New Year, New Legislation

Many Pending Bills Will Have a Significant Impact on Employers

By ANNIE E. LAJOIE, Esq. and KARINA L. SCHRENGOHST

As we usher in the new year, employers should be mindful of pending legislation that has the potential to impact their businesses. Here are some things to keep an eye on.

Independent Contractors
One piece of legislation related to independent contractors potentially offers game-changing good news for employers. There are several bills proposed that would make independent-contractor status more feasible, one of which is universally germane. With the change of one word, this proposed legislation would make a previously insurmountable hurdle less challenging.
The proposed bill would change the ‘and,’ which currently requires satisfying an essentially impossible three-prong test, to an ‘or,’ which would allow categorizing an individual as an independent contractor even though he or she performs services that are within the company’s usual course of business.  While there would still be a presumption of employment, it would be phenomenally easier to establish an independent-contractor relationship.
In more good news for franchisors, another proposed bill would clarify that franchisees are independent contractors and not employees. A third bill would allow freelance writers, editors, proofreaders, artists, and similar persons who work out of their own residence whose work constitutes intellectual property, to which copyright laws apply, to be classified as independent contractors.
Massachusetts independent-contractor law is long overdue for a change. The proposed changes would allow employers to maintain independent-contractor relationships where previously the burden was virtually impossible and misclassification was a large risk with hefty penalties.

Non-compete Agreements
Our governor would like to do away with non-compete agreements. The first step toward this is proposed legislation that would further limit the enforceability of non-compete agreements between employers and employees. Pending bills seek to limit the duration of these restrictive covenants to as little as six months.
In addition, pending legislation would limit use of non-compete agreements to employees with a minimum salary of $75,000 per year. Similar to California employers, restrictive covenants may eventually be a thing of the past for Massachusetts employers.

Raising Minimum Wage
One challenge employers may face in the next year is an increase to the minimum wage. The Massachusetts Senate has already voted to raise the state’s minimum wage from $8 per hour to $11 per hour over a three-year period, and future increases would be tied to the rate of inflation.
Restaurant owners should take note that this legislation could have a detrimental impact on their business. This pending bill would increase the minimum wage for tipped employees from $2.63 per hour to half the minimum wage.
If this legislation passes, employers would see an increase as early as July 1, 2014.

Paid Sick Time
Pending legislation would mandate that employers provide sick time to full-time, part-time, and temporary employees. Here’s a breakdown:
• Employers with 11 or more employees would be required to provide up to seven paid sick days per year;
• Employers with six to 10 employees would be required to provide up to five paid sick days per year;
• Employers with five or fewer employees would be required to provide up to five unpaid sick days per year; and
• Employees would earn one hour of sick time for every 30 hours they work.
Unlike accrued vacation time, employers would not be required to pay unused sick time at separation. Also, seasonal employers would be exempt from these requirements. Finally, employers would still be able to require proof of need for the sick time, such as a doctor’s note.

Parental Leave Act
Legislators have set out to make the Massachusetts Maternity Leave Act gender-neutral. The Parental Leave Act would expand coverage to men. Significantly, under this bill, employers would be required to give written notice to employees prior to the commencement of the leave that taking longer than eight weeks of leave may result in the loss of rights and benefits or denial of reinstatement.

Domestic Violence Bill
Finally, under proposed legislation, employers with 50 or more employees would be required to provide up to 15 days of job-secured leave per year for victims of domestic violence, sexual assault, or stalking to take time off to attend to court, housing, health, or other issues related to the abuse.
With new legislation comes new challenges. Consequently, employers would be wise to consult with employment counsel to stay abreast of new legal obligations to ensure compliance.

Annie E. Lajoie, Esq. specializes exclusively in management-side labor and employment law at Royal LLP, a woman-owned, SOMWBA-certified, boutique, management-side labor and employment law firm; (413) 586-2288; [email protected]. Karina L. Schrengohst, Esq. is an attorney at Royal LLP; (413) 586-2288; [email protected]