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Breaking Down the Massachusetts ‘Grand Bargain’ Bill

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Last month, Governor Charlie Baker signed “An Act Relative to Minimum Wage, Paid Family Medical Leave and the Sales Tax Holiday” into law, proposing major changes to Massachusetts’ employment laws that will gradually take effect over the next five years. This has been nicknamed the ‘Grand Bargain’ as it involves compromises between ballot initiative proponents and legislators.

Advocacy organizations that had planned to submit November ballot questions on the policies in the bill, including the state income and sales taxes, minimum wage, and paid family leave, agreed to withdraw their proposals after Governor Baker signs the bill.

Here’s a breakdown of the bill’s most significant policies:

Minimum Wage

The new law will raise the current $11-an-hour minimum wage to $15-an-hour, but don’t expect a raise right away. Increases will begin in 2019, when the state’s minimum wage will go up to $12-an-hour and continue to increase in 75-cent increments over the next four years. The tipped minimum wage will also increase from $3.75 an hour to $6.75 by 2023.

What’s the compromise?

The timeline for this minimum wage law is a year longer than the timeline drafted in the proposed minimum wage ballot question. The tipped minimum wage raise is also less than the amount proposed in the ballot question, which would have raised the tipped minimum wage to $9 an hour by 2022.

Paid Leave

Beginning in 2021, employees can take up to 12 weeks of family leave, up to 20 weeks of medical leave and up to 26 total weeks of compensated leave in a year. Workers will be paid 80 percent of their salary up to about $650 and 50 percent of wages above that, to a maximum weekly benefit of $850. Employees can use family leave to care for a new child, support a family member with a serious health condition or help a family member in the military who has been called into active duty.

What’s the compromise?

The leave program proposed in this bill is more limited than the one proposed in the ballot question. RaiseUp Massachusetts, a coalition of community organizations, religious groups, and labor unions, proposed up to 16 weeks of paid family leave, 26 weeks of paid medical leave, and compensation equal to 90% of wages.

And how will it be funded? By a 0.63 percent payroll tax increase, with contributions from employers and employees. According to the Boston Globe, the new deduction would amount to between $4 and $4.50 weekly per employee.

Creating a Sales Tax Holiday

Massachusetts residents will get a Sales Tax Holiday on Saturday, August 11 and Sunday, August 12 in 2018. The tax-free weekend isn’t new to the Commonwealth. It was first established in 2004 to fuel economic growth and was popular among consumers and retailers. In the midst of the recession in 2009, legislators opted against the tax holiday, but reinstated it in 2010. Lawmakers suspended the holiday again in 2016 and 2017 due to budget shortfalls.

What’s the compromise?

Originally, The Retailers Association of Massachusetts proposed a permanent decrease in the state sales tax from 6.25 percent to five percent. Legislators argued this would significantly hurt state revenues, but agreed to reinstate the sales tax holiday.

During the tax holiday, consumers will still have to pay the full sales tax on some products, including marijuana (assuming retail stores are operating), alcohol, cars, and other items over $2,500.

Holiday Pay

This bill eliminates the Massachusetts blue laws requirement that retailers pay employees overtime wages on Sundays and six restricted holidays. Premium pay will be phased out over the same four-year period as the minimum wage increase. Legislative leaders’ choice to make the text of the bill public just hours before they voted was seen as a way to “outrun opposition” from unions on this particular mandate.

What’s the compromise?

Phasing out premium pay on Sundays and holidays is expected to mitigate the effects of the $15 minimum wage on retailer workers. The law still maintains that employees cannot be required to work on Sundays or restricted holidays, nor can they be penalized for refusing to work on those days.

What’s Next?

Besides the August Sales Tax Holiday, the policies signed into law will begin taking effect in 2019. As the Commonwealth transitions, communication and transparency will be key for both employers and their employees, and perhaps the next step for organizations is figuring out how to transition collectively.

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