Massachusetts Legislature Passes Noncompetition Statute that Brings an Array of New Rules to the Employment Arena

It took years and came down to the last minutes of the current session, but the Massachusetts Legislature finally passed a noncompetition law on July 31, 2018. If signed by Gov. Charlie Baker, as it presumably will be, the statute will take effect on October 1 and will bring a number of major changes to this rather complex area of employment law.

agreement-business-businessmen-886465

Massachusetts Legislature finally passed a noncompetition law on July 31. If signed by Governor Baker, a number of major changes to this area of employment law will be affected.

Of note is the requirement that non-compete forms be presented to new employees at least 10 days prior to the start of work. When an employer asks existing workers to sign noncompetition agreements, it must provide them something of value – a pay raise, e.g., or perhaps a promotion. Enforceable agreements must be in writing and signed by both parties, a seemingly simple requirement that is often unsatisfied under current noncompetition practice. The parties’ contract must state expressly that a worker has a right to consult with counsel before signing. It must also provide for pay during the noncompetition period equal to at least 50% of the worker’s average annual salary during the prior two years. For workers who are entitled to overtime under federal law, non-competes are unenforceable. Neither can they be used for students engaged in short-term employment, workers under 18, and, notably, anyone who is laid off or fired without cause.

While these requirements apply to employees and independent contractors alike, they have nothing to do with other forms of restrictive covenants that are commonly used in the Commonwealth and almost always bundled together with noncompetition agreements. The law applies only to contracts that ban employees from competing with their former employers. That leaves employers free to create agreements that might ban workers from soliciting their employees or customers and, of course, from disclosing confidential data. As to this latter issue, the noncompetition statute also includes enactment of a form of the Uniform Trade Secrets Act, which protects a company’s trade secrets from misappropriation. The new law will not apply to noncompetition agreements signed before it takes effect in October, saving employers and the courts the trouble of figuring out what to do with existing agreements.

Lawsuits under the Revised Equal Pay Act are Out of the Gate Quickly

Well, that didn’t take long.

On the first business day that amendments to the Massachusetts Equal Pay Act were in effect, the first lawsuit was filed in Boston, according to published reports. It was brought by a female flutist in the Boston Symphony Orchestra who claims she was paid less than a male oboist, who also is part of the BSO’s woodwind section. According to the suit, the plaintiff has suffered wage discrimination for years because her work playing flute is comparable to her male counterpart’s work playing oboe. Regardless how the case turns out, it stands as yet another warning to employers who have yet to consider the effects that the revised Equal Pay Act will have on their businesses.

fads

The day that amendments to the Massachusetts Equal Pay Act went into effect, a female flutist in the Boston Symphony Orchestra brought forward a lawsuit.

The primary change to the Act, which has been around for decades, involves the comparison between male and female workers. That required showing was until now virtually impossible to make. The Equal Pay Act now makes it far easier for plaintiffs. The law as revised provides that employers may not discriminate in the payment of wages between men and women in “comparable” jobs – those that require substantially similar skill, effort and responsibility and are performed under similar conditions.

What this means is open to interpretation, leaving the courts to deal with pay discrimination claims one at a time and employers to worry about whether their practices pass muster. With steep potential damages and only a narrow set of viable excuses for unequal pay between the genders, employers need to consider avoidance options quickly. The law provides for a safe haven of sorts for companies that perform self-evaluations and make progress toward addressing illegal pay disparities before a suit is filed. While the conditions under which this makes sense are up for debate – it may not be a useful exercise for all companies – employers who fail to consider that option and others do so at their own peril.

Foreseeing Likely Outcomes on 3 Ballot Questions, Massachusetts Legislators Pass Law to Increase Minimum Wage, Grant Family and Medical Leave to Employees, and Require an Annual Sales Tax Holiday

They’re calling it a “grand bargain,” but the deal recently reached among legislators, activist groups, businesses and Gov. Charlie Baker is probably more of grand concession than anything else. Seeing the writing on the wall of strong support for three November 2018 ballot questions to raise the minimum wage to $15/hour, create sweeping new leave rights for Massachusetts workers, and reduce the state’s sales tax, the powers-that-be in Boston decided they’d better move to shape the new laws lest they be forced by voters to accept them in less desirable forms. On June 28, Gov. Baker signed the new bill into law. The proponents of all three ballot questions have agreed to withdraw them.

