Legislative Bargain to Greatly Impact Small Businesses in MA

Date: June 21, 2018

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A bill just passed in the legislature which will saddle Massachusetts businesses with many new labor mandates related to minimum wage increases, mandated paid family and medical leave, and more. Below NFIB explains the history, the fight, and how we were able to scale back the harm to our members. 

How did we get here?

For months, both legislators and Governor Baker expressed a preference for a legislative solution to address several ballot questions slated to appear on the November 2018 ballot. Rather than costly ballot campaigns, they felt the questions on paid family and medical leave, a $15 minimum wage, and the sales tax rollback should be voted on by elected officials in what was dubbed a “grand bargain.”

Negotiators were waiting to hear the outcome of a state Supreme Judicial Court decision on a fourth ballot question, whether to impose a tax surcharge on high-income earners. Yesterday the court ruled that question would not go before voters. With that off the table, the legislators got to work on the so-called grand bargain.  

The NFIB fight

NFIB strongly opposed the ballot initiatives on the $15 minimum wage and a paid family and medical leave program, which were highly popular with state voters, according to polls. Both initiatives increase the cost of doing business in Massachusetts. To try and fight back,  NFIB signed on to a counter effort led by the Retailers Association, to roll back the state sales tax to 5-percent and guarantee an annual sales tax holiday.

NFIB’s Massachusetts state director Christopher Carlozzi was one of five plaintiffs in the successful lawsuit to remove the income tax surcharge from the ballot pending before the Supreme Judicial Court.

All of these actions led to lawmakers calling for negotiations between the business groups and organized labor to work out a compromise.  Both Speaker Robert DeLeo and Senate President Harriett Chandler hoped they could pass a legislative solution and avoid a fight at the ballot box in November. After all, they faced losing $1.2 billion of revenue if they didn’t intercede.

For two months, NFIB sat at the negotiating table arguing a $15 minimum wage would be particularly hard on small businesses, that the current law requiring premium Sunday/holiday pay for retail employees was unfair and unwarranted, and that Massachusetts was one of just 11 states without a teen/training wage. We told them our members were already coping with EMAC costs, high energy prices, double-digit health care premium increases, and a 4-year old paid sick leave law. We explained an additional $1 billion tax on employers and their workers would surely hurt Main Street businesses.

Where are we now?

To get the sales tax increase off the ballot, legislators attempted to make the other two labor mandates less onerous for small business. NFIB remained in opposition to a $15 minimum wage and paid family medical leave and reminded legislators that these are still costly mandates that harm small businesses. House Bill 4640 rapidly moved through both the House and Senate with light debate and was laid before the Governor Wednesday evening.

The Governor is expected to sign the bill, which will remove the sales tax question and the family and medical leave question off the ballot. The Raise Up Coalition is still deciding if they plan to remove their question on the minimum wage, however certain aspects of the package relating to the minimum wage will remain law even if they move forward with their ballot initiative.

This is by no means a victory for small business because two very costly policies will still impact your business. Below please find the final compromise that resulted in House Bill 4640. As always please feel free to contact [email protected] for additional information. We will provide more information to members as it becomes available.

 

“Grand Bargain”

NFIB succeeded in making sure minimum wage is not indexed to inflation, there are smaller incremental increases, and a reduced increase in the tipped wage. 

Minimum Wage 

2019: $12.00/hr

2020: $12.75

2021: $13.50

2022: $14.25

2023: $15.00

No Indexing

Tipped Wage

2019: $4.35/hr

2020: $4.95

2021: $5.55

2022: $6.15

2023: $6.75

NFIB succeeded in the repeal of the premium Sunday/Holiday pay over several years.

Premium Sunday/Holiday Pay 

Repeals premium pay requirements for all employees, phased out on a sliding scale.

1/1/2019: 1.4 times the min wage

1/1/2020: 1.3 times min wage

1/1/2021: 1.2 times min wage

1/1/2021: 1.1 times min wage

1/1/2023: full repeal

To get concessions for small businesses the Retailers withdrew the ballot question reducing the sales tax

Sales Tax Reduction 

No change to sales tax

NFIB fought for and got a sales tax holiday

Sales Tax Holiday

2 days in August annually

NFIB succeeded in reducing the burden on small businesses by eliminating the employer contribution for companies with fewer than 25 employees. We were able to reduce family leave time by 4-weeks and medical leave time by 6-weeks. The wage replacement is reduced and the cap on wages lowered. There is also a delay in benefits.

Employers Subject to Leave Law 

Fewer than 25 employees

* Job protected, paid

* Employees pay employee share of premium (40%)

* No employer contribution

25 or more employees

* Premium split, medical – 60% employer, 40% employee; family – 100% employee

* If the Massachusetts workforce of an employer is comprised with greater than 50% of independent contractors, that employer shall be treated the same as other businesses of the same size

Duration 

* 12 weeks paid family leave

* 20 weeks paid medical leave

* 26 weeks military leave

* 26 weeks annual cap

Wage Replacement & Weekly Cap – Grand Bargain

80% of wages up to 50% of average weekly wage, then 50% of wages up to $850 cap.

Opt-Out 

* Opt-out for employers with programs that offer a benefit greater than or equal to what an employee receives under the state program.

* Employers may choose to opt-out for both individual leave types (medical/family).

Phase-In 

* Collections begin 7/1/19

* Benefits begin 1/1/2021 (medical)

* Benefits begin 7/1/2021 (family)

Self-employed. Independent Contractors 

* Must opt-in. 100% of premium paid by self-employed.

* If the Massachusetts workforce of an employer is comprised with greater than 50% of independent contractors, that employer shall be treated the same as other businesses of the same size.

 

 

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