A new Massachusetts law providing for COVID-19-related emergency paid sick leave (“EPSL”) was signed into law on May 28. Effective until the earlier of September 30, 2021 or the exhaustion of $75 M in program funds, as determined by the Commonwealth, employers must offer Massachusetts employees leave time for the reasons set forth below. Full-time employees are entitled to 40 hours of EPSL; part-time employees receive a pro-rated amount. This new EPSL allotment is over and above the 40 hours available under the earned sick leave law, and is payable at a maximum rate of $850 per week. Read more
As we approach the new year, the Massachusetts Department of Family and Medical Leave (DFML) is gearing up to begin administering leave requests for time off starting January 1, 2021 by preparing its online benefits application system (which may be piloted in December), updating employers on its responses to frequently asked questions, and issuing an updated workplace poster. Accordingly, now is a good time for employers to review their PFML compliance.
Employers that obtained a private plan exemption for 2020 should be looking out for information on renewal for 2021, and should note the FAQ below regarding retroactive payments that would become due if they choose not to renew.
Employers that paid into the public system for 2020 should consider whether obtaining a private plan exemption may be a better option for next year. Many more products have recently become available, some of which may make financial and operational sense for businesses with Massachusetts employees. Employers planning to implement a private plan for the first time should be aware that they must obtain an exemption from the state, which must be approved before the start of a quarter to be effective for that quarter. Information on applying for an exemption is available here.
Employers subject to both the PFML and the federal Family and Medical Leave Act (FMLA) should also review how they calculate the 12 month benefit eligibility period under the FMLA. While the FMLA allows employers to choose among four different methods for the calculation, the PFML requires employers to measure the leave entitlement period over 52 weeks starting from the Sunday immediately preceding the first day that job-protected leave commences. Employers that use a different method allowed by the FMLA—such as the 12-month rolling period measured backwards from the start of leave, which is the only one that avoids the potential for leave stacking—should consider changing it to maximize the amount of FMLA leave that can run concurrently with PFML time off. This can be done with 60 days’ advance notice to employees, so long as employees receive the benefit of the most generous calculation during the notice period. This is also a good time to review other related policies, such as absence notification and attendance requirements.
All employers are advised to post the updated workplace poster (translated versions available here) wherever other workplace postings are displayed. Employers without a physical space for such posters should distribute them electronically or on the appropriate portion of the company’s intranet, and even employers with a physical poster area should consider electronic distribution or posting while so many employees remain away from their usual work spaces due to ongoing pandemic mitigation efforts.
Finally, while the DFML does not currently have a page dedicated to FAQ’s, its recent newsletter identified a number of questions and answers that may be of particular interest to employers:
- What are the retroactive contribution requirements for an employer that has terminated a private plan exemption? An employer that terminates a private plan will be responsible to remit retroactive contributions back to the effective date of the initial exemption approval if it fails to renew its plan for a second term. After the filing and approval of the renewal, an employer may terminate its private plan at the end of the second term without owing retroactive contributions. Employers with an exemption which was initially approved prior to January 1, 2021, will need to go through one (1) renewal cycle to not owe retroactive contributions.
- What are the retroactive contribution requirements for an employer that failed to maintain a private plan or had its approval withdrawn by the Department? The Department may assess a penalty of up to an amount equal to the employer’s total annual payroll for employees and covered contract workers each year or fraction thereof that it failed to maintain said plan, multiplied by the then-current annual contribution rate required under M.G.L. c. 175M, § 6(a). This amount may be subject to penalties under M.G.L. c. 62C and interest from the due date of the PFML return to the date the PFML contributions are paid at a rate prescribed by M.G.L. c. 62C, § 32. The employer or covered business entity may also be required to repay to the Trust Fund the total amount of benefits paid to covered individuals who received benefits from the Trust Fund during the period of time that the employer failed to maintain its plan.
