As a result of the COVID-19 global health crisis, federal, state, and local health and safety guidelines for employers are continuously changing. Employers may still follow social distancing policies, hygiene protocols and safety procedures – however, in the state of Massachusetts, these policies are at the discretion of the business owner and are no longer mandated. See 4.4 Workplace Safety for information on Massachusetts’ post-COVID-19 reopening.
In some cases, employers may implement testing or monitor for symptoms, such as taking an employee’s temperature when reporting to work. To comply with ADA regulations, employers must ensure all mandatory COVID-19 testing is “job-related and consistent with business necessity”. Employers must maintain employee privacy rights by keeping COVID-19 test results confidential and separate from an employee’s personnel file. Furthermore, under EEOC guidelines, COVID-19 testing must be accurate and reliable, and employers are prohibited from requiring antibody testing.
The above testing guidelines further apply to vaccination requirements. While employers may mandate vaccination, they must do so within the guidelines of the ADA, Title VII, and other EEOC regulations. Public health requirements are constantly changing, requiring employers to monitor them closely in order to ensure compliance and maintain a safe workplace. While many guidelines are no longer required, employers must still comply with federally mandated leave provisions.
Due to the global uncertainty caused by the pandemic, there are currently over 700 employment cases related to COVID-19 filed in courts across the country. The majority of these cases include claims relating to discrimination and sick leave. Employers should also take caution when considering whether or not to require employees who return to work to sign liability waivers. These waivers may not be enforceable, as worker’s compensation claims, generally, cannot be waived. A recent Executive Order, however, protects employers from COVID-19-related liability as long as the employer is not negligent. Over two dozen states enacted or attempted to enact similar legislation.
On March 18, 2020, the federal government enacted the Families First Coronavirus Response Act (FFCRA). The FFCRA creates a series of employee relief efforts, which will remain in effect through September 30, 2021. Covered employers with less than 500 employees may choose to provide employees with COVID-19-related sick leave, family and medical leave, and receive tax credits for the payments made. While employer compliance with the FFCRA is optional through September 30, 2021, employers who want to take advantage of available tax credits under the Act may choose to participate.
Generally, covered employers may provide two weeks of fully paid sick leave if an employee is unable to work because they are quarantined, experiencing COVID-19 symptoms, awaiting a COVID-19 diagnosis, and obtaining or recovering from a COVID-19 vaccine. Covered employers may provide up to two weeks of leave at a rate of two-thirds regular pay if an employee is providing a bona fide need to care for a quarantined individual, 14 weeks of paid expanded family and medical leave at two-thirds the employee’s regular rate to care for a child whose school or place of care is close as a result of COVID-19.
Additionally, on May 28, 2021, the COVID-19 Emergency Paid Sick Leave Program (MA EPSL) was enacted to provide Massachusetts workers with emergency paid sick leave due to qualifying reasons related to the impact of COVID-19. These reasons include COVID-19-related illness, quarantine, vaccination and recovery post-vaccination, along with leave to care for qualifying family members. Furthermore, MA ESPL reimburses eligible employers up to USD850 per employee for providing COVID-19 emergency paid sick leave until September 30th or until the state’s fund runs out. Employers are to post a provided notice in “a conspicuous location […] where employees with rights under this section work” and cannot require an employee eligible for COVID-19 emergency paid sick leave to use existing benefits such as sick days, vacation and paid time off.
Note that many of the provisions are similar to the FFCRA, however the MA EPSL is required by all Massachusetts employers, regardless of size. Employers should familiarize themselves with the reimbursement processes.
The "Me Too" movement is an ongoing social campaign to raise awareness about sexual harassment. In the USA, especially in the Northeast region, "Me Too" has influenced workplace behavior. Allegations of sexual harassment can lead to expensive litigation and create a lot of negative attention in the media. Therefore, employers should have strong policies to educate employees about acceptable behavior and be prepared to respond to allegations of sexual misconduct with a thorough investigation and discipline when appropriate.
