Attorney General Maura Healey has certified a petition to put a question on the November 2018 ballot that would raise the current minimum wage of $11 to $12 in 2019, $13 in 2020, $14 in 2021, and $15 in 2022. The proposed law would also increase the current minimum wage of $3.75 per hour for tipped employees to $5.05 in 2019, $6.35 in 2020, $7.64 in 2021, and $9.00 in 2022.

In Massachusetts, one can file an initiative petition with the Office of the Attorney General to put questions on the ballot. Attorney General Maura Healey must review and certify that a petition complies with the constitutional guidelines for it to move through the rest of the process. Filing the petition and having it certified is one step of several to achieve getting a question on the ballot. Your PS&A team will keep you apprised of any new developments on this important issue.

On August 31, 2017, a U.S. District Court in Texas granted a summary judgment against the Department of Labor (DOL) in the consolidated cases challenging the increase in the salary threshold to $47,476 for classifying certain positions as exempt from overtime. The court held that the DOL exceeded its authority and concluded that the final rule is invalid. This same court had issued a temporary injunction in November of 2016 that blocked the increase from taking effect on December 1, 2016.

What’s next? As reported in our last month’s newsletter, the DOL is currently accepting comments on its Request for Information (RFI) through September 25, 2017. At this point, DOL has received over 124,000 comments. The purpose of the RFI is to ask the public for information that will help DOL in formulating a proposal to revise the FLSA regulations. The RFI asks for feedback on questions pertaining to the minimum salary threshold as well as to the duties test, verifying cost-of-living in different parts of the U.S., inclusion of non-discretionary bonuses and incentive payments for satisfying part of the minimum salary threshold, the salary test for highly compensated employees, and automatic updating of the minimum salary threshold. DOL Secretary Acosta has said that the salary threshold should be increased, but not to the $47,476 level. During confirmation hearings, DOL Secretary Acosta discussed the low $30,000’s as a possibility.

The PS&A team will keep you informed as developments on this important topic occur.

The U.S. Department of Labor (DOL) published a request for information (RFI) on July 26, 2017, regarding the overtime rule for determining whether employees are exempt or non-exempt under the Fair Labor Standards Act (FLSA).  The purpose of the RFI is to ask the public for information that will help DOL in formulating a proposal to revise the FLSA regulations.

Under the Obama administration, the minimum salary threshold for treating an employee as exempt from overtime under the so called FLSA white collar exemptions was increased from $455 per week ($23,660 annualized) to $913 ($47,475 annualized), effective December 1, 2016.  The increase in the threshold was highly controversial and within two weeks of the effective date, a federal district court in Texas issued a nationwide preliminary injunction, effectively putting the increase on hold.  Since then, an appeals court granted the DOL three extensions in defending their case as a new Secretary of Labor had not been confirmed following Trump becoming President.  Alex Acosta, the new Secretary of Labor, was ultimately confirmed on April 27.  Of note is that during the confirmation hearing, Acosta indicated that DOL will review and possibly revise the FLSA regulations and stated that he believed the minimum salary threshold should be around $33,000.

The RFI asks for feedback on questions pertaining to the minimum salary threshold as well as to the duties test, verifying cost-of-living in different parts of the U.S., inclusion of non-discretionary bonuses and incentive payments for satisfying part of the minimum salary threshold, the salary test for highly compensated employees, and automatic updating of the minimum salary threshold.  All comments must be received by September 25, 2017.   Comments may be submitted electronically at http://www.regulations.gov, or mailed to Melissa Smith, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington DC 20210.  The DOL prefers to receive comments electronically.  To date, there are over 35,000 who have submitted comments.  To view the RFI, visit the Federal Register website at

https://www.federalregister.gov/documents/2017/07/26/2017-15666/request-for-information-defining-and-delimiting-the-exemptions-for-executive-administrative.

The PS&A team will keep you apprised of new developments.

An appeals court has granted the Department of Labor (DOL) a third extension in defending the FLSA regulations that among other things would have increased the minimum salary threshold below which employers must pay overtime from $455 per week ($23,660 annualized) to $913 ($47,476 annualized), effective December 1, 2016. Within two weeks of the effective date (November 22), a federal district court in Texas issued a nationwide preliminary injunction, effectively putting the increase on hold. While President Obama was still in office, DOL appealed the order. Shortly after President Trump’s inauguration, a 30-day extension was granted making the deadline for filing a brief March 2 . A second extension of 60 days was granted bringing the deadline to May 1 to give new DOL leadership time to review the issues. The third extension was granted, bringing the deadline to June 30, because Trump’s nominee for Secretary of Labor, Alex Acosta, had not yet been confirmed. Acosta was confirmed as the new Labor Secretary on April 27.

Of note is that during a confirmation hearing, Acosta indicated that if he is confirmed, he would first decide whether DOL would continue to appeal the district court order. If DOL does not continue to appeal the order, a group of union organizations has moved to take over. Acosta also indicated that DOL will review and possibly revise the FLSA regulations and stated that he believed the minimum salary figure should be around $33,000.