- Employer Provided Benefits and PFML:
- Do private disability policies that are purchased separately by the employee, including through voluntary worksite benefits, cause the employee to have a reduction in DFML benefits?
- Can an employee “top-off” PFML benefits by using accrued paid time off from their employer?
- Can an employer with a private plan exemption allow their employees to supplement their private plan exemption benefit amount with accrued paid leave?
Employers can stay up to date with the DFML by signing up for the Department’s newsletter email list here. Of course, we remain available to advise on any questions that may arise about the PFML, FMLA and other leave issues.
By Bello Welsh LLP
The Massachusetts Attorney General’s Office, Fair Labor Division, has updated its list of Frequently Asked Questions About COVID-19, including an expanded response to the question of whether an employer that conducts a temporary layoff must pay final pay—including accrued vacation—at the start of the layoff (now numbered Question 3). The AG’s original response reflected that when an employer conducts a “temporary layoff,” accrued vacation is due at the start of the layoff. The revised response adds that if an employer takes an action that is intended to continue the employment relationship, for example instituting a “furlough” in which health and other benefits are maintained, the AG will not consider this to be a discharge for purposes of the Wage Act, and accrued vacation pay will not be due at the start of the furlough. However, if an employer becomes unable to continue contributions toward employee benefit plans, this will be deemed a discharge, triggering the employer’s obligation to make full payment on the next regular pay day.
In short, in this revised response the AG draws a distinction between a “temporary layoff,” in which the employment relationship is severed (even if temporarily) and another action (sometimes called “furlough”) in which the relationship continues to some degree. Regardless of what nomenclature is used, employers considering reductions should be aware of the AG’s position on this issue.
The revised FAQ document contains several other new items, including references to paid sick leave and emergency FMLA under the FFCRA (which we discuss here, here and here), high level descriptions of the CARES Act (which we discussed here, here and here) and information for independent contractors. The FAQ also highlights certain state-specific relief available to small businesses, including a fund run through the Mass Growth Capital Corporation and disaster assistance loans.
Of interest for employers, these new and revised FAQs confirm that the Massachusetts Earned Sick Time Law is a separate benefit, and that employers may not require employees to use sick time under the Massachusetts statute (or other employer-provided paid leave) before using the new federal paid sick time entitlement.
By Bello Welsh LLP
In response to the COVID-19 emergency, there have been several key changes made to the eligibility and work search requirements for unemployment insurance. The following summarizes the changes applicable to impacted claimants in Massachusetts, and highlights additional changes that could be implemented as a result of the federal legislation that was just passed by the United States Senate and is currently under consideration by the House of Representatives, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).
WAITING PERIOD AND AMOUNT OF BENEFITS
Waiver of Waiting Period
Governor Baker recently signed an act temporarily authorizing waiver of the one-week waiting period for unemployment benefits for any person who has become separated from work as a result of any circumstance relating to the outbreak of COVID-19, or the effects of the governor’s March 10, 2020 declaration of a state of emergency. Accordingly, individuals who applied for unemployment on or after March 10, 2020 will receive benefits for the first week of unemployment.
Length and Amount of Benefits
Under existing Massachusetts law, eligible individuals can receive up to 26 weeks of unemployment benefits in a benefit year. The current weekly benefit amount is approximately 50% of the individual’s average weekly wage, up to a maximum of $823 per week. An individual may also receive $25 per dependent child.
The CARES Act would significantly expand the length and amount of unemployment benefits, by providing for an additional $600 per week, and an additional 13 weeks of benefits. (As this legislation remains subject to change, we will update this information as further details become available.) This means that claimants will receive whatever unemployment benefit they would receive under state law, plus $600. This could create the anomalous result that a claimant receives more in unemployment benefits than they would have been paid in the ordinary course; the bill is, of course, subject to change, whether before it passes or in a subsequent corrections bill.