The rise of the "Me Too" movement has also increased attention on and criticism of non-disclosure agreements. In the past, sexual harassment victims signed non-disclosure agreements to prevent the accuser from publicizing the allegations. The US Internal Revenue Service has generally allowed employers to take tax deductions for confidential settlements and attorney fees related to the defense of such claims, but a recent change to the US Tax Code now explicitly prohibits employers from taking tax deductions for payments made to individuals alleging sexual harassment or sexual abuse if the settlement or payment requires the claimant to sign a non-disclosure agreement.
Nevertheless, non-disclosure agreements are legal, and there are many other good reasons to use them. For example, when an employee leaves a company after any type of dispute, a non-disclosure agreement can provide finality and prevent both sides from speaking negatively about the other. Thus, non-disclosure agreements are likely to endure despite this recent scrutiny.
In addition, "Black Lives Matter" (BLM) is a movement advocating for racial equality and advocating against police brutality. Employers should review their policies to ensure that the workplace is equitable and inclusive – as well as their responses for when it fails to be. Employers should train employees who conduct interviews to ensure inclusivity of all applicants. Employers should enforce dress codes and policies against political speech uniformly to avoid claims of discrimination from employees that are reprimanded for wearing BLM merchandise. Please see 4.3 Discrimination, Harassment, and Retaliation Issues for a discussion of Frith v Wholefoods Market.
The Northeast and West Coast in the USA are areas of innovation and investment in the technology and life science industries. Biotechnology companies have been particularly successful in Boston because of the city’s world-class hospitals and universities. The Massachusetts Institute of Technology and Boston’s entrepreneurial culture have contributed to many successful robotics and computer technology-based start-ups and consumer product companies. The young workforce attending and graduating from Boston’s many universities have also embraced the flexibility of the “gig” economy, favoring short-term or part-time contracts and freelance work over permanent jobs. The rise of the gig economy has, however, raised legal questions about whether participants should be treated as employees or independent contractors.
Massachusetts has increasingly caught national attention as the debate between classification of gig workers versus employees has intensified in the past year. Labor and civil rights groups support classifying workers as employees, while employers continue to push for legislation recognizing that gig workers are not employees. Gig economy power players filed for a November 2022 ballot initiative in Massachusetts that would keep gig economy workers classified as independent contractors, with added benefits such as healthcare stipends for workers who work at least 15 hours per week. Additionally, the Massachusetts Attorney General launched claims against ridesharing companies, calling for them to classify their drivers as employees.
With all of the innovation in these industries, it is especially important that employers protect their intellectual property and trade secrets. Any new venture or employment agreement should specify the ownership of intellectual property. While employers in Massachusetts may require certain employees to sign non-compete agreements, which prohibit employees from working for a competitor for a period of time after leaving the employer, a change in Massachusetts law in 2018 generally limits non-compete agreements to high-level employees. Meanwhile, there are some fairly new laws, such as the Federal Defend Trade Secrets Act, which make it easier for employers to protect and recover trade secrets in this very competitive environment.
The significant increase in the number of people unemployed, laid off, or furloughed due to COVID-19 caused an increased demand in part-time work and odd jobs. This created a more competitive gig economy resulting in a decrease in gig economy workers’ pay, harming it overall. However, Massachusetts broadened the qualifications for COVID-19-based unemployment payments, so gig workers may be eligible for up to 39 weeks of unemployment benefits if they cannot work due to COVID-19 and can prove their prior income.
Union membership in the private sector has declined significantly since its peak in the 1940s and 1950s, although the rate of decline has varied by industry and region. Recently, however, a political coalition that included union and non-union groups successfully advocated for a new law that will increase the minimum wage in Massachusetts from USD11 per hour to USD15 per hour by 2023. Massachusetts will join California, Illinois, Maryland, New Jersey and New York as the only states in the USA to require a USD15 minimum wage. Additionally, Washington D.C passed laws requiring a USD15 minimum wage by 2025 or earlier. The success of this effort is evidence that non-union groups and coalitions can fill the traditional organizational and advocacy roles of unions, which will likely further contribute to the decline in union membership in the private sector.
