Section Review

Bridging the gap: a review of the proposed amendments to the Massachusetts Minimum Wage Regulations

Ana Gomez-BlanchfieldAna Gomez-Blanchfield is an employment law attorney in private practice who represents and counsels employers in all aspects of employment law. She serves as an adjunct faculty member at Southern New England School of Law where she teaches employment discrimination law.

Wage and hour regulations heed the trend

The new millennium rolled out the red carpet in Massachusetts employment law jurisprudence making it fashionable to harmonize state decisions with federal law. This trend was initiated by our courts to bridge the chasm between federal and state law regarding the allocation and burden of proof in discrimination claims. See Abramian v. Pres. & Fellows of Harvard College, 432 Mass. 107 (2000); Wynn and Wynn P.C. v. MCAD, 431 Mass. 655 (2000). A more recent and similarly dramatic alignment between federal and state law was the amendment to M.G.L. ch. 151B, ß5 extending the limitations period for filing discrimination claims at the Massachusetts Commission Against Discrimination (MCAD) from "six months" to "300 days."

Creeping into this landscape with less fanfare, but with equally significant impact to Massachusetts employers are the proposed amendments to the Minimum Wage Regulations. In summarizing the proposed amendments, the Department of Occupational Safety (DOS), the agency that administers the commonwealth's Fair Minimum Wage Law, M.G.L. c. 151B, ßß 1-22, and promulgates the Minimum Wage Regulations, 455 C.M.R. 2.00, admits to being confronted with a significant increase in the number of inquiries from employers and employees about the meaning and interpretation of the Minimum Wage Regulations. These inquiries, according to the DOS, revealed significant gaps in the regulations that needed clarification; thus the agency came to the conclusion that the regulations should be brought in line with analogous federal law in several key areas. (See "DOS Summary of Proposed Amendments to the Massachusetts Minimum Wage Regulations," Nov. 18, 2002, available at http://www.state.ma.us/dos/Index.htm.) As of this writing, the proposed regulations are in the final stages of being approved. References to "new" regulations or changes in this article refer to the proposed regulations, and not necessarily the amendments that will be passed.

Bridging the gap with state wage and hour regulations

The Massachusetts Minimum Wage Regulations contained in 455 C.M.R. ß2.00 addresses the fundamental aspects of an employer's obligations to non-exempt employees. The regulations provide for the payment of the basic minimum wage, overtime regulations, the minimum wage for learners or apprentices and the minimum wage for tipped (now known as "service") employees. As an additional framework, the regulations also address the minimum hours of work for which an employee who shows up for work on a given day must be paid, on-duty or on-call time, travel time and expenses, deductions for lodging, meals, and uniforms, and wage records that employers are required to keep.

Employment law practitioners are often challenged by conflicting wage and hour standards between federal and state regulations. While it is settled that the prevailing statute is the one that provides more benefit and protection to the employee, Massachusetts practitioners often have to look to federal law for guidance in interpreting its statutes and regulations. For example, the term "on duty" is not defined by state regulations, but is clearly defined under analogous federal law and numerous court decisions.

The regulations, as proposed, go a long way in clarifying definitions. The changes if passed are startling, not just in its intent to fill the gaps between federal and state law, but that in filling these gaps, several of the new regulations plainly and unambiguously refer and direct us to federal statutes and regulations in defining and interpreting Massachusetts law. Some highlights of the proposed regulations are:

Regular hourly rate (section 2.01)

There are two specific changes in this section. The first change reflects the current enumeration of all excluded employments for the purposes of overtime pay found under M.G.L. c. 151, ß1A. This section recognizes 20 exemptions under the state overtime law. These exemptions include, to name a few, golf caddies, outside sales persons, fishermen, switchboard operators and laborers engaged in agriculture and farming. The past regulation noted only one exemption - the "bona fide executive, or administrative or professional person or qualified trainees for such position earning more than eighty dollars per week."

The second amendment is the more significant as it spells out very specific exclusions to the computation of the "regular hourly rate" for the purpose of overtime pay. In addition to commissions, drawing accounts, bonuses or other incentive pay, the regulation directs us to the federal exclusions under 29 U.S.C. ß207(e), also known as the 7(e) exclusions. These include, but are not limited to, gifts, discretionary bonuses, reasonable travel expenses, vacation, holiday or sick pay.

Overtime rates (section 2.02(3))

The new sub-section 2.02(3) consolidates the old definitions of overtime rates under ß2.02(4) and ß2.03(3). Noteworthy is the direct inclusion of the terms "bona fide executive, or administrative or professional person" in M.G.L. c. 151, ß1A(3) as having the same meaning "as set forth in Part 541 of Title 29 of the U.S. Code of Federal Regulations."

