If you work in Massachusetts then you’re likely aware of the minimum wage increase. Navigating this change can be tricky. To help guide you through a successful transition, KNF&T’s Executive Vice President, Beth Cabrera, shares what you need to know:
What are the new pay rates under the min wage law?
- The minimum wage was traditionally $11/hour for non-tipped employees.
- This changed in January 2019, when the state minimum wage will go up to $12 an hour.
Will the minimum wage continue to increase?
- Yes, the minimum wage will increase in 75-cent increments each year. This means that in 2020 the minimum wage in MA will increase to $12.75. The following year it will be $13.50, then $14.25 in 2022, and $15 in 2023.
Who does it impact?
- The increase in the minimum wage has an immediately positive impact on the lowest paid employees in our workforce. For the same hours, they will be earning at a minimum of $1 more per hour. That said, these same employees who tend to pick up shifts wherever they can might feel a negative impact as this legislation also eliminated the requirement to pay time and half for Sunday and Holiday shifts (in retail environments).
- If these employees are working over 40 hours as they enter that Holiday or Sunday shift, they will still receive the appropriate overtime premium. Those employees who have specifically chosen these shifts in the past to maximize their earnings may have to accept a net smaller paycheck.
- Companies who are open seven days a week may actually see a net savings from the new legislation (if their employees are working 40 hours or less per week).
Are there any issues that can occur as the minimum wage continues to increases?
- Yes, there are additional issues that impact payroll including the upcoming FLMA implementation. This paid leave program will be funded by a shared payroll tax, which means increased costs for employers and less net income landing in the pockets of employees
- There are also the issues around how to implement the stepped increase. Some companies are running ahead of the required steps in order to ensure that they attract and retain top entry level employees. In a state where the unemployment level is at historic lows, this is good news for employees.
- There is also the administrative issue of ensuring that increases are implemented on time, accurately, and across the board. This additional administrative work could lead to companies expanding their payroll departments adding additional expense to the overall cost of doing business in Massachusetts.
How should business owners prepare for changes to the minimum wage?
- Business owners should ensure they work with their finance and accounting teams to understand the full financial burden of this change and how they will be absorbing those costs.
- They should also know each deadline and have a process in place to ensure that these deadlines are met and all administrative requirements are completed in order to process the wage increases both timely and accurately.
- Business owners also need to have all appropriate postings in visible places for these employees so that every employee has a complete understanding of the stepped increase and can easily understand how it will impact them and their paycheck.
KNF&T can help alleviate your burden by providing contract workers for extra support during this transition, or direct hire employees for those looking for a permanent change.
We have talent for you in these areas: Accounting & finance, administrative, office services, healthcare, human resources, legal & compliance, marketing, and social media as well as diversity search and executive search.
Contact us today to get started.