The brand-new Massachusetts Department of Family and Medical Leave (“DFML”) has launched its webpage and issued the first set of guidance for both employers and employees. The DFML was created to help facilitate the implementation of Massachusetts’ new Paid Family and Medical Leave programs (“PFML”). The deadline for employers to start making contributions toward the PFML programs is July 1, 2019, and employees may begin receiving benefits beginning on January 1, 2021.

The DFML’s first set of guidance provides comprehensive FAQ documents, one for employers and one for employees. The employers’ FAQs largely summarize key components of the new statute:

  • Businesses with one or more employee are subject to the new PFML law, but businesses with less than 25 employees or covered individuals do not have to pay the employer portion of the contributions;
  • Those employers with programs that go above and beyond these new minimums may apply for annual exemptions from the new programs;
  • While self-employed individuals are not subject to the new PFML law, independent contractors who contract with companies that issue 1099s to more than 50% of their workforce will be covered by the new law;
  • The contribution rate is 0.63% on the first $128,400 of a covered individual’s earnings, and employers must remit the full contribution (both the employer and employee contributions) to the DFML;
  • Employers may deduct up to 40% of a covered individual’s total medical leave contribution from their pay, and may deduct up to 100% of a covered individual’s total family leave contributions from their pay; and
  • The statutory deadline for the publication of the PFML regulations by the DFML is March 31, 2019, with early drafts to be disseminated before then.

For employees, the first set of FAQs generally address questions about eligibility. This guidance is also relevant to employers, who should take note of the requirements in order to ensure compliance with the new law:

  • Employees and covered individuals must have approximately 15 weeks or more of earnings in a year before they may apply for these new benefits;
  • Individuals may take PFML for:
    • Their own serious medical condition
    • Bonding with a child in the 12 months following birth or adoption
    • Dealing with a qualifying exigency arising out of a family member’s active duty, or notice of impending call or order to active duty
    • Caring for a family member who is a covered service member with a serious injury or illness that is the result of, or aggravated by their service
  • The employee or covered individual’s weekly benefit is calculated as a percentage of their earnings, up to $850 per week;
  • Paid medical leave is capped at 20 weeks per year; paid family leave is capped at 12 weeks per year; paid family leave arising from a covered service member’s call to active duty is capped at 26 weeks per year; and the maximum amount of combined family and medical leave that one person may take is capped at 26 weeks per year.

The DFML is expected to publish more content, including the regulations, during 2019.

 

Anastasia A. Regne, a Law Clerk – Admission Pending – in the firm’s New York office, contributed significantly to the preparation of this blog post.

Massachusetts is one of many states which have adopted legislation, commonly known as a “ban the box” law, prohibiting public and private employers from requesting criminal record information in a prospective employee’s “initial written employment application” and limiting the type and scope of questions an employer may ask a candidate following receipt of an “initial written employment application.” Yesterday, Massachusetts Attorney General Maura Healey announced that her office has settled with four businesses and issued warning letters to 17 others for violations of Massachusetts’s ban the box law, marking the first enforcement efforts by the Massachusetts Attorney General’s Office.

According to the AG’s press release, it conducted an investigation into employer compliance with the state’s ban the box law by sampling an undisclosed number of Boston and Cambridge employers. The initial employment applications of 21 of those businesses were found to contain one or more impermissible questions about the applicant’s criminal record, such as whether the applicant had been convicted of violating the law, whether he or she been convicted of a crime or offense other than a minor traffic violation, and whether he or she had ever been convicted of a felony. The four employers that reached agreements with the AG’s Office are Edible Arrangements, Five Guys, L’Occitane, and The Walking Company. The first three were fined $5,000 each (The Walking Company appears to have been given a pass due to its bankruptcy status) and each was required to take steps to comply with the law. The 17 business which received a warning to immediately comply with the law are: Brattle Book Shop, Kingston Grille and Bar, Salvatore’s, Sidebar, Stoddard’s Food & Ale, The Chicken and Rice Guys (two locations), The Oceanaire Seafood Room, Tous Les Jours, Viga Italian Eatery and Catering, Love Culture, and Frette, all in Boston, as well The Middle East Restaurant, Mainely Burgers, Mexicali Burrito Co., Café ArtScience, Meadhall, and Grafton Street Pub & Grill in Cambridge.

