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 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.

Massachusetts High Court Clarifies that Sick Leave is not Wages

Though most employment lawyers never thought of accrued sick leave benefits as a wage, it took only one, armed with a big enough sick leave balance, to test the question in Massachusetts’ highest legal venue. To the surprise of few, the law left the Massachusetts Supreme Judicial Court in the same form lawyers and lower court judges have long interpreted it. While accrued sick leave remains a benefit that employers now need to provide under Massachusetts law, it is not a wage that must be paid to departing employees who have accrued it on the company’s books.

The case’s high stakes lend a clue as to why it went as far as it did. At issue was $46,755 in accrued sick leave under a plan at the Massachusetts Port Authority. Though the benefits were ultimately paid to the employee, the check was cut about a year after he retired due to an arbitration proceeding that ultimately went his way. Under the Massachusetts Wage Act, wages due to employees must be paid promptly at departure from employment. The Plaintiff pressed a theory that this provision of the law was broken by the late payment and that he was consequently entitled to three times the amount of  accrued sick pay owed, plus reimbursement for all legal fees he incurred to collect his pay.

The SJC would have none of it, however. It cited to the Act’s definition of the term “wages,” which includes holiday pay, vacation pay and earned commissions but does not mention sick leave benefits. The court then contrasted the purposes of sick and vacation leave policies, noting that only the latter could be used for any purpose. Sick leave generally is not wages as a result, the court concluded, and could not be considered a wage under Massport’s specific policy of paying out accrued, unused sick leave under some circumstances. Those conditions made sick time at Massport a “contingent bonus,” such that it like other bonuses is not a wage covered by the Wage Act.

The case is Mui v. Massachusetts Port Authority, decided January 29, 2018.

Hiking of Minimum Wage to $15/Hour Makes its Way toward the Ballot Box for November 2018

Dissatisfied with the recent increase of the Massachusetts minimum wage to $11/hour and its failed efforts to get the state legislature to move the hourly rate to $15, a coalition of community, religious and labor groups has submitted the issue for referendum vote. Assuming the question moves through the process to the November 2018 ballot, Massachusetts voters will decide whether to increase the hourly rate to $15, a move that surely won’t go over well with some business people.

Proponents of the hourly wage increase are unmoved. They believe $15/hour is necessary to allow low paid workers to afford basic necessities such as groceries, housing and heating. As it is, they say, full-time workers earning the current minimum of $11/hour make only about $22,000 per year. About a million Massachusetts workers will benefit if the rate increase is approved, they contend, and most are above the age of 20. They include nursing assistants, childcare providers, and teachers’ aides, the group says. Anticipating objections to the wage hike, the coalition points out that, despite the increase in the minimum wage from $8 to $11 in recent years, the Massachusetts economy continues to grow strongly.

If approved at the ballot box, the minimum wage will increase by $1/hour each year for four years, beginning in 2019. The measure will also increase the minimum tip wage from $3.75 to $9/hour during the same 4-year period. Under Massachusetts law, tipped employees may be paid less than minimum if their hourly rate plus the tips they receive are equal to or exceed the minimum hourly wage. On December 21, 2017, the Massachusetts secretary of state confirmed that enough signatures were submitted to support the ballot measure. The proposed wage increase now moves to the state legislature, which will have the option to approve it prior to any voting by the public. If that does not occur by May 2, 2018 or if the governor fails to sign a passed measure into law, proponents of the minimum wage increase will need to obtain another roughly 11,000 signatures from Massachusetts voters by July 4 to place the question on the 2018 ballot.

2018 Ballot Question Proposes up to 26 Weeks of Paid Family and Medical Leave to Massachusetts Employees

If a coalition group called Raise Up Massachusetts gets its way, the Commonwealth will soon have a comprehensive new law that provides paid leave to employees for a variety of personal reasons. At the recent deadline for 2018 ballot questions, Raise Up submitted a voter-supported initiative it calls a Family and Medical Leave law. If approved at the polls next November, the new law will provide up to 26 weeks of paid leave annually to Massachusetts employees.

The ballot question divides paid leave into two general categories – “family” and “medical.” Under the former, employees will be entitled to up to 16 weeks of paid family leave each year to care for ill family members, bond with their children, or address military-related emergencies. They’ll be allowed up to 26 weeks to care for a covered service member, as that term is defined by the proposed law. For an employee’s own health condition, he/she will be allowed up to 26 weeks under the medical leave portion of the proposed new law. An employee who uses either family or medical leave will generally need to be restored to the same or a similar job without losing pay or other benefits. Pay will be capped at $1,000 per week.

Wage payments will not come directly from employers under the proposed Family and Medical Leave Law. Instead, a new agency called the Department of Family and Medical Leave will be created to collect employer contributions equal to .63% of employee and independent contractor payrolls. Half of the amount paid by employers can be recouped from workers. The Department of Family and Medical Leave will create regulations to implement and administer the new law. It will make eligibility decisions, pay benefits, and adjust contribution rates periodically as needed.