One of the biggest impacts of COVID-19 on unions is in connection with the monitoring and enforcing of safety in the workplace. Union members are actively filing lawsuits and/or complaints with the Occupational Safety and Health Administration (OSHA) in an effort to regulate and ensure workers' safety during the pandemic. Due to the novelty of the COVID-19 pandemic, regulations are constantly being modified and unions are playing a role in ensuring the enforcement of appropriate workplace standards.
The reconstituted National Labor Relations Board (NLRB) under the Trump administration reversed policy decisions by the prior Obama NLRB that favored union organization and broad protection of workers’ rights. The Obama NLRB decisions addressed, among other topics: the definition of “joint employer status”, which made it easier for unions to organize in situations involving staffing agencies or franchises; “micro units”, which made it easier for employees to organize bargaining units; and a policy to invalidate employer rules if they could be interpreted to violate workers’ rights.
On the issues of joint employer status and micro units, the Trump NLRB returned the rules to their pre-Obama status, while it set new standards for analyzing employee handbooks and policies. The Trump NLRB made it easier for an employer to terminate negotiation with a union and eject the union from the workplace if the employer believes that a majority of workers no longer support that union. These NLRB decisions were consistent with the Trump administration’s general policy of reducing restrictions on business. Under the Trump administration, unions were filing fewer complaints against employers out of concern that the Trump NLRB would issue pro-business decisions that would have a negative impact on employees with similar challenges in the future. However, the Biden administration likely will see a reversal in these practices.
The first year of President Biden’s presidency has been marked by his efforts to further workers’ rights and unionization efforts – and is expected to include the replacement of several Trump-era rulings. His nominees for the NLRB have been markedly pro-union and the NLRB has increased their budget to hire over 100 new attorneys, specifically expecting a need to address the rising debate over the classification of gig workers. The NLRB will be launching a USD2.1 million program to promote knowledge of workers’ rights and how to unionize. The U.S. Senate confirmed two union attorneys to serve on the NLRB recently, marking a Democratic majority.
COVID-19 prompted uncertainty regarding the rights and obligations of employers. Although the impact of COVID-19 within the NLRB remains unclear at this time, the NLRB recognized the fluidity of the pandemic and resulting regulations and issued advice memoranda granting employers flexibility. With that said, employers should narrowly tailor their actions to what is deemed appropriate in particular circumstances and try to discuss such actions with the union prior to implementation.
At the outset of any relationship between an entity and its agent, it is critical to define the nature of the relationship and to delineate, as clearly as possible, the rights of each party. In Massachusetts, when choosing between an employer-employee or independent contractor relationship, it is important to consider that Massachusetts has a very stringent independent contractor statute. (See M.G.L. c. 149, § 148B.) Therefore, only a traditional independent contractor relationship is likely to survive statutory scrutiny in Massachusetts.
Another consideration is the applicability of “joint employment” and the shifting definition applied by the NLRB. The Obama NLRB significantly broadened the scope of what could be considered “joint employment” between two entities. The Trump NLRB, however, had overturned or overhauled numerous Obama-era NLRB policies including those related to defining “joint employment”.
Notwithstanding, on July 29, 2021, the Department of Labor (DOL) rescinded the Trump-era “joint employer” rule under the Fair Labor Standards Act (FLSA). This change makes it more likely that an employee may have more than one employer for the work they perform for purposes of minimum wage and overtime requirements. This change is indicative of President Biden’s worker-friendly policies and rejects the narrowing limitations on “joint employer” status implemented under the Trump presidency. The final rule becomes effective September 28, 2021. Employers should keep abreast of NLRB decisions under the Biden Administration and should contact an attorney for the most up-to-date information.
Yet another critical consideration for any employer is whether there is a legal obligation to compensate interns. In Massachusetts, an employer is generally not required to pay an intern who is receiving academic credit. Otherwise, barring the applicability of a narrow class of exceptions, employers are legally required to compensate an intern pursuant to state minimum wage laws. (See M.G.L. c. 151, § 2.)