While the press release does not indicate whether the AG’s Office intends to expand its probe, continued enforcement seems likely in light of AG Healey’s remarks that “Jobs are the pathway to economic security and building a better life. But unfortunately, many of our residents with criminal records face barriers to securing employment. These actions are an effort to give all job applicants a fair chance.”

Enforcement of ban the box legislation is not limited to regulators in Massachusetts. Well over a year ago, the New York State Attorney General announced settlements with two major national retailers – Big Lots Stores and Marshalls – for violation of New York’s ban the box law by inquiring about the criminal history of job applications on initial employment applications at their Buffalo stores. The New York AG imposed fines that were substantially greater than those set by the Massachusetts AG: Big Lots agreed to pay a monetary penalty of $100,000, and Marshalls a penalty of $95,000. Both were required to adopt new policies and training, and report their remediation to the New York AG.

These actions highlight that businesses operating in jurisdictions with ban the box laws must ensure that their pre-hiring practices comply with such laws or risk regulatory fines, not to mention public disrepute and potential civil liability.

Massachusetts employers should take note of a provision in the Massachusetts criminal justice reform law – signed into law last week – that amends the type and scope of questions an employer may ask an applicant about his or her criminal history following an “initial written employment application.”

Since 2010, Massachusetts has prohibited public and private employers from requesting criminal record information in a prospective employee’s “initial written employment application” (commonly known as a “ban the box” provision). Following receipt of an “initial written employment application,” Massachusetts employers were further prohibited from inquiring about (1) an arrest, detention, or disposition regarding any violation of law in which no conviction resulted; (2) a first offense for drunkenness, simple assault, speeding, minor traffic violations, affray, or disturbance of the peace (all classified as misdemeanors); or (3) any conviction for a misdemeanor where the date of conviction, or the completion of any resulting period of incarceration, occurred five or more years prior to the date of the application, unless such person has been convicted of any offense within the preceding five-year period.

The new law, effective October 13, 2018, modifies one of these existing restrictions and adds yet another constraint. First, the law decreases the period in which an employer can ask about a misdemeanor conviction or a resulting incarceration from five to three years preceding the date of the employment application.  In other words, an employer cannot ask an applicant questions about misdemeanor convictions/resulting incarcerations that occurred three or more years prior to the date of the employment application, unless the applicant was convicted of any offense within the preceding three years.  Second, the law creates a blanket prohibition as to any and all inquiries about sealed or expunged criminal records.  Consequently, these amendments afford expanded privacy and protection to candidates.

In light of these amendments, employers should revisit their hiring practices and procedures, and potentially provide supplemental training to those individuals involved in the hiring process.

Our colleagues , at Epstein Becker Green, have a post on the Retail Labor and Employment Law blog that will be of interest to many of our readers in the hospitality industry: “New Jersey’s Appellate Division Finds Part C of the “ABC” Independent Contractor Test Does Not Require an Independent Business

Following is an excerpt:

In a potentially significant decision following the New Jersey Supreme Court’s ruling in Hargrove v. Sleepy’s, LLC, 220 N.J. 289 (2015), a New Jersey appellate panel held, in Garden State Fireworks, Inc. v. New Jersey Department of Labor and Workforce Development (“Sleepy’s”), Docket No. A-1581-15T2, 2017 N.J. Super. Unpub. LEXIS 2468 (App. Div. Sept. 29, 2017), that part C of the “ABC” test does not require an individual to operate an independent business engaged in the same services as that provided to the putative employer to be considered an independent contractor. Rather, the key inquiry for part C of the “ABC” test is whether the worker will “join the ranks of the unemployed” when the business relationship ends. …

Read the full post here.

