'Grand Bargain' Will Change Minimum Wage, Sunday Pay
The so-called “grand bargain” approved by the Massachusetts Legislature and signed by Governor Charlie Baker will not only usher in paid family and medical leave, but also make significant changes to the state minimum wage and rules governing Sunday and holiday premium pay. These wage changes take effect on January 1, 2019, so it’s time for employers to prepare.
Sunday Openings and Premium Pay
The existing Sunday premium-pay law was adopted in the 1980s when the Legislature allowed retail stores to open on Sunday. The trade-off was that all employees working on Sunday would earn premium pay (1.5 times the employee’s regular pay), whether or not the employee worked 40 hours during the week.
The grand bargain stipulates that Sunday premium pay will decrease gradually during the next five years, until it is eliminated:
a. January 1, 2019, 1.4 times employee’s base pay
b. January 1, 2020, 1.3 times employee’s base pay
c. January 1, 2021, 1.2 times employee’s base pay
d. January 1, 2022, 1.1 times employee’s base pay
e. January 1, 2023, employee paid regular pay (i.e. non-premium pay)
The same gradual phase-out applies to the three summer holidays - Memorial Day, July Fourth and Labor Day.
Massachusetts maintains two types of minimum wage – the first for regular wages, the second a service rate (i.e. tipped employee) rate. The current minimum wage is $11 per hour, the final increase under a law that took the wage from $8 to $9 per hour in 2015 and finally to $11 in 2017. The new legislation increases the minimum wage as follows:
January 1, 2019, $12 per hour
January 1, 2020, $12.75 per hour
January 1, 2021, $13.50 per hour
January 1, 2022, $14.25 per hour
January 1, 2023, $15.00 per hour
The Massachusetts service wage is currently $3.75 per hour. The law also requires employers to ensure that tipped employees receive the equivalent of the minimum wage if tips do not bring the employee up to that level. Employers must pay that differential at the completion of each shift worked by the employee.
Under the new law, the rate will increase as follows:
January 1, 2019 $4.35 per hour
January 1, 2020 $4.95 per hour
January 1, 2021 $5.55 per hour
January 1, 2022 $6.15 per hour
January 1, 2023 $6.75 per hour
We anticipate that the attorney general's Fair Labor Division will issue a new Wage-and-Hour Poster by January 1, 2019, just in case you may need to manually amend your poster to reflect the new wage rates.