Individuals who work part time hours may still be paid unemployment benefits if the gross wages are less than the individual’s weekly benefit amount. Such individuals must report any earnings to the Department of Unemployment Assistance (DUA) each week, and any earnings greater than 1/3 of the weekly benefit amount will be deducted from the weekly benefit payment.
CLAIMANTS IMPACTED BY COVID-19
The DUA has also filed emergency regulations, which make it easier for those impacted by COVID-19 to claim unemployment benefits. All requirements of attending seminars at the MassHire career centers have been suspended, and appeal hearings will be held by telephone only. Further, the DUA may excuse missed deadlines during the processing of a claim, if the reason for failing to meet the deadline is due to COVID-19.
Most individuals who are out of work due to being impacted by COVID-19 should be eligible for unemployment insurance benefits. Individuals who are temporarily unemployed due to COVID-19 – whether laid off, furloughed, or if their workplace is fully or partially shut down – and expect to return to work will be considered to be in “Standby Status,” and are eligible for unemployment benefits. According to the DUA’s updated guidance for filing a new unemployment claim, being impacted by COVID-19 for purposes of unemployment eligibility may also include, but is not limited to, the following:
- Employee or someone in his/her household is quarantined (whether due to an order by a civil authority or medical professional, or a self-imposed quarantine based on a reasonable fear of illness or exposure)
- Employee leaves employment due to reasonable risk of exposure or infection or to care for a family member and does not intend to or is not allowed to return to work
- Employee, or someone the employee is caring for, is “high risk” (older adults and/or persons with serious chronic medical conditions)
- Lack of childcare
Individuals impacted by COVID-19 will be presumed eligible for four weeks of standby status. Individuals do not need to provide medical documentation, and employers need not even respond that the individual is on standby. However, employers may request that standby status be extended to up to eight weeks, and the DUA can further extend such standby status if necessary.
Work Search Requirements
Individuals impacted by COVID-19 will not be subject to the usual work search requirements; rather, such individuals will satisfy this requirement by taking reasonable measures to maintain contact with their employer and being available to perform any work that their employer may have for them, that they are able to do. Note, however, that work will not be considered suitable if it endangers the health of the employee or others in the employee’s household, and an employee need not accept such work.
CLAIMANTS NOT IMPACTED BY COVID-19
Individuals applying for unemployment benefits for reasons unrelated to COVID-19 are still required to conduct a weekly work search, which may include reviewing job postings online or working on a resume. However, such individuals only need to accept suitable work; accordingly, if the individual is quarantined, self-quarantining, caring for a family member who is sick, or caring for a child who is at home, the individual does not need to accept work offered until these conditions resolve.
Independent Contractors and Self-Employed Individuals
Self-employed individuals and individuals whose compensation is reported on an IRS Form 1099-MISC (“independent contractors”) are not currently eligible for unemployment benefits under Massachusetts law. However, the CARES Act would provide Pandemic Unemployment Assistance for certain self-employed individuals and independent contractors who are unemployed, partially unemployed, or unable to work due to COVID-19. We will update this information as details become available.
OTHER CONSIDERATIONS for Employers DUE TO COVID-19
Distribution of Unemployment Handbook Upon Separation
The DUA has issued a new COVID-19 Unemployment Handbook, which provides detailed instructions on filing for benefits online. Employers that communicate with employees via email may distribute this information electronically to employees upon temporary layoff or termination. In addition, all employers are required to provide a pamphlet regarding unemployment insurance to employees at the time of a temporary or permanent separation (which may also be done electronically).
Grace Period for Quarterly Reports and Contributions
Employers that are impacted by COVID-19 may request up to a 60-day grace period for filing quarterly wage reports and paying contributions. The DUA is currently looking at the effect of COVID-19 on employer rate charging, and rates will not change until January 2021.
