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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

Business, Advocates Join to Ask for Paid Leave Delay

Posted by Brad MacDougall on May 20, 2019 5:42:34 PM

Associated Industries of Massachusetts and the business organizations and advocates who last year negotiated a compromise version of paid family and medical leave are together asking state leaders to postpone the July 1 starting date of the program by three months.

statehousedome“In the course of our work together we have identified the need for a three-month extension of the July 1, 2019 deadline for approval of employers’ private paid family and medical leave plans and the commencement of the required plan contributions,” the groups said in a letter to Governor Charlie Baker, House Speaker Robert DeLeo and Senate President Karen Spilka.

“In addition, there are five other amendments to chapter 121 of the Acts of 2018 that are necessary for clarification of rights and responsibilities of stakeholders to effect the smooth implementation and operation of the new law,” the letter said.

The group noted that the extension would not impact any of the benefits or the timing for eligibility of benefits under the new law.

Signers of the letter include AIM, Raise Up Massachusetts, 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 Chamber of Commerce of Greater Springfield.

The call for a delay from politically diverse groups reflects growing concern that neither the marketplace nor employers nor their workers are adequately prepared for the sweeping new benefits program.

The Baker Administration attempt to allay those concerns three weeks ago 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.

“However, 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, as well as the additional five clarifying amendments to the statute…” the group writes.

The proposed amendments are intended to provide clarity for employers, insurance providers (developing and providing products to employers), employees applying for the leaves covered by the new law, and health care providers certifying the need for leave. In addition, the clarifying amendments align core principles of the Massachusetts paid family and medical leave law with the federal Family and Medical Leave Act (FMLA).

The amendments include:

  1. Intermittent Leave – This amendment would clarify that leave taken on an intermittent or reduced leave schedule reduces the amount of remaining leave available to a covered worker. This change tracks the language of the federal FMLA.
  2. Serious health condition – This amendment clarifies that eligibility for medical leave for the covered individual’s own serious health condition arises where such a serious health condition “makes the covered individual unable to perform the functions of the covered individual's job.”

If you are an AIM Member and want updates sign up here or contact Brad MacDougall.

Not an AIM member?  Contact Bob Paine to learn how AIM’s advocacy and resources can help your company.

Topics: Massachusetts Legislature, Charlie Baker, 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

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: Employment Law, Massachusetts employers, Paid Family 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

$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.

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

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