The amendment also tracks the language of 29 U.S.C. ß207(h) by specifically stating that "extra compensation" as per 29 U.S.C. ß207(e) (5), (6) and (7) shall be credited toward overtime compensation. Of interest to retailers whose businesses open on Sundays and certain holidays, the regulations under M.G.L. c. 136 still exclude the premium (overtime) pay required for hours worked on these days from overtime pay.

Hours worked (section 2.03)

The new "on-call" provision for "off the work site" situations specifically provides for the now prevalent practice of providing employees with pagers and cell phones. The new ß2.03(2) provides that one is not "working while on-call" when one is "not required to be at the work site," and when one is "effectively free to use his or her time for his or her own purposes." This broader statement provides more currency as it no longer assumes that day shifts are the norm as the former regulation did.

For work shifts "on the work site," ß2.03(3) addresses three different scenarios:

(1) An employee who is required to be on duty at the work site for less than 24 hours;

(2) An employee who is required to be on duty at the worksite for 24 hours or more; and

(3) An employee who resides on an employer's premises on a permanent basis or for extended periods of time.

Each scenario addresses specific regulatory responsibilities for employers. For example, in scenario number one the employee is considered to be working even if the employee is permitted to sleep or engage in personal activities when not busy. ß2.03(3)(a). The new ß2.03(3)(b) does away with the "night" time provisions and minimum wage compensation requirements for "no less than four hours per night" in these situations. Finally, by adding section ß2.03(3)(c), the regulation fills a void by addressing the situation of employees who reside on the employers' premises, a provision that was conspicuously absent in prior Massachusetts law. This provision tracks its federal counterpart under 29 CFR 785.23.

While there are few changes under the travel time provisions, (the regulations have been rewritten to address home-to-work time and changed the term "workday" to "workshift"), the new ß2.03(4) fills another gap by adding a new sub-section (c) dealing with travel time away from home, also not previously addressed by state regulations. This too is consistent with its federal analogue, ß29 CFR 785.39.

Wage Payment and Deductions From Wages (section 2.04)

The proposed amendments include a new section, Wage Payment and Deductions From Wages (ß2.04), which clarifies the previous ß2.03(4). This section makes it very clear that only allowable meals and lodging set forth in (a) and (b) can be deducted from, and thereby be considered part of, the minimum wage.

The "deductions" sections for Uniforms (ß2.04(2)) and the Calculation of Overtime (ß2.04(3)) have been clarified and re-organized. The provision for uniforms reflects the DOS' current interpretation of uniform maintenance costs and its effect on minimum wage. The latter provision clearly pronounces that all such deductions for meals, lodging and uniforms may not alter an employee's regular rate for the purposes of overtime calculations. These changes parallel federal treatment in these areas.

Other changes

The proposed changes include several technical changes to reflect current usage or practice, to neutralize assumptions, to be consistent or to reflect DOS interpretation. For example, changing "service" to "tipped" employees, or amending language under the definition of "uniform," to clarify that clothing requirements that are more in the nature of a dress code are not considered uniforms. Working time has also been changed to "work site," and the word "luncheon" has been changed to "lunch." The title of "minimum daily hours" would be changed to "reporting pay" to reflect the current DOS interpretation of this provision.

The new regulations under ß2.06 permit employers to round practices in the recording of hours worked, and provides the specific manner of computing time averages. On a final note, and you heard it here first, the workplace notices required under ß2.06(1) are no longer available, by statute, from the Office of the Attorney General.

Conclusion

Employment law practitioners should carefully review the new provisions of the Minimum Wage Act and identify how the amendments impact their clients. These amendments, when passed, provide an excellent opportunity for attorneys to engage employers in strategic planning and compliance with the new laws.

Wage and hour laws are often delegated as the less sexy counterpart of employment law practice. However, serious employment law practitioners are just as familiar with the pitfalls, legal consequences and monetary damages that arise out of a client's failure to follow the maze of statutes, regulations and case law under the FLSA and state wage and hour laws. The haze that one often operates under is complicated by differing and conflicting provisions of federal and state interpretation of the same law or regulation.

That is why the amendments are a welcome trend. These amendments provide clearer guidance and comfort to employers, their human resource personnel and the attorneys who advise them. Law by ambush should not be the norm. These new regulations provide some protection from further surprises.

NOTE: The amendments to the Massachusetts Minimum Wage Regulations were recently passed and became effective on April 25, 2003. Please contact Lisa C. Price, legal counsel for the Minimum Wage Program, (617)-727-3452 at the Department of Occupational Safety (DOS) or visit its Web site http://www.state.ma.us/dos/Index.htm, to get updated information on the new regulations.

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