WorkShare Program – An Alternative to Layoffs
To avoid layoffs, employers may apply to the Executive Office of Labor and Workforce Development and the DUA’s WorkShare program. This program allows an employer to reduce the number of hours worked by a specific group of employees by 10%-60%, while maintaining health insurance and other benefits. The decreased wages are partially offset by unemployment benefits. Employers must submit quarterly contribution and wage detail reports and pay unemployment taxes in a timely manner, and benefits paid to employees under an approved WorkShare plan are charged the same way as regular unemployment benefits. Interested employers should visit the WorkShare website for additional information about eligibility and creation of a WorkShare plan. However, employers should carefully evaluate whether the WorkShare program will meet the employer’s needs, as the program is not particularly flexible, and once a WorkShare plan is approved, workers must work the reduced hours stated in the plan each week.
Note that certain employees may be entitled to other forms of paid leave for reasons related to COVID-19, pursuant to the Families First Coronavirus Response Act signed March 18, 2020 and effective April 1, 2020. For more information about eligibility for paid sick time and emergency FMLA leave, please see Bello Welsh’s detailed alert on this topic.
We will continue to monitor legal developments related to COVID-19 and provide updates as new laws applicable to employers are enacted.
On March 23, 2010, Massachusetts Governor Baker issued an emergency Order Assuring Continued Operation of Essential Services in the Commonwealth, Closing Certain Workplaces, and Prohibiting Gatherings of More than 10 People. A copy of the emergency Order may be found here: https://www.mass.gov/doc/march-23-2020-essential-services-and-revised-gatherings-order. A listing of essential services not subject to workplace closure may be found here: https://www.mass.gov/doc/covid-19-essential-services/download. A copy of the Assemblage Guidance (stay-at-home advisory) may be found here: https://www.mass.gov/doc/march-23-assemblage-guidance/download.
If your business is not listed as an “essential service” but you think it should be listed, you may apply to have your business deemed as essential for purposes of the Emergency Order at this link: https://www.mass.gov/forms/essential-service-designation-request.
The Massachusetts Attorney General’s Office has issued COVID-19 FAQs, which provides its perspective on how to navigate the impact of COVID-19 on the workplace. A link to these FAQs, which the Attorney General’s Office has promised to update as circumstances change, may be found here: https://www.mass.gov/doc/covid-19-fld-faqs.
The Massachusetts Department of Unemployment Assistance has issued a new handbook for employees, that should be provided upon temporary layoff (furlough) or termination, at least until the COVID-19 crisis is over. This is over and above the standard unemployment pamphlet that must be provided. A copy of the new pamphlet may be found here: https://www.mass.gov/doc/filing-a-new-unemployment-claim-covid-19/download. The one-week waiting period before benefits may be provided is waived for the time being. Further DUA guidance may be found here: https://www.mass.gov/info-details/massachusetts-covid-19-unemployment-information.
For small businesses in need of recovery funds, the U.S. Small Business Administration’s Economic Injury Disaster Loan (EIDL) program is accepting applications from Massachusetts businesses. Applications are available here: https://disasterloan.sba.gov/ela.
We will continue to provide updates as events unfold.
Following weeks of piecemeal changes and updates, the Department of Family and Medical Leave (“DFML”) has now issued the final regulations (effective July 1, 2019). Click here for a revised Bello / Welsh alert, which has been updated to be consistent with both the final regulations and the bill passed last week. The most significant changes are as follows: Read more
On December 3, 2018, we posted about the new Massachusetts Paid Family and Medical Leave Law (“PFML”). Although the post was accurate at the time published, the Department of Paid Family and Medical Leave (the “Department”), has since pushed out some deadlines and made other changes. We will be posting substantive guidance shortly, but in the meantime the updated deadlines are as follows:
- April 29, 2019, the applications for private plan exemptions were made available online at MassTaxConnect.