By:  Barry Guryan and Jeff Ruzal

In a highly publicized March 23, 2010 decision, Awuah v. Coverall N. Am., Inc., 707 F.Supp.2d 80 (D. Mass. 2010), U.S. District Judge William Young for the District of Massachusetts rocked the Massachusetts business community by ruling that a group of janitorial franchisees were improperly classified as independent contractors, and that they were instead “employees” of commercial cleaning franchisor Coverall who are entitled to statutory protection under Massachusetts’ Wage laws including, among others, minimum wage, overtime pay, meal breaks and workers’ compensation.

Massachusetts law is known to have one of the most stringent employment classification tests in the country. Commonly referred to as the “ABC Test,” G.L. c. 149, § 148B(a), putative employers must satisfy the following three conditions to establish an independent relationship with individuals who perform services for them: (a) the individual is free from control and direction in connection with the performance of service; (b) the service is performed “outside the usual course of the business of the employer,” and (c) the individual is customarily engaged in an independently established business of the same nature as that involved in the service performed.  Id.  Prong B is by far the most challenging part of the Test because, in most instances, the services to be performed fall within the employer’s usual course of business.  This requirement does not exist under most state law classification tests.     

Seizing on prong B of the Test, Judge Young rejected Coverall’s argument that its franchising business is separate and distinct from the franchisee’s individual businesses in commercial cleaning.  Judge Young instead found that:

franchising is not itself a business[;] rather a company is in the business of selling goods or services and uses the franchise model as a means of distributing the goods or services to the final end user without acquiring significant distribution costs.  Describing franchising as a business in itself, as Coverall seeks to do, sounds vaguely like a description for a modified Ponzi scheme—a company that does not earn money from the sale of goods and services, but from taking in more money from unwitting franchisees to make payments to previous franchisees.

Awuah, 707 F.Supp.2d at 84 (emphasis added).  Concluding that Coverall franchisees did not perform services outside the course of Coverall’s business, the Court held that the franchisees were not independent contractors but Coverall’s employees.  Coverall thereafter filed its notice of appeal of this decision to the First Circuit Court of Appeals.   

On February 3, 2014, Coverall filed its brief to the First Circuit, arguing, among other points, that its regular activities and the services it performs are entirely different from the activities and services performed by franchise owners.  As Coverall explained, its regular activities are selling franchises, promoting the Coverall® brand, soliciting customer contracts, and providing billing and collections services to franchise owners.  By contrast, Coverall argued, franchise owners independently operate commercial cleaning businesses, which include scheduling cleaning services, staffing cleaners, purchasing cleaning equipment and supplies, and supervising their own employees. 

Echoing Coverall’s argument, the International Franchise Association (“IFA”), the largest trade association in the world, argued as amicus curiae in its April 17, 2014 brief to the First Circuit that the District Court failed to recognize the significant differences between Coverall’s and the franchise owners’ regular activities and services, and instead incorrectly focused on the irrelevant fact that they both ultimately depend on the sale of commercial cleaning services. 

The IFA further argued that Judge Young’s decision will severely damage the Massachusetts franchising business, referencing staggering statistics that highlight the importance franchising has on Massachusetts’ economy.  According to the Economic Impact of Franchised Businesses, in 2007, the most recent year for which comprehensive data is available, 13,676 Massachusetts franchise establishments produced 149,600 Massachusetts jobs totaling $6.4 billion in payroll.  www.buildingopportunity.com/download/Part1.pdf.  What is more, those 13,676 Massachusetts franchise establishments helped create 323,900 additional independent Massachusetts jobs supporting, but not directly tied to, the franchised businesses.  The IFA argued that Judge Young’s decision puts Massachusetts’ robust franchising business in jeopardy by, among other things, disincentivizing franchisees from supplying their own financial capital into new and existing franchises because as salaried or hourly “employees” they will not be entitled under the law to the profits they produce.  

Whether the First Circuit will agree with the IFA and thus look to narrow Judge Young’s expansive reading of prong B is an open question.  In any event, franchisors operating in Massachusetts must be mindful of the stringent ABC Test, and should consult with an attorney on compliance and best practices in the franchising business.  Franchisors outside of Massachusetts must likewise be aware of the classification laws unique to the states in which they operate to ensure utmost compliance.