By the year 2013, the Massachusetts minimum wage may be $15.

By the year 2023, the Massachusetts minimum wage may be $15.

Highlighting the “grand bargain” is an increase to the state’s minimum wage from $11 to $15 per hour over a five-year period. This is despite the fact that the state only recently finished increasing the rate from $8 to $11 after many years of doing nothing on the topic. The new minimum wage rate will be $12 on January 1, 2019. From there, it will increase by 75 cents/hour each year until January 1, 2023, when it hits $15. The tipped wage rate – which is paid to workers who receive the bulk of their earnings as tips – will increase by 60 cents per year until it hits $6.75/hour in 2023. Tipped workers must still earn enough in tips to make the minimum hourly wage, and when they don’t employers must make up the difference. The new law will also eliminate the current requirement that retail establishments pay workers at the overtime rate for work on Sundays and holidays.

The new law also grants workers broad leave rights akin to those that now exist only for those covered by the Family and Medical Leave Act, which applies only to certain workers at companies with at least 50 employees. Beginning in 2021, employees can take 12 weeks of family leave and 20 weeks of medical leave – all paid – with job protection rights for their return to duty. While these leave amounts are a bit lower than what was proposed in a November ballot question, they represent a substantial change in current state law nonetheless. Employers need not fear that they alone will bear the cost of this new program. Pay for workers on leave will be funded by a new payroll tax that begins in July 2019. Contributions will be divided about evenly between employers and employees.

Finally, the statute mandates an annual sales tax holiday for a weekend every August. Businesses were pushing for this requirement by ballot question because legislators did not enact the annual event during the past two years. They proposed in the same ballot question that the state’s sales tax be reduced from 6.25% to 5%. The new law does not provide any tax reduction, so the rate remains as is. As to the sales tax holiday, it won’t apply to marijuana (whenever it’s sold in the Commonwealth), alcohol, boats, cars or any item that costs more than $2,500, among a few other items.

Massachusetts High Court Concludes Workers can be Employees and Independent Contractors at the Same Time

image creditWhat once appeared to be an effectively impenetrable wall against the use of independent contractors in the Commonwealth saw a few bricks knocked out by a recent decision of Massachusetts’ highest court. At the same time, the court introduced substantial confusion into some relationships between employers and their workers, and the workers’ eligibility for certain benefits such as workers’ compensation and unemployment benefits.

In early May, the Supreme Judicial Court decided that a worker can be misclassified under the state’s Independent Contractor Statute, Mass. Gen. L. ch. 149, §148B, yet still be properly treated as an independent contractor under Mass. Gen. L. ch. 152, which governs workers’ compensation. The result raises the specter of the same worker being entitled to certain benefits as an employee while being properly denied others as an independent contractor. This includes both workers’ compensation and unemployment benefits.

Ives Camargo v. Publishers Circulation Fullfillment, Inc.

Confusing, I know, but this is precisely the implication of Ives Camargo’s Case, decided by the SJC on May 10. The case involved a worker who claimed she was entitled to workers’ compensation benefits for a job injury despite her classification as a contractor. Chapter 152 requires benefits only for employees, and the plaintiff argued – as many others have done successfully before her – that, because she was an employee under the Independent Contractor Statute, she was an employee for workers’ compensation purposes. Not so fast, the SJC said. It affirmed a decision by the Department of Industrial Accidents that denied benefits to the worker because she did not qualify as an employee under the 12-part test that applies in cases under Mass. Gen. L. ch. 152. Regardless of status under Mass. Gen. L. ch. 149, §148B, which makes pretty much every worker an employee, the SJC held that the plaintiff remained a contractor under the workers’ compensation law and could not recover for her injuries.

The difficulties this statutory scheme creates was expressly called out in a concurring opinion by the SJC’s chief justice, who called on the legislature to address it. “With so many different standards, it is difficult for employers to classify their workers properly,” CJ Ralph Gants wrote. “Enforcement also becomes more challenging….Most importantly, workers must struggle to understand and assert their rights.”

