Workers’ Comp Rates to Fall By Average 3.5 Percent
Massachusetts businesses will collectively save about $80 million on workers’ compensation costs under an average 3.5 percent insurance rate rollback that was recently announced by the Attorney General’s office. The new rates are set to take effect July 1 and are part of a settlement reached between the Attorney General’s office, the State Rating Bureau, and the Workers’ Compensation Rating and Inspection Bureau of Massachusetts. The rates are set periodically as part of administrative hearings before the Division of Insurance involving insurance companies. The AG’s office can intervene and litigate against the proposal to protect the public interest. In a December filing, the industry sought a statewide average rate increase of 2.7 percent.
State Court Rules on Wage Payment Claims
On April 4, 2022, the Massachusetts Supreme Judicial Court issued an important decision in which it interpreted the allocation of penalties for late wage payments under the Massachusetts Wage Act. The decision reinforces that there are severe penalties under Massachusetts law for any late payment of wages and benefits. The law is now clear that an employer is liable for triple damages plus twelve percent interest on any late payment of wages. The employer cannot avoid liability for treble damages once the payment is even a single day late, even by making a payment with interest prior to the employee’s filing of a lawsuit. Employers must now make sure that employees are paid in a timely manner for any compensation they are due. The term “wages” is defined in the Wage Act broadly to include virtually all forms of compensation, including hourly wages, salaries, commissions, overtime payments, and Sunday premium pay. Any employee who is involuntarily terminated must be paid all accrued wages, including unused vacation time, on their last day of work or the employer will suffer severe financial penalties under the Wage Act.
House Rejects Series of Tax Relief Proposals
The House of Representatives rejected a series of Republican-led attempts to add tax breaks into the annual state budget. The amendments included a proposed two-month holiday for the 24-cents-pergallon gas tax, a proposal to increase the estate tax threshold from $1 to $2 million and a proposal to reduce the short-term capital gains tax from 12 to 5 percent. These proposed amendments mirror the language included in the tax relief proposal recently filed by Governor Baker. The House leadership called the gas tax freeze a break of tens of millions of dollars per month for “Big Oil” rather than for individual taxpayers. The Committee on Revenue is reviewing the Governor’s proposal and they expect to release a redrafted tax relief plan before the end of the session on July 31st.
Inadequate Child Care Leads to Lost Wages and Worker Shortages
The Massachusetts Taxpayers Foundation has released a report that found that hourly workers in Massachusetts miss out on more than $1.6 billion in wages every year because of unmet childcare needs which results in a $2.7 billion drag on the statewide economy. Employers lose nearly $812 million every year due to lost productivity, turnover, and replacement costs when workers need to step away to care for their children. The MTF projected a significant economic boost if parents of young children who are currently not working decided to join the labor force, a step that is impossible for many families who cannot afford to place their kids into programs. Approximately 100,000 parents who do not work and have children under 5 years old. If 10 percent of those adults worked full-time hours making the state median wage, they would collectively earn $859 million and steer $33 million more in income tax to the state every year. Getting more parents of young children to work could also help address a workforce crisis fueled by an aging Massachusetts population. Massachusetts families currently pay 20 to 40 percent of their household income toward early education and care, making it one of the least affordable for those services in the country. Governor Baker recently proposed a doubling of the dependent care tax-credit, and the House of Representatives has allocated an additional $110 million to help fund early childhood education and day care.