Employers also need to be cognizant of workplace safety requirements and best practices in the wake of the COVID-19 pandemic. Specifically, employers need to understand their obligation to ensure a safe workplace, which requires that employers conduct certain safety-related screening and workplace set-up. At minimum, employers should question employees regarding symptoms. In addition, an employee workplace needs to be reorganized to comply with social distancing requirements of the jurisdiction it is in.
United States employers who would like to employ foreign citizens should ensure compliance with work visa requirements under federal law. (See 8 U.S.C. § 1153(b)). This statutory provision sets forth the basis and requirements for employment-based immigration including, without limitation, for “priority workers” and “skilled workers, professionals, and other workers”. Employers should also consider that the former Trump administration previously made immigration regulation and reform a priority, meaning that even routine work visas are being more heavily scrutinized and may be more difficult to obtain.
In June 2020, former President Trump extended a freeze on green cards for new immigrants and signed an executive order to suspend new H-1B, L-1, J and other temporary work visas for skilled workers, managers and au pairs through the end of the year. Although this freeze has since expired, there are an estimated 2.6 million visa applications in the backlog.
It remains to be seen if COVID-19 will bring lasting changes to immigration policies. Nearly all jurisdictions have implemented entry or travel restrictions. Employers are required to monitor the DHS and ICE websites for additional updates regarding extensions to I-9 flexibility, which are currently in place, as a result of the COVID-19 pandemic.
To the extent that any employees are or may become unionized, employers must understand how the collective bargaining agreement will define and otherwise affect the employer-employee relationship. To that end, any employer with unionized employees should be well informed on the applicable provisions of the National Labor Relations Act. (See 29 U.S.C. § 151, et seq.) While union membership is generally declining in the USA, certain unions, including the Massachusetts Nurses Association, continue to maintain a strong presence and remain active in Massachusetts. The Biden administration’s union-friendly policies may also bolster union membership and activity. As issues of pay, leave and equity become more prominent with the current social and political climate, as well as in relation to the COVID-19 pandemic, unionization may see an uptick in response.
A variety of intersecting laws and regulations either directly prohibit or place strictures on lines of inquiry in the process of interviewing prospective employees in Massachusetts. Before going on to discuss prohibited or limited areas of inquiry, here are some topics, just by way of example, that are generally considered safe areas of inquiry in Massachusetts: work history, qualifications, education, expectations, significant challenges, and personal strengths and weaknesses.
Impermissible Interview Questions
Any inquiry about an individual’s membership in a protected class is prohibited in Massachusetts. Employers are required to abide by both federal and Massachusetts anti-discrimination laws. Protected classes under federal law include race, color, national origin, religion, sex (including pregnancy, childbirth and other related medical conditions), sexual orientation and gender identity, disability, age (40 or older), citizenship status, and genetic information.
Additional protected classes under Massachusetts law include age (beyond asking if one is over 18), marital status, military service, arrest record and ancestry. If a prospective employee volunteers such information in an interview (eg, an applicant volunteers that they recently got married), a savvy interviewer would be well advised to steer the topic away from the line of discussion concerning protected class membership.
In addition, under the Massachusetts Equal Pay Act, M.G.L. c. 149 § 105A, inquiries concerning salary history are prohibited (either directly or through an agent like a head-hunter).
Employers should be aware that older employees and those with underlying health conditions may be entitled to a reasonable accommodation to work remotely in light of the COVID-19 pandemic. Furthermore, employers may screen job applicants for symptoms of COVID-19, but only after they have been given a conditional job offer and only if the employer does so for all entering employees in the same type of job.
Interview Questions Subject to Limitations
In 2010, Massachusetts became one of the first states to adopt “ban-the-box” measures, which bar employers from requiring applicants to check a box if they have a criminal history. Massachusetts prohibits any inquiry into an applicant’s criminal history on an initial written application and significantly limits potential inquiries into criminal history during the interview and intake stages of hiring. For instance, during an interview, employers are specifically prohibited from asking about:
In short, unless mandated by state or federal law requiring employers to make criminal inquiries of applicants (wherein certain exceptions will apply to the restrictions discussed here), employers should proceed very cautiously with any inquiry into a job applicant’s criminal history.
