe passing of the Massachusetts Senate presidency today from Harriett Chandler to Karen Spilka represents a transition from one woman who has gracefully led the chamber through a period of turbulence to another who offers significant hope for an inclusive approach to the employer community.

Senator Chandler, a Worcester Democrat, assumed the presidency in December after former President Stanley Rosenberg of Amherst resigned amid a scandal. She steered the Senate through the ensuing months while developing consensus on important issues such as the “grand bargain” that headed off a dangerous ballot question on paid leave.

Senator Chandler deserves tremendous credit for conducting her work with the decorum and decency so often missing in American politics these days. She and Senator Spilka jointly announced the transition in April after the Ashland Democrat secured the support needed to guarantee her election as president.

Senator Spilka, who has chaired the Senate Ways and Means Committee for more than three years, has already reached out to Associated Industries of Massachusetts on key issues ranging from health-care reform to the sensible use of non-complete agreements. We look forward to additional issue conversations as the Legislature moves toward the end of its two-year formal session next Tuesday.

AIM stands ready to work with the new Senate president, House Speaker Robert DeLeo and Governor Charlie Baker to prioritize policy matters that can improve the economic climate of the Commonwealth and, thereby, the lives of the residents of our state.

 

Topics: Massachusetts Legislature, Massachusetts senate, Karen Spilka

The Unintended Consequences of Energy Legislation

Posted by John Regan on Jul 16, 2018 11:53:29 AM

Listen as AIM Senior Vice President Robert Rio talks to the CommonWealth Codcast about  why focusing only on renewable power makes it harder for Massachusetts to reach its clean energy goals. 

Topics: Massachusetts Legislature, Energy

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

Much at Stake for Employers in Final 100 Days of Legislative Session

Posted by Rick Lord on Apr 23, 2018 8:30:00 AM

Today marks 100 days until the Massachusetts Legislature wraps up formal business for its 2017-2018 session.

ExteriorThe end of formal sessions will bring with it the usual eleventh-hour debate on bills that will otherwise have to go back to the starting line when a new session begins in January 2019. Informal sessions continue through the end of the year, but the rules of the Legislature make it all but impossible for controversial bills to pass.

Associated Industries of Massachusetts, as the statewide employer association, looks forward to representing employers late into the evening of July 31 – perhaps into the wee hours of August 1 – as lawmakers consider bills that could have a profound effect on employers and the Massachusetts economy.

But the real Beacon Hill deadline that employers need to keep their eye on this year is the first week of July. That’s because the end of the legislative session is inextricably bound up with four potential questions that could appear on the November election ballot, and any compromise on those issues will have to be wrapped up before ballots go to print in early July.

The most important issues for AIM at the end of the session all revolve around these potential ballot questions and ongoing negotiations intended to develop compromises that could be approved by the Legislature before July 31.

AIM has been part of negotiations for more than six months on a proposal to mandate paid family and medical leave for Massachusetts employees.

The association opposes the question, which would cost $1 billion annually by allowing 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.

John Regan, Executive Vice President of Government Affairs for AIM, has been hashing out the paid-leave issues with representatives of Raise Up Massachusetts, the coalition sponsoring the proposal.  All sides remain committed to seeking a fair agreement that does not inflict significant damage to the economy.

A poll of AIM-member employers last week indicated that companies favor by a two-to-one margin reaching a negotiated settlement.

House Speaker Robert DeLeo and Senate President Harriett Chandler have convened separate negotiations on proposed ballot questions that would increase the minimum wage to $15 per hour and reduce the state sales tax from 6.25 percent to 5 percent.

And looming over all the negotiations is a pending decision by the Massachusetts Supreme Judicial Court on a challenge that four business association colleagues and I filed to a proposed constitutional amendment that would impose a 4 percentage-point surtax on incomes more than $1 million. A decision in that case is expected this spring, adding pressure to the already tight time frame for finding common ground on the other questions.

“AIM will follow hundreds of bills as the session comes to an end, but creating a better and less burdensome paid family and medical leave law will be the priority,” Regan said.

“The minimum-wage increase and graduated income tax are right behind that. The objective is to provide the Legislature with the opportunity to resolve all these issues rather than mounting multiple ballot campaigns that could cost $10 million each.”

It’s a full plate for 100 days. The clock starts now.

Topics: Minimum Wage, Massachusetts Legislature, Paid Family Leave

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

Summing Up, Looking Ahead: Challenges Await Employers

Posted by Rick Lord on Jan 2, 2018 8:30:00 AM

The first half of the 2017-2018 legislative session in Massachusetts was dominated by the issue of health-care costs and the role employers should play in helping to close a budget gap in the state Medicaid program.