How can workers and employers comply?

The chief judge makes a strong point. It is one that both businesses and workers should take stock of as they evaluate their relationships and seek to comply with the law as best they can. The answer to the quandary they now face may be easy for businesses that traditionally use employees in their work forces. For those that don’t, a review of various laws and their implications is now necessary before legal pitfalls can be properly assessed. Meanwhile, employees and contractors alike may need to worry about which benefits they qualify for under which laws.

Supreme Court Upholds Employers’ Uses of Arbitration Clauses to Block Class Action Lawsuits

Arbitration Clauses

image credit

The U.S. Supreme Court has again deflected a challenge to the use in employment agreements of dispute resolution clauses that mandate arbitration and generally bar class action lawsuits. The May 21, 2018 decision was a close call for employers: a 5-4 decision with the conservative majority carrying the day. Nonetheless, this represents a major victory in their battle against expensive lawsuits that pose extraordinary financial risks.

In Epic Systems Corp. v. Lewis, the Supreme Court dealt with challenges to class action restrictions in arbitration clauses based on the National Labor Relations Act (NLRA), which protect workers’ rights to collective activities. The NLRA guarantees employees the right to unionize and sets up an enforcement scheme under the National Labor Relations Board. After it altered its prior interpretation and held in 2012 that class actions could not be barred by arbitration clauses, challenges were filed based on a conflict between the NLRA and the Federal Arbitration Act (FAA), which provides for the enforcement of mandatory arbitration agreements. In the face of a strong dissent, the Court concluded that the NLRA cannot override the FAA because Congress did not provide for it to do so.

The use of mandatory arbitration clauses that bar class action lawsuits is growing in the Commonwealth. They provide potentially huge benefits by precluding the extreme risks presented by suits involving tens, hundreds or even thousands of employees. It is now common for larger employers who could face class actions by virtue of their sizes to mandate resolution of disputes by individual arbitration, and a growing number of small companies seeks the cost and time advantages arbitration can provide. To be sure, employers who use mandatory arbitration agreements must take care not to trample on employee rights and thereby invalidate their contracts, a result that remains possible under current law. Arbitration clauses are enforced only if they are reasonable and are contained in valid contracts between employees and employers.

Taking Action to Eliminate Sexual Behaviors at Work is Crucial for Avoiding Sexual Harassment Lawsuits

For those who have yet to grasp the significance of the #MeToo movement, which is encouraging women to complain about sexual mistreatment at work, here’s a bit more help. In late 2017, a poll by ABC News and the Washington Post found that 54% of women believe they received “unwanted and inappropriate” sexual advances at work, and 95% of them think such behavior normally is not punished by employers. About 80% of these women called the conduct sexual harassment. That means, according to the poll, about 33 million women think they were sexually harassed at work.

That, of course, is a lot of potential litigation, and there’s little doubt it’s being unleashed on employers who fail to take steps to address it. Fortunately, doing so effectively isn’t particularly complex, though it does require a firm commitment. Employers should begin by implementing or re-issuing, as the case may be, strong anti-sexual harassment policies, then follow them up with a concrete and sustained message that no sex talk or behavior will be tolerated at work or at work events. Here are a pointers for employers in this areas. Their goal should be to encourage employees to complain about perceived sexual issues so that employer’s action can follow and risks are thus minimized.

  1. Decide that an anti-harassment program is worthwhile and commit to it at the highest managerial levels. If top leaders don’t buy in and mean it, what follows will likely be a waste of time.
  2. Evaluate workplace interactions to see how employees talk with each other and behave on the job. A good baseline understanding here is important so that potential threats are exposed and employees can be asked to make specifically required changes.
  3. Be sure appropriate anti-harassment postings exist. Update or re-post them as needed.
  4. Train key personnel and consider training others. At the very least, be sure all employees get an in-person overview of the company’s anti-harassment policy and have the chance to ask questions. Key managers should be present when this is done to deliver the message that the company means what it says.
  5. Designate and train a key human resources person to answer questions and address complaints. Strange though it may seem, complaints about sexual behaviors are an employer’s friend, not its enemy. When workers believe the company will take them seriously and act, sexual harassment is normally dealt with internally. When they don’t, victims tend to remain silent and consider filing suit at the Massachusetts Commission Against Discrimination.

