By Stéphanie Smith

Ringing in 2023 – Important Legal Updates for Massachusetts Employers

The new year usually brings newly-minted employment laws, and 2023 is no exception.  Below is a summary of some of the more important changes for Massachusetts employers, including some changes for employers with workers outside the Commonwealth, and other newsworthy developments. 

Paid Family and Medical Leave (PFML) Updates

Important updates to the PFML program became effective on January 1, 2023, requiring immediate action by Massachusetts employers who missed this important deadline.    

First, and importantly, the PFML contribution rate has decreased in 2023.  Indeed, as of January 1, 2023, the contribution rate for employers with 25 or more covered workers has decreased to 0.63% of “eligible wages” (the employer’s share of that 0.63% is 0.312%, and the employee’s share is the remaining 0.318%).  For employers with less than 25 covered workers, the contribution rate decreased from 0.344% to 0.318% (no contribution by the employer is required).

Other good news for employees: While the contribution rate has gone down in 2023, the maximum weekly benefit amount went up, and is now capped at $1,129.82 per week.  However, the state has also increased the minimum earnings requirement, and now requires that a worker have earned at least $6,000 in the last four completed quarters preceding the PFML application, in order to be eligible for PFML benefits.

If they have not done so already, Massachusetts employers should 

• update their policies and post the updated 2023 mandatory PFML poster in the workplace as soon as possible; and  

• notify their workforce of the updated contribution rate and ensure that their payroll system withholds the proper rate. 

The updated poster, employee notices, and rate sheets are available here.  The link also includes information for employers with a private plan.

Massachusetts and Other Jurisdictions Increase Minimum Wage 

The Massachusetts minimum wage is now $15 per hour (and the rate for tipped workers has increased to $6.75 per hour).  Other states also increased their minimum hourly rate, including California ($15.50/hour), New York ($14.20/hour), and Washington ($15.74/hour).  

Employers operating in other jurisdictions should be mindful that some states are set to increase their minimum wage later in the year.  For example, Connecticut’s minimum wage is set to increase to $15/hour on June 1, 2023. And, as if compliance with federal and state wage and hour laws was not already tricky enough, employers also need to confirm whether the cities in which they operate (or in which they employ workers) have higher wage requirements.  For example, the minimum wage in Long Island and New York City is $15 per hour.

Given the potential for multiple damages for even a minor or unintentional violation, multi-state employers (including entities employing remote workers) should consult with experienced employment counsel to confirm compliance with applicable laws.

Lastly, as of January 1, 2023, the Massachusetts Sunday and holiday premium pay rate requirement for covered retailers has been entirely eliminated.  (Employers are still required to pay the overtime premium rate of 1.5 times their employees’ regular hourly rate, where applicable).

Expanded Salary Transparency Laws 

Existing laws already prohibit discriminatory pay practices based on a candidate’s gender, race, or other protected categories.  However, it can prove difficult for employees to identify a potential wage gap, because pay information for peers is not readily available.  In an effort to reduce the gender and race pay gap, a growing number of states and cities require employers to disclose the pay range for an open position in job postings and/or disclose this information to current employees upon request.  

California: As of January 1, 2023, all California employers must provide pay scale information (salary or hourly rate) to current employees upon request - the law already provided this right to job candidates.  Employers with at least 15 employees must also include pay scale information in job postings, including on the employer’s hiring page. The law includes new recordkeeping obligations. The California Labor Commissioner recently issued FAQs, which clarify that the employee threshold is met if an employer employs at least 15 employees and at least 1 employee is located in California.   

Washington: Under the Equal Pay and Opportunities Act, covered employers must include pay scale information and a general description of company benefits “and other compensation to be offered” in job postings.  The law applies to employers with 15 or more employees (including at least 1 employee located in the state). Pay scale information must be provided upon request by an employee offered an internal transfer or promotion. 

These states join other states that have already passed their own salary disclosure laws, including Connecticut, Rhode Island and Colorado. A similar salary transparency law went into effect in New York City in November 2022.  Note that in many cases, these laws apply if the position can or will be performed remotely from the applicable jurisdiction.  These new pay transparency laws add important protections to existing laws prohibiting employers from asking about job applicants’ salary history, in an effort to weed out discriminatory pay gaps.

A Look Back, and What’s Ahead

Hairstyle-based discrimination became illegal in Massachusetts in 2022, when then-Governor Baker signed the “CROWN” Act, which stands for “Creating a Respectful and Open World for Natural Hair.”  The Act, which became effective on October 24, 2022, expands existing protections against race  discrimination, by defining “race” as including “traits historically associated with race, including, but not limited to, hair texture, hair type, hair length and protective hairstyles.” The term “protective hairstyle” is defined broadly in the law, and includes, without limitation, braids, Bantu knots and hair coverings. The law requires the Massachusetts Commission Against Discrimination to adopt rules and regulations, and formulate policies, to assist in enforcing the law.

The Federal Trade Commission (FTC) started 2023 off with a bang by issuing a Notice of Proposed Rulemaking, which would impose a sweeping ban on nearly all noncompetition agreements, nationwide.  The proposed “Non-Compete Clause” rule would not only prohibit employers from entering into non-compete clauses with employees and independent contractors, but also require employers to rescind existing non-compete clauses and notify workers of that rescission.  The only apparent exception at this time is for an owner, member or partner of the selling business and who owns at least 25% of the business being sold.  Public comments are due 60 days after the proposed rule is published in the Federal Register, after which the FTC will move to make it final.  Employers should start reviewing which workers have unexpired non-compete clauses and keep an eye out for model notices from the FTC, which can be provided to a worker with an unexpired non-compete clause.