Exterior.jpgBut larger battles await during 2018 as progressive activists seek to place three questions on the Massachusetts election ballot that would together impede economic growth for a generation. The initiatives would impose an 80 percent surtax on incomes more than $1 million for pass-through businesses, establish a $1.3 billion-per-year paid leave program and increase the minimum wage to $15 per hour.

Associated Industries of Massachusetts worked successfully during 2017 on a range of issues confronting its member employers from every sector of the economy.

The most important achievement was a compromise that transformed a proposed $700 million annual health-care surtax into a two-year, $200 million assessment to close the budget shortfall in the commonwealth’s health-insurance program for low-income people. The assessment increased the Employer Medical Assistance Contribution (EMAC) in a manner that will fall most heavily on companies where employees use MassHealth instead of an employer health plan.

The levy will be partially offset by a two-year Unemployment Insurance rate adjustment that will save employers $335 million over two years versus current rates. AIM was disappointed that lawmakers passed the assessment without making structural reforms to the MassHealth program.

“We believe, however, that the Legislature is committed to resolving the financial problems at MassHealth and employers look forward to working with lawmakers toward that goal in 2018,” said John Regan, Executive Vice President of Government Affairs at AIM.

AIM also played a key role in hammering out compromise legislation to extend employment protection to pregnant workers in Massachusetts.

The Pregnant Workers Fairness Act requires employers to make reasonable workplace accommodations for pregnant employees — more frequent or longer breaks, temporary transfer to a less strenuous or hazardous position, a modified work schedule, or seating for those whose jobs require extended standing.  AIM opposed early versions of the bill because of concern among employers that the legislation provided an applicant or employee with unlimited power to reject multiple and reasonable offers of accommodation by an employer. The compromise bill addresses that concern.

There was no such compromise in August when the Baker Administration introduced regulations that set specific limits on sources of greenhouse gases, the emissions linked to climate change. State officials indicate that the regulations could increase costs to electric ratepayers by as much as 2 percent. The new rules aim to reduce the state’s carbon emissions 25 percent below 1990 levels by 2020, as required by state law.

The regulations, however, were ultimately unnecessary. The administration could have chosen to work with the Legislature to change the Global Warming Solutions Act to allow alternative ways for the electricity sector to meet these obligations.  The administration instead turned a blind eye to the corrosive impacts that high electric rates are having on struggling Massachusetts companies.

The three potential 2018 ballot questions would represent an unprecedented potential policy crisis for Massachusetts:

  • The constitutional tax amendment would raise from 5.1 percent to 9.1 percent the levy on income of more than $1 million per year, including income generated by subchapter S-corporations, LLPs, LLCs, partnerships, and other pass-through entities. The $1.9 billion tax increase would be paid by roughly 19,500 filers, 80 percent of whom are anticipated to file with some business income.
  • The paid leave question would mandate 16 weeks of paid family leave and 26 weeks of paid medical leave for employees for a total projected cost of $1.3 billion.
  • The minimum wage question would raise the wage from the current $11 per hour in annual $1 per-hour annual increments starting in 2019 until it reaches $15 an hour in 2022. That amounts to a projected increase of 36 percent.

Supporters of the paid-leave and minimum wage questions filed the requisite number of signatures last month to move a step closer to the ballot. Massachusetts lawmakers now have until the end of April to consider and pass the initiatives. Any initiatives that are not adopted must gather and file an additional 10,792 signatures by July 3 to make the 2018 ballot.

The income surtax constitutional amendment qualified for the ballot in 2016. In October, I joined four other prominent business leaders in filing a suit challenging the validity of the proposal, asserting that the amendment is riddled with constitutional flaws and would make the new tax essentially permanent and unchangeable. 

“It is impossible to overstate the potential threat that these three ballot questions pose for Massachusetts employers.  The advocates supporting the questions are well funded and are prepared to spend millions of dollars to get their message across to voters,” Regan said.

The ballot battle will take place just as employers begin to comply with the new Massachusetts Pay Equity Law on July 1, 2018. The law prohibits employers from discriminating based on gender in the payment of wages and other compensation for “comparable” work. Many employers are already undertaking the internal wage studies that provide a safe harbor from litigation under the statute.

Beacon Hill lawmakers will conclude the second year of their two-year session on July 31. The end of formal sessions will kick off an election season that will see Governor Charlie Baker, US Senator Elizabeth Warren and other prominent office holders face re-election challenges.

 

Topics: Massachusetts Legislature, Massachusetts employers, Charlie Baker

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