New Pregnancy Law Takes Effect April 1; Employers should have Written Policies in Place by Now

Effective on April 1, 2018, Massachusetts will institute its new pregnancy statute. The law brings broad new protections for pregnant employees, some of which benefit women after a child is born, and imposes important obligations on employers. Among them is a written pregnancy policy, which all employers should have already put into place.

The Pregnant Workers Fairness Act was signed last summer by Gov. Charlie Baker. It generally requires employers to treat pregnant employees in the same manner as disabled workers. This includes obligations to implement reasonable workplace accommodations and engage pregnant women for purposes of identifying modifications that will allow them to remain on the job. The specific commands of the new pregnancy law instruct employers to do the following.

  • Provide private, non-bathroom space for lactating mothers.
  • Allow extra leave time as needed beyond the 8 or 12 weeks required by current law for mothers to recover from the effects of childbirth.
  • Restore women to their prior or an equivalent job, with no loss of benefits, when the need for an accommodation ends.
  • Do not penalize women by denying them opportunities based on accommodations for pregnancy or lactation.
  • Do not force pregnant or lactating women to accept accommodations they do not want, unless it’s necessary to allow a woman to perform the essential functions of her job.
  • Do not require women to take a leave of absence for pregnancy or lactation unless it’s required to avoid undue hardship on the employer.
  • Do not refuse to hire an otherwise qualified woman due to her pregnancy or related needs.

Written employer policies should cover these issues as they generally inform employees about their rights under the Pregnant Workers Fairness Act. It makes sense for employers to review hiring and other practices to ensure that the rights of pregnant employees are not inadvertently infringed. Training is likely wise for certain employers, particularly larger ones. Penalties for violating the new pregnancy law can be steep and include lost wages, emotional damages and legal fees incurred by affected employees.

Massachusetts Attorney General Issues Guidance to Help Employers Prepare for the Equal Pay Act

image credit: pixabay

image credit: pixabay

With just four months until a revised Massachusetts Equal Pay Act takes effect and unleashes what is likely to be a wave of pay discrimination lawsuits, the state’s Attorney General has issued guidance to help employers understand and implement the new law. The guidance describes key elements of the new statute, which takes effect on July 1, 2018, and provides ideas on how employers can protect themselves against pay discrimination claims by self-auditing their compensation practices and beginning to address any sex-based disparities that they may uncover.

The new Equal Pay Act re-writes a 1945 law that sought to address pay discrimination but failed to do so; on average, full-time working women in the Commonwealth earn about 84% of what men earn, and the gap may be larger for minority women. Most significantly, the Act will make unequal pay for “comparable” work illegal and will subject employers to damages in the form of double the amount of any lost pay, plus reimbursement of employee legal fees. Employers will not be permitted to address existing pay disparities by reducing the wages of higher paid employees. They will be barred from even asking prospective employees about their salary histories until after a job offer at a specified wage is made. Neither may employers prohibit employees from exchanging information about their wages.

“Comparable work” is both a critical and difficult issue for companies to understand, and the Act helps employers understand what it means. Since job titles will not be determinative and comparisons of skill, effort and responsibility will be – the Attorney General’s new Equal Pay Act guidance offers insight into conducting appropriate self-audits of pay practices. This tool can provide legal cover to employers, who can escape liability for existing pay disparities by identifying problems in their own work forces and making progress to resolve them. As a result, virtually all employers should consider a self-audit as they keep in mind that the Act makes pay disparities between genders illegal regardless whether they occur intentionally or not.

For some employers, a self-audit might be a relatively straight forward and simple process and way to avoid a pay discrimination lawsuit. Many employers, however, will quickly hit complexities in determining which jobs to compare to which and how, if at all, to consider the effects of several criteria the Equal Pay Act permits as bases for pay disparities. In these cases, help from a professional compensation specialist may be necessary. In all cases, employers should consider the ramifications of the revised Equal Pay Act in the coming weeks and be sure they understand how to both prepare for it, and to avoid a pay discrimination lawsuit.

