We’ve all heard the words “minimum wage” before, right? What exactly does this mean – and why is it changing in our state (Massachusetts)?
For those who don’t know, minimum wage is the lowest pay rate an employer can legally pay their workers/employees; the term “service rate” refers to the minimum cash wage paid to tipped employees such as restaurant servers, bartenders, and the like. The minimum wage is different in each state, and is currently $11 an hour and $3.75 an hour for service rate in Massachusetts (MA). If you’re a Massachusetts employer, you’ve likely heard and worry about the law mandating an increase in wages in coming years. Not to worry, we’re here to help and keep you in the loop.
On June 28, 2018, Massachusetts Governor Baker executed this legislation through a law was termed the “Grand Bargain”. With this, Baker aims to increase Massachusetts minimum wage – and service rates for tipped employees – over the next five years, eliminate special pay on holidays and Sundays, and enact mandatory paid family and medical leave. Stay tuned for another post with more details on eliminating special pay on holidays & Sundays and the new Family & Medical Leave Act!
Minimum Wage changes will be effective…
- January 1, 2019, wage will increase to $12.00
- January 1, 2020, wage will increase to $12.75
- January 1, 2021, wage will increase to $13.50
- January 1, 2022, wage will increase to $14.25
- January 1, 2023, wage will increase to $15.00
Also during this time, the MA service rate will increase from $3.75 an hour to $6.75 an hour, increasing by $0.60 per year until 2023.
What Can You Do To Prepare?
The “Grand Bargain” Act presents major changes for MA employers AND employees, but most of the changes are not effective until July 1, 2019, giving employers ample time to prepare.
In the meantime, Ritz Payroll is happy to answer any questions, address concerns, guide you through the process, or direct you to our trusted partners.