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.

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.