Massachusetts Earned Sick Time Law: what is it and how does it apply to you?

A new law took effect on July 1, 2015, requiring all employers to provide earned sick time for their employees, including part time and temporary employees.  And unlike many other employment laws, this really means all employers- big or small- and all employees-part time, full time or temporary.

The basics are as follows:

What:  All employees earn an hour of sick time for each 30 hours worked, beginning on the first day of employment, up to 40 hours in a year.

The time begins to accrue immediately, but an employer can limit the use of that time until 90 days (calendar days) after the start of employment.

It’s not just sick time: time off under this law can be for the employee’s own illness, but also for purposes of attending routine medical appointments or taking care of a child or immediate family member, or taking a child or immediate family member to routine medical appointments.

Unlike earned vacation time, unused earned sick time does not have to be paid out to the employee at termination.

Employers must post the notice prepared by the Massachusetts Attorney General in a conspicuous location in the workplace, and provide all employees with a copy.   

Employers of any size may not penalize employees for taking earned time, for complaining that an employer’s practices violate the earned sick time law, or for supporting another employee’s exercise of his or her rights under the earned sick time law.

Who:  Employers with 11 or more employees (note that this means actual people, whether full time, part time, or temporary) must pay the employees for earned sick time that they use, at their regular hourly rate.  Smaller employers still must provide the time, but making it paid time is optional.  The rule against retaliation applies to all employers, whether they are required to provide paid time or not.

Where: Anyone who works in Massachusetts is entitled to the protection of this law, even if the employer is located somewhere outside of Massachusetts (think sales representatives who work from home and on the road, or remote help desk technicians- even though the company may be located elsewhere, the employee providing services in Massachusetts is entitled to the benefits under this law).

Why:  The sponsors of this law successfully made the case to Massachusetts voters in 2014 that the protections of the law were needed to help thousands of working people who faced the choice between going to work sick, sending a sick child to school, or missing an opportunity for routine preventative care for themselves or their child, and losing a day’s pay or perhaps even losing their job.

And here are the implications.

Eleven employees is eleven actual people, not full time equivalents.  This means even fairly small operations must provide paid sick time in accordance with the law.  Unlike laws about employer-sponsored health benefits, you can’t change this count by hiring more people for fewer hours apiece- every person who draws a paycheck counts toward the eleven.

The accrual of earned sick time is proportional to hours worked, but the total amount an employee can accrue is not necessarily.  What does that mean? Over the course of a year, assuming employees work 50 weeks, both a full time employee and an employee who works 25 hours a week can accrue 40 hours of earned sick time.  An employee who works 20 hours a week or less will not accrue the full 40, just because of the rate at which the time accrues, but people should be aware that even someone who might be considered part time at 25 hours a week is entitled to accrue the same total amount of earned sick time for the year.

The earned sick time law is now part of the Massachusetts Wage Act.  Why should you care?  Because it is enforceable by a private lawsuit in the same manner as non-payment of wages, and if a court finds that an employer has violated the sick time law, it is mandatory that the employer be ordered to pay three times the amount of actual damages, and required to pay the employee’s reasonable legal fees and costs.  So if you have an employee who should have been paid for 40 hours of earned sick time at $15 an hour, you won’t just owe him $600, but $1800 plus his attorneys’ fees.

Pay careful attention to the anti-retaliation provision.  This, too carries with it the possibility of triple damages and attorneys’ fees, but it has implications that are even broader than that.  Imagine you are a working parent who has to miss some number of days each year to take your child to routine medical appointments.  Prior to this law, you could be fired for missing too many days of work- being a parent is not a protected class under the anti-discrimination laws, and routine medical appointments do not qualify as a “serious health condition” under the Family and Medical Leave Act (“FMLA”). Now, so long as you are using the time you have accrued under this law, you are protected from being fired, demoted, or disciplined because you used that time.  Or imagine you have a seriously ill child or spouse and need time to take care of them and help get them the care they need, but you work for a company with fewer than 50 employees, or you have worked for your employer for less than a year, meaning the FMLA does not apply to you, even for unpaid, job-protected leave.  The earned sick time law gives you that protection.

Whether you are an employer or an employee, whether you see this law as an important protection for working families or as yet another burden on small businesses, or perhaps a windfall for employment lawyers, it is important to understand your rights and responsibilities under the law, and to realize that it does change the landscape of the employment relationship.

For more information, you can see the Massachusetts Attorney General’s Frequently Asked Questions about the earned sick time law, and download a copy of the required employee notice here.

