Legislature Votes to Raise Minimum Wage; Lower Business Costs through Reform

Representative David P. Linsky joined his colleagues in the Legislature to pass final legislation to increase the minimum wage to $11 per hour by 2017 and lower costs for businesses through an updated unemployment insurance rating table and multi-year rate freeze. Adjusting for inflation, the minimum wage in 1968 would be worth $10.72 today.

“Massachusetts has always been a leader and this bill will give the Commonwealth the highest minimum wage in the country while assisting business by reforming unemployment insurance.  This is great news for Massachusetts workers and the business community,” said Representative Linsky.

“These are two very important issues facing the Commonwealth, and I am proud of the Legislature for taking these steps to support our workers and businesses,” Senate President Therese Murray (D-Plymouth) said. “Increasing the minimum wage will make a real difference in the lives of residents and, by updating our unemployment insurance rating table and introducing a multi-year rate freeze for our businesses, we are providing financial predictability and rewarding companies with positive employment histories. These changes are necessary to create a healthy economic environment where both residents and businesses can succeed.” 

“With this vote to increase the minimum wage and to reform our unemployment insurance system, the Legislature has strengthened two important aspects of our state's social and economic fabric,” House Speaker Robert A. DeLeo (D-Winthrop) said. “By pairing an increase in minimum wage on a non-indexed basis with UI reform we will improve conditions for working families and provide a vehicle for economic growth. I thank Senate President Murray, the conferees and my colleagues in the Legislature for their intelligent and well-considered action on this bill.”

The compromise legislation increases wages for tipped workers to $3.75 per hour by 2017. Current law sets wages at $2.63 for tipped workers. In addition, the minimum wage for agriculture and farming will increase to $8 per hour from $1.60 per hour under this bill.

As part of unemployment insurance reform, the bill expands the experience rating table to allow stable employers to pay lower rates and require negatively rated employees to pay higher rates, from $0.73 per employee to $11.13 per employee. The expanded rating table also sets the taxable wage base at $15,000, an increase of $1,000 to achieve employer savings while ensuring the maintenance of a health UI trust fund.

To further support stable employers in the Commonwealth, the bill also allows the experience rating of employers to be determined by the past three years, instead of the current one-year.

The bill reduces unemployment insurance costs for employers by expanding the seasonal employer exemption to 20 weeks. Under current law, to qualify for certification a seasonal business must be in operation for fewer than 16 weeks or employ workers in one or more functionally distinct job titles for fewer than 16 weeks.

The bill also authorizes the Department of Unemployment Assistance to participate in a federal program that allows the interception of federal tax refunds to recover benefit overpayments.

Business owners will be allowed to collect unemployment benefits if they leave their company but will be required to pay back any money collected if they return to the same company within the same benefit year. Individuals will also be allowed to collect benefits if they quit a second job before they were laid off from their primary job.

The bill also does the following:

·         Establishes a Council on the Underground Economy to combat the underground economy and employee misclassification;

·         Prohibits crewmembers on commercial fishing vessels from being denied unemployment benefits if unemployment is the result of federal fisheries management restrictions;

·         Requires all public contractors to certify they do not owe back Unemployment Insurance payments;

·         Adds whistleblower protections for employees who testify about their employers’ defrauding the system; and,

·         Requires the Department of Unemployment Assistance to hold at least one annual public hearing to receive input from employers;

The bill now goes to the Governor for his final approval.