Bottom line, we could still see an increase in the minimum salary threshold but it’s more likely to be in the low to mid-thirties range – not $47,476. For now, we all need to sit tight while this continues to unfold.

A new bill, called the Working Families Flexibility Act of 2017 (H.R. 1180), was introduced and passed by the House on May 2, 2017. If signed into law, the Act would amend the Fair Labor Standards Act to allow private sector employers to provide compensatory time (aka comp time) for nonexempt employees in lieu of overtime pay, an option currently available to public employers only. If signed into law, the Act would sunset (i.e., cease to be in effect) five years after the date the Act becomes law.

If providing comp time, the number of hours would have to equal at least one and one-half hours for each hour an employee worked overtime. In addition, the following conditions would apply:

  • For a nonunion employee, the employer and employee would be required to have an agreement in place before the employee performs the work. The agreement, which should be in writing, would have to specify that the employer has offered and the employee has chosen to receive comp time in lieu of overtime pay, and that the employee entered into the agreement “knowingly and voluntarily” and not as “a condition of employment.”
  • In the case of a union employee, the collective bargaining agreement would be required to include provisions allowing employees to receive comp time in lieu of overtime pay.
  • No employee (whether nonunion or union) would receive or agree to receive comp time unless the employee had worked at least 1,000 hours during a period of continuous employment with the employer in the 12-month period before the date of the agreement or receipt of comp time.

The bill caps the maximum comp time hours an employee could accrue during a calendar year at 160 hours, and it requires that an employer would have to pay out any accrued comp time not used by the end of the year no later than January 31st. In addition, unused accrued comp time would have to be paid out to an employee who terminates employment, regardless of whether the termination is voluntary or involuntary. The bill also provides that an employer would have to pay out accrued but unused comp time in excess of 80 hours at any time after giving the employee at least 30 days’ notice.

When unused comp time is paid out, it would be considered unpaid overtime compensation, and it would have to be paid at a rate not less than the higher of  the regular rate earned by the employee when the:

  • Comp time was accrued or
  • Employee received payment of the comp time

Other provisions of the bill include:

  • An employer would have to allow an employee who requests to use some of his or her accrued comp time to take the time off within a reasonable period after the request so long as doing so does not unduly disrupt the employer’s operations.
  • Except when a collective bargaining agreement provides otherwise, an employer that has adopted a policy offering comp time to employees could terminate the policy after giving employees 30 days’ notice.
  • An employee who has signed an agreement for comp time could withdraw his or her agreement at any time. In addition, an employee could request in writing at any time that his or her accrued but unused comp time be paid out. An employer would have to pay out the comp time within 30 days of receiving an employee’s written request.
  • An employer could not directly or indirectly intimidate, threaten, or coerce or attempt to intimidate, threaten, or coerce any employee to interfere with an employee’s rights to request or not request comp time off in lieu of overtime or require any employee to use his or her comp time.

The House bill passed by a vote of 229 to 197 with no Democrat voting in favor of the bill.  The Senate version of the bill (S. 801) was introduced to the Committee on Health, Education, Labor, and Pensions on April 3, 2017. Your PS&A team will keep you informed on any new developments.

In our most recent blog we reported that Governor Baker had proposed four Massachusetts insurance market reforms to help close a $600 million shortfall in the MassHealth budget for 2018. One of the reforms would have assessed an employer with 11 or more full-time equivalent employees (FTEs) $2,000 per FTE not covered by the employer’s plan. The budget put forth by the House, however, does not include Governor Baker’s proposed assessment. Rather, the House plan calls for the administration to hold public hearings to obtain more input from businesses before implementing any assessment.

We continue to hear that Governor Baker is open to compromise. Your PS&A team will update you on the proposal as new developments occur.

To make up for a $600 million shortfall in the MassHealth budget for 2018, Governor Baker has proposed four Massachusetts insurance market reforms, one of which would bring back a fair share contribution requirement for employers with 11 or more full-time equivalent employees (FTEs). Before the Affordable Care Act (ACA) was signed into law, the Massachusetts Health Care Reform law required an employer to pay $295 per full-time employee unless the employer met certain coverage offer requirements. However, the requirement was repealed in 2013 to align with the Affordable Care Act’s employer mandate and other requirements taking effect in 2014.

Under Governor Baker’s proposal, the employer contribution would be $2,000 per FTE not covered by the employer’s plan, unless the employer provided “adequate coverage” and at least 80 percent of its FTEs were enrolled in the employer’s plan. If passed as proposed, the effective date would be the first day of the plan year beginning on or after January 1, 2018.

Adequate coverage is defined as $4,950 for full-time employees (i.e., 35 hours per week) for employer health coverage or a contribution to an HRA ($4,950 or another amount determined by the Massachusetts Department of Revenue). There is no additional requirement for spouses and dependents.

FTEs would equal the total number of employee hours of work performed by employees with one at least one month of service per quarter divided by 500, with a maximum of 500 hours counted per employee. When determining FTEs and an employer’s fair share contribution, temporary and seasonal employees and interns would be excluded. However, employees under age 26 who opt for coverage under a parent’s employer’s plan would be included. The formula for determining FTEs was designed to not incent employers to shift more full-time employees to part-time. If an Affordable Care Act (ACA) mandate applies, an employer would be credited for any federal penalties it pays before being assessed for the state employer contribution.

