Top 5 Wage and Hour Considerations for Massachusetts Employers in 2020

With the flurry of the holidays and year-end activities, do not lose sight of these critical wage and hour issues for 2020.

1.      Increase to Salary Basis Threshold. Effective January 1, 2020, in order to properly classify an employee as exempt from overtime under the executive, administrative, or professional exemptions, an employer must pay the employee a salary of at least $684 per week ($35,568 annualized) and the employee must perform the requisite job duties of the particular exemption. Also, the total annual compensation requirement for a so-called “highly compensated employee” will be $107,432.

2.      Inside-Sales Employees Entitled to Overtime and Sunday Premium Pay. In this year’s Sullivan v. Sleepy's LLC, 482 Mass. 227 (2019), the Massachusetts Supreme Judicial Court found that inside-sales employees paid by commissions and draws are entitled to “separate and additional payments of one and one-half times the minimum wage for every hour the employees worked over forty hours,” and separate and additional pay for Sunday premium pay, where applicable. For example, an employer cannot retroactively allocate draws and commissions as hourly wages and overtime pay, even if the draws and commissions equaled or exceeded one times the minimum wage times the number of hours worked up to 40, plus 1.5 times the minimum wage for any hours worked beyond 40. Many retailers that employ seven or more workers are required to pay inside-sales employees (and other non-exempt employees) a premium rate on Sundays, which decreases from 1.4 to 1.3 times the employee’s regular rate on January 1, 2020. Ensure that all of your non-exempt employees are paid overtime for hours worked in excess of 40 in a week and Sunday premium pay for Sunday work, where applicable.

3.      Classification of Independent Contractors. With more states adopting a version of the so-called “ABC” test for independent contractor status used in Massachusetts and increased enforcement action, consider reassessing the status of all of your workers classified as independent contractors. In Massachusetts, a worker is presumed to be an employee unless all three of the following are satisfied:

• The worker is free from control and direction in connection with the performance of the service, both under any contract and in fact; AND
• The service is performed outside of the employer's usual course of business; AND
• The worker is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

The cost of independent contractor misclassification in Massachusetts can be significant and include treble damages, attorneys’ fees, and costs for any lost wages or other benefits, and civil and criminal penalties for companies and individuals, including corporate officers and those with management over affected workers.

4.      Leap Year. If you pay employees weekly or biweekly, decide how you are going to address the fact that next year includes February 29, 2020 (potentially 53 or 27 paydays).

5.      Minimum wage. Effective January 1, 2020, the Massachusetts minimum wage increases from $12 to $12.75 and the tipped minimum wage increases from $4.35 to $4.95.

By Shannon M. Lynch, Esq., Hackett Feinberg P.C.