If voted into law next November, the Family and Medical Leave Law will take effect 18 months later. Contributions to the trust fund, however, will begin on July 1, 2019, roughly a year before the law takes hold. As with other employment laws, the proposed statute bars retaliation against employees who take advantage of its benefits. Any negative change to the terms and conditions of employment within six months of using paid leave will be presumptively retaliatory. Punishment can include up to three times the amount of any lost wages, damages as may be incurred, and reimbursement of legal fees.

Employers Get Another Reason to Carefully Review and Comply with Wage Laws

It’s no surprise that the reach of Massachusetts’ wage laws is long, and most employers know they need to carefully abide them if they want to avoid potentially dire effects. Still, courts sometimes seem to extend the law’s reach in surprising ways. When that happens, employers to which such rulings apply might first shudder a bit, then step back and review policies to be sure they are doing things properly.

A recent U.S. District Court decision may have such an effect. In Chebotnikov v. LimoLink, the court ruled that a trial was necessary to determine whether limousine drivers are employees or contractors. It went on to also conclude that gratuities charged to customers must be remitted to the drivers under the Massachusetts tips statute. That law requires that service charges or tips from customers “shall be remitted only to the wait staff employees, service employees or service bartenders” who provide the customer service at issue.

What’s interesting here is the award of tips to individuals who may or may not be employees despite the fact that the statute involved appears to apply only to that group. The court seemed moved in large part by the clear intention of the law: to ensure that service workers get the tips that customers intend for them and not their employers to receive. Employers who collect tips or charge costs to customers that might be interpreted as gratuities need not shudder at this ruling, perhaps, but certainly should review their practices to ensure they don’t get caught in the same situation as LimoLink apparently has.

Supreme Judicial Court Rules that Employees get Interest on Unpaid Wages but not Statutory Penalties

The Supreme Judicial Court this week issued its latest interpretation of the Massachusetts Wage Act, Mass. Gen. L. ch. 150, §§148-150. It ruled that prejudgment interest on unpaid wages and other benefits awarded to employees should be added to judgments at the statutory rate of 12 percent. Importantly, however, the SJC decided that no interest can be awarded on the mandatory triple damage penalties that apply under the Wage Act.

The case is significant both as to its substance and the SJC’s break with a ruling by the U.S. Supreme Court regarding prejudgment interest on wages. On substance, the SJC’s ruling will likely result in substantially reduced judgments against employers in some cases. As to federal precedent, the Supreme Court decided in 1945 that employees cannot receive interest on wage judgments under the Fair Labor Standards Act (a federal law dealing with wage payments to employees) because its liquidated damages provision superseded it. In rejecting this logic, the SJC pointed to laws in Massachusetts that require interest at 12 percent annually on damages awards. It concluded that harmonizing the Wage Act with these laws requires a reasonable balance such that interest must be awarded on actual damages awarded but not on triple damage sums. [Read more…]

U.S. Supreme Court Delays Hearing on Cases that may Decide whether Class Action Rights can be Waived

The U.S. Supreme Court may have accepted a group of cases that will determine whether companies can require their workers to waive class action rights, but that doesn’t mean it’ll be deciding this important question anytime soon. After accepting the cases for review in January, the Court announced that it will not hold oral arguments this term. The cases will be argued in Fall 2017 and decided some time thereafter, perhaps well into 2018.

The significance of this is patent. First, it suggests that the Court may be divided on the class action waiver question and requires a deciding voter. The Court now has only 8 justices in the wake of the Republicans’ 2016 refusal to consider President Obama’s nominee to the bench. They won’t do the same with their own party’s nominee(s), and the Court will surely have 9 members soon. Second, the delay means that uncertainty over class action waivers in employment agreements will remain for some time. This will likely encourage litigation in lower courts over the issue and may cause decisions to be delayed.

It is common today for companies to have their workers sign agreements that include arbitration provisions requiring lawsuits to be pursued individually. This is sometimes impractical due to the small size of a claim, and an employee or independent contractor therefore may seek to bring suit on behalf of others. The Supreme Court has previously found that mandatory arbitration agreements are generally enforceable. It’s now being asked to resolve lower court disagreement about whether federal law allows companies to avoid class action lawsuits through arbitration clauses.

Minimum Wage Now at $11 Per Hour

Effective January 1, 2017, the minimum wage for Massachusetts workers rose from $10 to $11 per hour. The new rate applies to almost all employees. For employees who regularly receive tips as part of their pay, the minimum rate is $3.75/hour. Those workers’ total compensation with tips included must be at least $11/hour. All categories of workers remain eligible for overtime pay at 1.5 times their normal rates of pay for hours worked above 40 in a workweek. Some workers are exempt from overtime requirements based on job classifications and administrative requirements.