Earlier this morning, Governor Baker signed legislation averting a showdown this November on several ballot initiatives that would have had billions of dollars in policy impacts for the state. This “grand bargain” legislation is a compromise that replaces ballot initiative proposals that would have implemented a state-run paid family and medical leave program, increased the minimum wage, and reduced the sales tax. All three ballot questions were polling favorably and would have had even greater impacts on the business community and the state if certain elements had not been addressed through negotiations.
Over the past several months, the Chamber was an active member of two working groups attempting to negotiate legislative compromises on these ballot questions. Throughout negotiations, the Chamber maintained that any compromise must be balanced, fair, and protect the competitiveness of the Massachusetts economy. While the Chamber would not have designed any of these policies from scratch, we believe the final legislation includes important changes to the minimum wage increase and paid family and medical leave program that would not have been considered had these questions gone through the one-sided, winner-take-all ballot process.
- Paid Family and Medical Leave
Many of the Chamber’s members already offer paid family and medical leave programs and support the concept, so our focus was on creating a program that is accountable, has strong controls, and allows employers the flexibility to offer benefits that will attract and retain their employees. The resulting compromise provides for 20 weeks of personal medical leave and 16 weeks of family leave.
The original ballot language required all employers to enroll in the state program. As a result of the negotiations, employers can opt-out of the state program for personal medical and/or family leave if they provide a wage benefit that is equal to or greater than the state benefit for the duration of the leave. Employers pay 60 percent of personal medical premiums and 0 percent of family premiums. Employers with fewer than 25 employees are not required to contribute to premium costs, another provision won through the negotiation process.
Contributions to the program begin in July 2019. Employees can apply for personal medical benefits and family benefits beginning in January 2021 and July 2021 respectively.
Importantly, several outstanding issues with the proposed paid family and medical leave program will have to be resolved through regulations and we encourage our members to let us know their particular concerns.
- Minimum Wage and Sales Tax
A second aspect of the compromise legislation involved the minimum wage. The minimum wage will rise from $11 per hour to $15 per hour over five years, as opposed to the four-year implementation period in the ballot initiative. The tipped minimum wage will rise from $3.75 per hour to $6.75 per hour over five years, rather than the proposed $9 per hour over four years. As part of the compromise, the minimum wage will not be indexed to inflation.
The final component of the compromise pertained to the sales tax. Rather than dropping the sales tax rate from 6.25 percent to 5 percent, negotiators agreed to a two-day annual sales tax holiday.
Additionally, Sunday and holiday time-and-a-half premium pay for retail employees will be phased out over five years.
- Graduated Income Tax
In addition to the “grand bargain” legislation, the Supreme Judicial Court last week (SJC) ruled unconstitutional the proposed constitutional amendment to implement a graduated income tax. The Court’s ruling means that the graduated income tax will not move appear on the November ballot.
- Remaining Ballot Questions
Because of the SJC decision and the “grand bargain” legislation, there are now only three remaining ballot questions that may appear on the November ballot. One is a ballot initiative mandating nurse staffing ratios in Massachusetts hospitals and health care facilities. A second is a referendum to repeal the transgender rights law adopted by the Legislature in 2016 that protects transgender people from discrimination in public places. A final potential question would create a state commission charged with researching and advocating for an amendment to the United States Constitution to overturn a U.S. Supreme Court decision on campaign finance laws.
- Next Steps
Many issues still need to be worked out through the regulatory process for paid family and medical leave, and we will remain fully engaged to ensure that the state implements a fair program and addresses additional employer concerns. As this process unfolds, we will be sure to keep members updated with new information.