The table that follows shows how the employer contribution would be calculated assuming each employer has 20 FTEs comprised of 18 full-time employees and 4 part-time employees.

In addition to the fair share contribution, Governor Baker has also proposed the following to close the MassHealth budget gap:

  • Caps on certain health care provider rate increases, the elimination of certain facility fees charged for services, a moratorium on new health insurance coverage mandates, and the ability for small businesses to offer employees a choice among a range of insurance through a new Connector small business platform (In general, the effective date would be July 1, 2018, except for the new
  • Connector small business platform, which would be effective January 1, 2018.)
  • Submitting a waiver for relief from ACA employer mandate to simplify health care administration burden for employers
  • Continued controls for the sustainability and program integrity of MassHealth

Governor Baker’s proposal is causing a great deal of concern among some businesses. The Associated Industries of Massachusetts opposes the reinstatement of the fair share contribution, stating on its website that the “proposal to impose a $2,000-per-employee tax on some employers is an unfair way to close a deficit in MassHealth.” There are also many questions on how the $2,000 fair share contribution would actually work. We understand that the Governor is open to considering other options that would close the MassHealth gap.

The information provided on Governor Baker’s proposal is from the Masschusetts Insurance Market Reform, Affordability and MassHealth Sustainability document prepared by the Executive Office of Health & Human Services, January 26, 2017. To access the full text, visit http://www.mass.gov/eohhs/docs/eohhs/insurance-market-reform-proposals.pdf.

Your PS&A team will keep you informed of any new developments regarding the proposal.

Pamela Sande recently attended the Society for Human Resource Management’s (SHRM’s) Employment Law & Legislative Conference in Washington D.C. on March 13 and 14, and as a member of SHRM’s Advocacy Team, participated in SHRM’s Legislative Hill Day on March 15. SHRM is the largest HR professional society with 285,000 members worldwide. In addition to serving as a valuable resource for its members, SHRM, a nonpartisan organization, advocates for legislation that benefits employers and employees. On Legislative Hill Day, Pamela and other members of the Advocacy Team met with Senators and House Representatives and/or their staffs, to advocate for health care and workplace flexibility legislation. A summary of SHRM’s position regarding Health Care and Workplace Flexibility legislation follows.

Health Care

SHRM supports bipartisan reform that lowers health care costs, that improves access to high quality and affordable coverage, and that protects and strengthens employer sponsored coverage. Protecting and strengthening employer sponsored coverage is important as over 177 million people have health care coverage through an employer plan. This is 16 times the number of people who have coverage through the Affordable Care Act (also known as ACA or Obamacare) federal and state health care exchanges. In addition, SHRM is advocating for:

  • Reform that does not raise taxes on employers or employees or that would increase the cost of health care for employees and their families.
  • Full repeal of the 40 percent excise tax (also known as the “Cadillac tax”). Note: The House bill, (i.e., The American Health Care Act), that was withdrawn on March 24 due to lack of votes necessary for the bill to pass, would not have repealed the excise tax. Rather, it would have delayed the excise tax to 2025.
  • Keeping provisions in the ACA that improve wellness programs and quality of care as wellness programs are an integral part of many employers’ strategy to promote healthy lifestyles and reduce health care costs.

Workplace Flexibility

SHRM is advocating for a 21st century workplace flexibility policy approach that meets the needs of employers and employees. Rather than promoting a one-size-fits-all approach, SHRM believes that legislation should be flexible enough to accommodate differences among businesses because of size, industry, labor market, and other factors. SHRM has worked with Representative Mimi Walters (R-CA) to develop a proposal that encourages employers to adopt paid leave and flexible work options voluntarily. Representative Walters is expected to introduce the SHRM developed legislation within the next few weeks.

Under the bill, ERISA would be amended to allow an employer to voluntarily opt into the program provided the employer meets two requirements: (1) the employer offers a minimum threshold of paid leave; and (2) the employer offers a flexible work option to all employees such as part-time work, flexible schedule, opportunity to telecommute, etc. To satisfy the second requirement, an employer would be able to offer different flexible work options based on job or a segment of its work force. Two key benefits of this bill if passed are:

  • It gives employers some flexibility in designing time off and flexible work place options that best fit the business, and
  • Provided an employer satisfies federal law, the employer would automatically also satisfy all state and local requirements, allowing the employer to create a program that better fits its business versus a state mandated leave law and/or avoid having to satisfy multiple state laws if operating in multiple states.

Your PS&A team will keep you posted on these legislative efforts!

The final FLSA rules would have increased the minimum salary threshold from $455/week ($23,660/year) to $913/week ($47,476/year), effective December 1, 2016, doubling the threshold for the exemption from overtime pay. However, within two weeks of the effective date of the increase, a federal court in Texas issued a preliminary injunction, effectively putting the increase on hold. Thus, employers may continue to use the $455 per week threshold for now. Further, given the 2016 election results, it is questionable as to when and whether the threshold will increase.