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Issue: # 124
June 16, 2015
  
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Dear  :     

 


The new Massachusetts Sick Leave Law takes effect July 1st, 2015. 
CHECK  LATEST UPDATES BELOW!!!!!

This month you should watch out for the Supreme Court decision on Obamacare subsidies.  If the Supreme Court concludes subsidies are unconstitutional for the 6,000,00 receiving them, it will spell the end of Obamacare. 

It will also repeal all individual and employer mandates.     This is a huge decision!!!   NPR radio story on this upcoming decision. 

Thanks

Bill Randell CLU ChFC
Vanessa Costa CLU ChFC 
The Attorney General's Public Hearing

On June 5, in a standing-room-only Saxe Room at the Worcester Public Library, business owners and HR managers voiced their frustrations in their testimony as to how the new earned sick leave law will affect them. They asked the representatives from the AG's office many complicated hypothetical questions regarding this law, which is still being revised at this time. It is a very confusing law, and many of the proposed regulations aim to clarify gray areas.

 

The two biggest concerns for those running business are staffing issues and cost.

  • One HR manager of a large retail food chain, stated that the implementation of this new law will cost her company $3 million.
  • The owner of a bus company that transports special needs children is concerned that his drivers will now call out sick more often, leaving children stranded.
  • Another business owner asked that the implementation of the law be delayed until January 1. Unfortunately the Massachusetts legislature already voted this option down; on July 1 all employers need to comply with this law by implementing it completely if they do not fall under the "Safe Harbor".
We were assured at the meeting that all regulations will be revised and ready by June 19th.   An important regulation under revision is the "break in service" regulation.   Right now this allows an employee to have a "break in service" up to one year and maintain their accrued sick time from the period before the break.   This could certainly be a significant expense for companies using seasonal employees.

HR questions? Please Email us.
Payroll Companies & Sample Accrual Policy Ready!

We are finding that many employers have contacted their payroll companies to see if they will  "track" the sick time July 1st.  Most of the payroll companies can prepare these reports for a nominal fee.

If you decide to just follow the the Massachusetts Sick Leave Law that credits one hour per 30 works, you still need your Sick Pay Policy in writing.  In addition employers need to define the 12 month period of the new policy and forward that information to their payroll vendor. 
 

In addition, you will have to post the notice from the Attorney Generals office for all employees to see.  It may also be prudent to distribute your official sick pay policy to all employees and have them sign off.

 

We now  have a Sample Accrual Policy (credits 1 hour per 30 worked) in addition to our alternate Sick Pay Policy that front loads the 40 hours day one.   It is available free to clients of Advantage Benefits now, send us an e-mail for a copy. 

 

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Accrual Method Vs. Front Load Method
 

Which method works best for your business? The answer depends upon a few items.  One key is whether your payroll company can accommodate the tracking at no charge or a nominal cost. Putting that aside, lets look at an example: 

  • An employer decides to simply give (front load) the employees 40 hours of sick pay effective July 1st for a plan year from this July through next June 30th.
  • An employee works 300 hours in July & August, then uses all 40 hours sick time with pay  - and then quits.
  • Under the accrual method, you would only pay 10 hours (1 per 30) rather then then the 40 hours.
  • In this example, the up front method cost 30 hours more then the accrual method.

It comes down to this.  If you are a small business with less than 50 employees and have a steady/stable workforce, with low turn-over, then loading the hours may make sense.   Front loading eliminates the need to accrue/track hours.  Keep in mind, you will have to keep track of the front load 40 hours used, which is less labor intense. 

 

If you have more than 50 employees, high turnover, or a large percentage of part-timers then the accrual method most likely makes more sense.  We have a Sample Sick pay Written Policy for each method - send us an e-mail for copies.  

 

Another interesting scenario is a business that has a core group of benefit eligible employees and a host of part time workers with no benefits.  The employer would like to front load the sick time for the full timers, but would prefer to accrue hours for the part timers.  WE have just learned that this is an acceptable alternative.

 

In the end, no matter what you do it is important that you:

  • review all  other current PTO (paid time off) polices (vacation/holidays)
  • have a Sick Pay Policy in writing with employee sign off
  • post the notice from the AG
  • coordinate with payroll company

There is no question that this new law will be a material new cost to fellow business owners.

You do have the discretion to reduce paid holidays, or revamp vacation formulas. 

 

Bello & Welsh LLP

We have started to work with the Law Firm of Bello / Welsh LLP, a premier boutique law firm, concentrating in the representation of management in all aspects of labor and employment law.   

Check out their latest blog on the Massachusetts Sick Leave Law.