Steps for Dealing with Improper Sexual Behaviors in the Workplace

Dealing with improper sexual behaviors at work is something no one should have to worry about. All too often, however, employees and employers are forced to do so. In some cases, bad actors are managers or even company owners – a situation that makes an effective response to workplace sexual behavior difficult for all concerned. In others, sexually harassing or otherwise improper sexual behaviors in the workplace comes, but victims don’t complain because they are not confident that their concerns will be dealt with properly. In either of these situations, things can go from bad to worse for employee and employer alike in a very short period of time.

As the #metoo movement takes hold, it’s clear that the status quo in the sexual harassment in the workplace arena can no longer be tolerated. Employees are feeling empowered to complain when events occur, and employers must take action. Those who don’t, risk potentially serious financial and other business-related peril. To avoid those pitfalls and, more importantly, to protect employees against unwanted sexual conduct in the workplace that is both unfair to them and damaging to business productivity, employers should take the following steps:

  •  If you haven’t already, get management out onto work floors to talk to employees about their work environments. This does not mean questioning them about sexual harassment in the workplace. It does mean communicating about issues at work generally and observing how workers interact with each other. From there, steps to address problems or improve the workplace can be taken if needed.
  • Review anti-harassment policies, update them if required, and distribute them to employees. It may be better not to do this electronically. Massachusetts law requires the distribution of a sexual harassment policy annually, and doing so with a note to employees about the company’s commitment to ensuring a harassment-free workplace may go a long way toward what should be every employer’s ultimate goal: getting employees to believe they can come to management with problems rather than going to a lawyer to investigate their legal options. The commitment this process represents needs to be frequently reinforced if it is to have the desired effect.
  • Maintain an open-door policy to questions or complaints about improper sexual behaviors in the workplace. Be sure all managers know to be on the lookout for sexual issues and how to address any improper sexual behaviors they observe or learn about from employees. This will require training on some level. In all companies, at least one person should be designated to oversee harassment or other behavior-related complaints. The designee needs to understand when issues can be handled internally and when legal or other consultations are required.

Legislators Consider Law that would Grant Broad Sexual Harassment Powers to Massachusetts Attorney General

If there isn’t already enough for employers to worry about amid the plethora of sexual deviance reports that have hit the media lately, add to the list the prospect of an amended anti-discrimination statute that would give the Massachusetts Attorney General broad investigative powers over all things harassing or discriminatory. If passed, the proposed new law would drastically change the sexual harassment landscape by inserting the power of government into the discrimination law arena in a dramatic new way.

In late January, a bill captioned “An Act to enhance investigations of sexual harassment and discrimination” was introduced by State Senator Cynthia Creem. It proposes to amend Mass. Gen. L. ch. 151B, which already provides remedies against sexual harassment and other discriminatory misconduct, by empowering the Massachusetts Attorney General to investigate those same claims when it sees fit. Tools at the Massachusetts Attorney General’s disposal will include the power to demand production of documents and witnesses for sworn testimony. The office of the Massachusetts Attorney General can use its investigative findings to negotiate resolutions with employers or file suit for injunctive relieve, civil penalties of up to $50,000 per violation of law, and damages that include lost wages, emotional distress, and reimbursement for investigative expenses and legal fees. As an apparent public relations deterrent to sexual harassment, the proposed bill would make findings of potential discrimination made by the Massachusetts Commission Against Discrimination open to public inspection, an event that no employer will want to experience.

Regardless whether the proposal becomes law (it is now being reviewed by a legislative committee), it represents yet another warning about sexual behaviors that employers cannot afford to ignore. Massachusetts anti-discriminations laws already make sexual harassment illegal and require employers to maintain an effective anti-harassment policy that is distributed at least annually to all employees. It also encourages sexual harassment training of employees, especially managers. Given the huge financial stakes in this area, the prevalence of sexually inappropriate behaviors in Massachusetts workplaces, and the encouragement victims are currently receiving to complain about harassment when it occurs, all employers will be well-served by a thorough evaluation of their workplaces and procedures. In many cases, a training program for managers or others will make risk/reward sense.