- June 30, 2019, written PFML notices must be distributed to all employees and contract works (pay reported on IRS Form 1099-MISC)
- July 1, 2019
- PFML laws and regulations effective (note that final regulations are now expected to be published on July 1, the effective date)
- PFML posters posted
- Payroll tax deductions begin (unless the company has applied for and been granted a private plan exemption)
- September 20, 2019, applications for private plan exemption for Quarter 1 due
- October 1, 2019, first quarterly report filed through MassTaxConnect
- October 30, 2019, payments for Quarter 1 (July 1- September 30) remitted
- January 1, 2021, most benefits available
- July 1, 2021, all benefits available
In October 2018, amendments to Massachusetts law concerning employer criminal history inquiries became effective. Under the previous version of the law, employers were prohibited from asking about: (i) an arrest, detention, or disposition regarding any violation of law in which no conviction resulted; (ii) a first conviction for any of the following misdemeanors: drunkenness, simple assault, speeding, minor traffic violations, affray, or disturbance of the peace; or (iii) any conviction of a misdemeanor where the date of the conviction or the completion of any period of incarceration resulting therefrom, whichever is later, occurred more than five years prior to the inquiry, unless the person had been convicted of any offense in the five years immediately preceding the inquiry. Also, employers seeking information about an applicant’s prior arrests or convictions have long been required to include specific language notifying the applicant that he or she may answer “no record” in response to an inquiry about a matter that is sealed and providing other disclaimers. Additionally, since 2010, Massachusetts employers have been prohibited from making any criminal history inquiries on the initial written employment application or prior to an interview.
The new law amends these restrictions in three ways: Read more
In June 2018, Massachusetts passed a law that will gradually raise the state minimum wage to $15.00 per hour and establish a paid family and medical leave program for employees in the state. The Massachusetts Department of Family and Medical Leave, a newly established state agency created to administer the leave program, recently issued FAQs for employers and employees, available here. The requirements of the new law, as clarified by the FAQs, are explained below. Read more
The Massachusetts Legislature has passed a major overhaul of non-compete law, known as the “Massachusetts Noncompetition Act.” Assuming Governor Charlie Baker signs the bill, it will apply to noncompetition agreements entered into on or after October 1, 2018. This alert summarizes the key provisions of the Act.
What is a noncompetition agreement?
The Act imposes minimum requirements that noncompetition agreements between employers and “employees” (broadly defined to include independent contractors) must meet to be valid and enforceable. For purposes of the Act, a “noncompetition agreement” means:
an agreement between an employer and employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee or expected employee agrees that he or she will not engage in certain specified activities competitive with his or her employer after the employment relationship has ended.
Notably, non-disclosure/confidentiality agreements, invention assignment agreements, employee non-solicit/no-hire provisions, and covenants not to solicit or transact business with customers, clients or vendors are not “noncompetition agreements” governed by the Act. Likewise, noncompetition agreements made in connection with the sale of a business are not covered (provided the signatory is a significant owner of the purchased business and will receive significant consideration from the sale), nor are noncompetition agreements made in connection with an individual’s separation from employment (provided the employee is expressly given seven business days to rescind acceptance).
Are noncompetition agreements with certain categories of employees prohibited?
Yes. The Act provides that noncompetition agreements are automatically unenforceable against four categories of employees: (1) employees who are considered non-exempt from overtime under the federal Fair Labor Standards Act; (2) undergraduate or graduate students who enter into an internship or other short-term employment relationship while enrolled in school; (3) employees age 18 and younger; and (4) employees who have been terminated without cause or laid off. The Act does not define the terms “without cause” or “laid off,” but Massachusetts cases arising in other contexts have defined the related terms “good cause” and “just cause” quite broadly from the employer perspective.
What requirements must noncompetition agreements meet to be valid and enforceable?
Noncompetition agreements must meet a number of requirements to be valid and enforceable, including the following:
- An agreement signed in connection with an employee’s hiring must be in writing and provided to the employee by the earlier of a formal offer of employment or 10 business days before the start of employment. As a practical matter, this means that an employee cannot begin working for 10 business days after receipt of an offer if the non-competition agreement is to be enforceable.
