On June 28, 2018, Massachusetts Governor Charlie Baker signed into law An Act relative to minimum wage, paid family medical leave and the sales tax holiday, compromise legislation also known as the “Grand Bargain.” The new law created a permanent sales tax holiday, implemented annual increases in the minimum wage (up to $15 per hour as of January 1, 2023), and instituted a state-mandated paid family and medical leave program. To offset some of the cost to businesses of the minimum wage increases, the legislation was also designed to gradually phase out Sunday and holiday premium pay requirements. Indeed, the state’s press release accompanying the bill signing noted that “Wage policies for Sunday and Holiday pay will also be reformed.”
However, without explanation, the Grand Bargain failed to eliminate premium holiday pay requirements for three major legal holidays: New Year’s Day, Columbus Day, and Veterans Day. And the state Attorney General’s Office has indicated that it is ready to enforce the law as written, which means the “Grand Bargain” may not be so “grand” for employers.
Massachusetts General Laws Ch. 136, § 5 generally prohibits retailers from opening on Sunday. However, Section 6 contains a lengthy list of exceptions, including a broad one for retail stores and shops. Under the exception, most retailers are required to pay employees time and a half for Sunday work. In addition, Sections 13 and 16 require retailers to pay time and a half to employees who work on certain legal holidays: Section 13 requires premium pay on New Year’s Day, Veterans Day, and Columbus Day, while Section 16 requires premium pay on Memorial Day, the Fourth of July, and Labor Day. The Grand Bargain legislation made amendments to Section 6, concerning Sunday pay, and Section 16, concerning premium pay on Memorial Day, July Fourth, and Labor Day. Both of these premium pay requirements are phased out over a period of five years: The premium rate is 1.4 times the employee’s regular rate of pay until January 1, 2020; 1.3 times until January 1, 2021; 1.2 times until January 1, 2022; and 1.1 times until January 1, 2023.
Without explanation (in the preamble to the bill or otherwise), the Grand Bargain made no amendments to Section 13, which requires premium pay on New Year’s Day, Veterans Day, and Columbus Day. Whether this omission was intentional or inadvertent, the Attorney General’s office has published a table listing the disparate premium pay requirements. Moreover, as discussed in our previous bulletin linked above, holiday premium payments that are less than 1.5 times the employee’s regular rate of pay must be included in the “regular rate” for purposes of calculating overtime under the Fair Labor Standards Act.
In summary, from an employers’ standpoint, “the Grand Bargain” may have to be downgraded to “the Meh Bargain.”