Minimum Wage in MA
Overview of Minimum Wage in Massachusetts
The Massachusetts minimum wage has long been higher than the federal minimum wage, and recent legislation has broadened that gap. In 2019 every employer must pay employees at least $12 per hour, and the minimum wage will increase each year until it reaches $15 an hour in 2023. The rules are different for service employees who receive tips ("tipped employees"). Tipped employees have a lower minimum wage because their wages are supplemented by the tips. These base wages will increase also between now and 2023, from $4.25 per hour in 2019 to $6.75 in 2023. The employer, however, must make sure that tipped employees' total compensation including tips meets the applicable minimum wage for other employees. Employers must also follow strict rules protecting those tipped employees if the employer requires staff to share tips or pool tips ("tip pooling").
What is Minimum Wage
Minimum wage is the lowest amount per hour the law allows an employer to pay employees. There is a federal minimum wage set by the Fair Labor Standards Act ("FLSA"), which is currently $7.25 per hour, but many states (like Massachusetts) require a higher hourly rate. No state can provide for a minimum wage lower than the federal rate, but where the state rate is higher that is the applicable wage. The minimum hourly wage is lower for tipped employees, like waitstaff and bartenders, but their hourly wage plus tips must still equal the minimum requirement, currently $12 per hour in Massachusetts. Employees engaged in agriculture and farming are also subject to a lower minimum wage in Massachusetts (currently $8.00 per hour).
Minimum Wage and Commission Only Employees
Some employees are paid on a "commission only" basis, which means their actual pay may vary a lot from week to week or month to month. If you are a commission-based employee (usually sales), you may not think that the minimum wage is applicable to you, because over time you end up making more than the required hourly rate. But you should know that the minimum wage still applies to you. If you are not paid at least $12 per hour each week that you work, including whatever amounts you receive in commissions, your employer could be violating the minimum wage laws. This is especially true in industries with long sales cycles. For example, if what you are selling typically requires several months of customer cultivation to result in a large sale, particularly when you start you could go a month or more without compensation. Even if the ultimate payout is significant when the sale closes, the time you went without compensation might violate the law. Best practices for employers with commission-based employees include either a base salary or guaranteed commission that ensures that everyone is paid at least $12 per hour for each week worked. This amount can count against the ultimate commission payout, so long as that is clearly stated in the commission policy.
Service Rates for Restaurant Workers ("Tipped Employees")
An employer must pay tipped employees the lower minimum wage for service employees (the service rate), but the must still make sure that each tipped employee earns at least the applicable hourly wage as a combination of hourly wages and tips. In addition, if the employer requires staff to pool or share tips, it must make sure that the tips are not shared with anyone except wait staff employees, service employees, or service bartenders. In other words, only those employees who participate in serving the customer who leaves the tip may share in the tips left by customers. Service staff cannot be required to share tips with managers, hostesses, or kitchen staff. All of those other employees must be paid at the higher regular minimum wage, not the service rate, because they are not entitled to share in tips.
Minimum Wage and Salaried Workers
Just because you are paid a salary and not an hourly rate does not mean the minimum wage laws don't apply to you. For example, if you are paid a salary that is meant to compensate you at minimum wage for 35 hours worked in a week, but you actually work 50 hours, your actual hourly wage will be below minimum wage. Your salary divided by the number of hours you actually work should equal or exceed the minimum wage in order to be lawful. Even if you are exempt from overtime pay, if you are regularly working additional hours in a pay period, and your hours worked take your overall pay below minimum wage, you may be entitled to additional compensation.
Recent Changes to Massachusetts Minimum Wage Law
In 2018, the Massachusetts Governor Charlie Baker signed a comprehensive set of changes to the wage and hour laws, including the minimum wage in Massachusetts. the minimum wage will increase each year between now and 2023, capping out at $15 per hour for most employees and $5.75 per hour for tipped employees. These changes are called the "grand bargain," because essentially the new law trades gradual increases in the minimum wage for a gradual reduction, and ultimately elimination, of the laws requiring time and a half pay for certain employees working on Sundays.
The schedule for increase of the minimum wage rates is as follows:
Massachusetts Minimum Wage 2019: $12.00, $4.35 for tipped employees
Massachusetts Minimum Wage 2020: $12.75, $4.95 for tipped employees
Massachusetts Minimum Wage 2021: $13.50, $5.55 for tipped employees
Massachusetts Minimum Wage 2022: $14.25, $6.15 for tipped employees
Massachusetts Minimum Wage 2023: $15.00, $6.75 for tipped employees
Phase Out of the Sunday Premium Pay Laws (Blue Laws)
For many years, retail employees who worked on Sundays were entitled to be paid time and a half, regardless of whether the worked over 40 hours in a week. As a result of the 2018 "grand bargain," this law will be phased out, ending with no premium pay for Sunday work in 2023, the same year the minimum wage reaches the $15 per hour mark. The phase out is as follows:
Year Sunday Premium Pay
January 1, 2019 1.4x Regular Rate
January 1, 2020 1.3x Regular Rate
January 1, 2021 1.2x Regular Rate
January 1, 2022 1.1x Regular Rate
January 1, 2023 Regular Rate
What Happens if Employees Are Not Paid Minimum Wage in Massachusetts?
Any failure to pay wages as required in Massachusetts, including minimum wage, will result in the employer having to pay three times the employee's proven damages, as well as the employee's attorneys' fees and costs. Violations must be reported first to the Massachusetts Attorney General, who may choose to investigate the situation, but most often will issue what is known as a "right to sue" letter to the employee. If you think you might be owed wages, you should fill out the Attorney General complaint as soon as possible, because this "right to sue letter" is a document you are required to have before filing a civil suit in court to recover your wages.
Once you receive this letter from the Attorney General, you can file a complaint. You can do this with or without the help of an employment lawyer, but remember that if you win your case your employer will have to pay your legal fees, so there is very little risk to you in retaining an attorney.
Minimum Wage and the Small Business
For a small business owner, the scheduled increase in wages for workers in Massachusetts may cause you anxiety and concern. After all, for most of us payroll is our single largest expense, and the increase between now and 2023 is significant, at least as a percentage. But it is important to remember that the costs of falling below minimum wage for your workers in Massachusetts can be catastrophic, if you have to pay your employees triple damages, pay for their legal fees, and pay your own lawyer to defend your business.
If an employee complains that they are not being paid properly under the minimum wage laws. Though it may not feel this way, this could in fact be a very good thing, as your employee is bringing the issue to you privately and giving you the chance to fix it (assuming there is actually a problem). It is important to contact an attorney right away so that you have good information about whether your pay practices comply with the law. You should also remember that the law prohibits retaliation against employees for raising these kinds of issues.
If you are contacted by the Attorney General about a wage complaint. This generally means one or more of your employees has contacted the Attorney General's Fair Labor Division with a question or complaint about wages (either minimum wage or some other wage and hour problem). It is important that you respond promptly to the AG inquiry, preferably with the assistance of counsel. If there is a problem, it can usually be resolved with the AG by correcting whatever the error is and compensating the employees who were affected. Though this comes at a cost, it is usually less expensive than dealing with a private lawsuit.
If you are sued by a current or former employee. Employee lawsuits are every small business owner's worst nightmare, but this situation, too, can be handled. Your first step should be to consult an experienced employment lawyer, who can help you assess the situation, identify defenses, and help you determine whether the best course is to defend the claims or try to come to resolution with the employee.
How slnlaw Can Help
We can help you navigate these issues and get clarity on your rights and obligations as an employer or an employee. You can use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.
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