- An agreement entered into after the start of employment, but not in connection with separation from employment, must be supported by “fair and reasonable consideration independent from the continuation of employment” and notice of the agreement must be provided at least 10 business days before it is to become effective. The Act does not define the term “fair and reasonable consideration,” but it certainly requires more than a de minimus One potential option is a signing bonus directly attributed to the noncompetition agreement that is large enough to be (at least arguably) “fair and reasonable” under the circumstances.
- The agreement must be in writing, must be signed by both the employer and the employee, and must expressly state that the employee has the right to consult with counsel prior to signing.
- The agreement must be supported by a “garden leave clause” or “other mutually-agreed upon consideration between the employer and the employee, provided that such consideration is specified in the noncompetition agreement.” A garden leave clause is an employer’s agreement to pay an employee on a pro rata basis during the non-compete period at least half of the employee’s highest annualized salary in effect during the two years preceding the employee’s termination. Notably, the Act does not require noncompetition agreements to include expensive garden leave provisions. Mutually-agreed upon alternative consideration is acceptable, and the Act does not specify the amount or type of such consideration. That said, it does appear that noncompetition agreements signed at the start of employment likely need to be supported by some consideration above and beyond the mere hiring of the employee. An upfront agreement to pay an employee a lump sum at the time of separation from employment, for example, may suffice.
- The restricted period may not exceed 12 months from the end of employment (except the period may be extended to up to two years from the end of employment if the employee has breached his or her fiduciary duty to the employer or has unlawfully taken, physically or electronically, property belonging to the employer).
Apart from these specific requirements, noncompetition agreements must be reasonable in all respects and consonant with public policy, as is required under existing common law. The Act specifically provides that noncompetition agreements must be (1) no broader than necessary to protect the employer’s legitimate business interests in trade secrets, confidential information, and/or goodwill; (2) reasonable in geographic scope relative to the interests protected; and (3) reasonable in the scope of proscribed activities relative to the interests protected.
The Act creates certain presumptions of reasonableness. For example, a noncompetition agreement will be presumed reasonable in geographic scope if it is limited to the areas where the employee provided services “or had a material presence or influence” at any time during the last two year of employment, and it will be presumed reasonable in scope of proscribed activities if it is limited to the specific types of services provided by the employee at any time during the last two years of employment.
Can a court reform an overbroad noncompetition agreement?
Yes. As under existing law, a court may reform or revise an overbroad noncompetition agreement to render it valid and enforceable to the extent necessary to protect the employer’s legitimate business interests.
Can employers avoid the strict requirements of the Act with choice of law and forum selection clauses identifying a state other than Massachusetts?
No. The Act states that any choice of law provision that would have the effect of avoiding the requirements of the law is not enforceable “if the employee is, and has been for at least 30 days immediately preceding his or her cessation of employment, a resident of or employed in Massachusetts at the time of his or her termination of employment.” Additionally, the Act requires that all civil actions relating to covered noncompetition agreements shall be brought in the county where the employee resides or, if mutually agreed by the employer and employee, in the Superior Court of Suffolk County. It is not clear whether this provision is an attempt to limit enforcement of noncompetition agreements in federal court (for example in diversity cases), which may be subject to challenge.
What Should Employers Do Now?
Assuming the bill is signed by the Governor, employers should promptly review and revise any form noncompetition agreements to be used after October 1, 2018 and determine what consideration to offer employees in connection with such agreements. Employers may also wish to consider whether noncompetition agreements are necessary for certain employees or whether the same objectives can be achieved with other restrictive covenants outside the scope of the Act, such as provisions prohibiting solicitation of and doing business with customers. Employers should also review their hiring processes and severance agreements to maximize the enforceability of noncompetition agreements. We at Bello Welsh are available to assist and work with our clients on compliance with this new law.
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