Reminder: Important Wage & Hour Updates Effective January 1, 2020

by Robert Rudolph

Massachusetts Minimum Wage

Effective January 1, 2020, the Massachusetts Minimum Wage will increase from $12.00 per hour to $12.75 per hour. The Massachusetts Minimum Wage will continue to increase in yearly increments until it reaches $15.00 per hour on January 1, 2023. In Massachusetts, all workers are presumed to be employees, and almost all workers must be paid at least the minimum wage.

Note: There are circumstances in which different wages may be permitted depending on the employee’s position and job type.

Tipped Employees Minimum Wage (Service Rate)

Effective January 1, 2020, the Massachusetts Minimum Wage for Tipped Employees, commonly referred to as the “Service Rate,” will increase from $4.35 per hour to $4.95 per hour. The Massachusetts Minimum Wage for Tipped Employees will continue to increase in yearly increments until it reaches $6.75 per hour on January 1, 2023.

An employer can pay the hourly “service rate,” per hour, to a worker if:
– the employer informs the worker in writing that they will be paid the service rate
– the worker makes more than $20 a month in tips, and
– the hourly tips plus the hourly service rate add up to the minimum wage.

Note: Service employees who earn tips must earn at least the minimum wage. If the service rate plus tips do not add up to at least the minimum wage, the employer must pay the difference. The law requires employers to calculate the difference between the service rate and earned tips at the end of every shift worked by the employee.

Fair Labor Standards Act Exempt Status Minimum Salary Threshold

Effective January 1, 2020, the Department of Labor (DOL) has updated and revised the regulations issued pursuant to the Fair Labor Standards Act (FLSA), which set the minimum earnings thresholds to exempt executive, administrative and professional employees from the FLSA’s minimum wage and overtime requirements. Effective January 1, 2020: (i) the standard salary level for exempt employees will increase from $23,660 annually, or $455 per week, to $35,568 annually, or $648 per week; (ii) the total annual compensation level for highly compensated employees will increase from $100,000 to $107,432 annually; and (iii) employers will be permitted to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level.

However, employers must remember that meeting the minimum salary earnings threshold is not the only requirement for an employee to be considered exempt pursuant to the FLSA. An employee must meet three (3) requirements: (i) the employee must be paid on a salary basis (as opposed to hourly wages); (ii) the employee must earn at least the FLSA minimum salary threshold of $35,568 annually (effective January 1, 2020); and (iii) the employee must have an executive, administrative or professional job duties exemption, as defined by the FLSA.

Payroll Record Keeping

For each employee, Massachusetts law requires that the employer shall keep a true and accurate record of the employee’s name, complete address, social security number, occupation, amount paid each pay period, hours worked each day, rate of pay, vacation pay, any deductions made from wages, any fees or amounts charged by the employer to the employee, and dates worked each week. Such records shall be kept on file for at least three years after the entry date of the record.

Wage & Hour Poster

Massachusetts law requires all employers to post a notice of Massachusetts wage and hour laws in the workplace in a location where it can be easily read. The workplace notice must be posted in English, and in any other language that is spoken by five percent or more of the employer’s workforce and for which a translated notice in that language is available from the Commonwealth.

You can download the Massachusetts Wage & Hour Poster in seven different languages.

This e-mail is not meant to provide legal advice. If you wish to discuss your specific situation, please contact Rudolph Friedmann LLP attorney Robert Rudolph at rrudolph@rflawyers.com or 617-723-7700.