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The Massachusetts Wage Act: Payment of Commissions and Deductions from Commissions

For many workers, commissions are a significant part of their compensation, and for many employers, paying some or all of an employee’s compensation through commissions is an effective tool for keeping costs tied to revenue and giving employees incentive to grow sales and grow your business.  The most common example are sales representatives, who are frequently paid some combination of base salary or draw and commissions; other service-related employees who are not involved in direct sales often have some portion of their compensation tied to revenue generated by the services they provide.

It is important for both employers and employees to remember that the Massachusetts Wage Act (the statute requiring timely payment of wages) expressly applies to commissions, which must be paid pursuant to the Wage Act requirements once they are earned.   When the commissions are earned and how much is due to the employee are important questions, questions that are not as straightforward to answer as they would be for an hourly or salaried employee.

When are commissions earned:  if there is a written commission plan that spells out when an employee has “earned” a commission, the terms of that plan will generally control.  For example, a plan might specific that a sales representative earns her commission when the customer signs a contract or places an order, when the customer is invoiced, or when the customer actually pays.  If there is no written commission plan, courts will generally assume that a commission is earned when a contract is signed or an order placed.

How much is due to the commissioned employee:  employers often draft commission plans to include offsets for certain expenses in the calculation of the final commission due.   Can they do this?  The answer is not entirely clear, but a recent Massachusetts Superior Court decision suggests that employers should use caution, and employees paid on a commission basis should be watchful and review their commission plans carefully to be sure that there are no inappropriate deductions.

The Wage Act has been interpreted to prohibit deductions from the wages of hourly or salaried employees unless they are a valid set-off under Massachusetts law.  This means an employer may deduct from an hourly or salaried employee things like medical and dental insurance premiums, taxes, and court approved garnishments, but cannot deduct expenses associated with your work.

It has been less clear how the prohibition against deductions applies to deductions from commissions.  It is not an uncommon practice for employers to include certain costs in the calculation of commissions, many of which are really a way of transferring the employer’s overhead expenses.
For example, a commission formula for a salesperson may include deductions for expenses associated with the sale.

The Wage Act explicitly includes commissions within its scope, and states that it is applicable: “…when the amount of such commissions, less allowable or authorized deductions, has been definitely determined and has become due…”  M.G.L. ch. 149, § 148.  Until recently, there has been no guidance in the Massachusetts case law about the meaning of “allowable or authorized deductions" as it relates to employees compensated on a commission basis.

We represented a hair stylist whose compensation was based on a percentage of the revenue from the clients she serviced.  The salon applied a “product deduction” of $2.00 for each client serviced, purportedly to cover the cost of the shampoo, conditioner, or other product used, which was deducted after the calculation of the commission.  The crux of our argument was that an employer should not be able to do to a commissioned employee what it cannot do to an hourly or salaried employee- namely, to transfer a portion of the employer’s overhead expense to the employee.

The salon moved for summary judgment, arguing that the deduction was an integral part of the commission calculation, and that it was therefore an “allowable or authorized deduction.”  In an opinion dated July 7, 2014, the Massachusetts Superior Court denied the salon’s motion.  The court noted a prior decision of the Massachusetts Supreme Judicial Court, which “emphasized that deductions which further an employer’s interests, including the transfer of overhead costs to employees, are impermissible, as running strongly against the legislative policy which underlies the Massachusetts Wage Act." 

That case settled before trial, therefore the decision has not been reviewed by an appeals court and is not binding on other courts in other cases.  If followed by other courts in Massachusetts, however, the implications of this decision could be significant, and affect the rights not only of hair stylists whose pay is affected by “product deductions”(a common practice in that industry), but also other employees paid pursuant to complex commissions formulas that may similarly involve an impermissible transfer of the employer’s costs.  If a deduction is not permitted, the deduction is likely a violation of the Wage Act, which requires that the employee be awarded three times the amount of the wages withheld, along with reimbursement for reasonable attorneys' fees incurred in enforcing the Wage Act.

For employees paid on a commission basis, this means you should review your commission formula carefully so you understand if your employer is incorporating any deductions that might be suspect under the law.

Employers, too, should carefully review their commission policies.  It is risky, at best, to include offsets in the commission formula for direct costs of sales.  A safer practice is to incorporate those costs as you would any other overhead expense in the amount you offer to pay your commission-based employees. For example, if you have direct costs associated with sales that are on average 1% of the sale, and you pay your employees 10% of the sales revenue, it is a better practice to set their commission percentage at 9%, rather than offer 10% and deduct the 1% cost from their commission calculation.

If you are uncertain whether your commission plan includes potentially unlawful deductions, or if your plan is unclear about when a commission is “earned,” it is worth your while to consult with an experienced Massachusetts employment lawyer.

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