Finally, any employer who intends to make inquiries into a job applicant’s credit history must abide by the federal Fair Credit Reporting Act, which contains requirements concerning obtaining written consent and providing a variety of written disclosures to applicants. These disclosures include forms which must be provided to an applicant before and after taking adverse action, such as not hiring an applicant based on information contained in a credit report.
President Biden’s Executive Order
On July 9, 2021, President Biden issued an Executive Order encouraging the Federal Trade Commission to consider implementing laws that would make it more difficult for employers to use non-compete agreements. The Order does not impact current Massachusetts laws surrounding non-compete agreements, but does highlight an increasing effort across the country to make it more difficult for employers to restrict an employee’s movement in the job market.
Massachusetts’ Non-compete Law
The 2018 Massachusetts non-compete law limited the execution and enforcement of non-compete agreements. Applying to non-compete agreements between employees (including independent contractors) and employers entered into on or after October 1, 2018, the law does not apply to separation agreements made in connection with the termination of an employee that include a non-compete provision, provided that the employee is allowed seven days to revoke their acceptance of the agreement.
The legislation does not govern other types of restrictive covenants such as non-solicitation and confidentiality agreements. Under the law, employers may not enforce non-competes executed on or after October 1, 2018 against:
Further, employee non-competes may not exceed 12 months in duration from the cessation of employment, unless the employee has illegally misappropriated the employer’s physical/electronic property or has committed a breach of fiduciary duty. The law also offers new protections for employees.
This legislation also requires consideration for the non-compete to be enforceable. Specifically, the Massachusetts non-compete law contains a “garden leave” provision, which requires that the employer pay the employee 50% of the employee’s highest base salary over the preceding two years for the duration of the restricted period. Alternatively, the employer may provide the employee with mutually agreed-upon consideration.
For a non-compete entered at the commencement of employment to be valid:
A non-compete presented after the commencement of employment must be in writing, signed by both parties, and provide at least ten days’ notice with an advisement on an employee’s right to counsel before becoming effective. Post-commencement non-competes now require “fair and reasonable” consideration – ie, some additional payment or benefit to the employee such as a bonus payment or stock options.
Employers should remember to issue new non-compete agreements in the event of a material change to an employee’s job – such as a promotion or increase in job duties. For example, a Massachusetts court found a non-compete invalid when a manager was promoted to Vice President because there was a significant increase in the employee’s compensation and job responsibility and the employer had not renewed the original non-compete agreement.
Also, if there is a gap in employment – even if for a single day – a non-compete must be renewed. For example, a Massachusetts court found a non-compete invalid where an employee’s term ended on one day, and he started an entirely new position the very next day. The court found the gap in employment as reason to invalidate the non-compete agreement.
Under both Massachusetts common law and the 2018 non-compete legislation, restrictive employment covenants may not be broader in scope than is necessary to protect an employer’s legitimate business interests. The agreements must also be reasonably limited in time and geographic scope.
Employers are permitted to protect trade secrets, confidential information, and preservation of business goodwill. Because non-competes are generally less favoured than other types of restrictive covenants, employers should consider whether there are other options to protect their interests, such as non-solicitation, non-disclosure or confidentiality agreements.
The Massachusetts Uniform Trade Secrets Act (MUTSA) was signed into law in 2018 and is similar to the Uniform Trade Secrets Act that has been adopted by 48 other states. Under MUTSA, trade secrets include scientific, technical, financial or customer data that did or could provide an economic advantage and other things such as:
Also, the MUTSA expanded protections for employers in Massachusetts now:
MUTSA is another tool for employers to use to protect trade secrets and may be brought by employers in addition to other claims for misuse of confidential or proprietary information.
Additionally, Massachusetts requires any business that maintains or stores the personal information of Massachusetts residents to develop an information security program and to designate an employee to run the program. The program must ensure that the business enters into confidentiality and information security agreements with third-party service providers that have access to the personal information. Notably, this applies to any business that maintains information on Massachusetts’ residents, whether that business is organized under Massachusetts law or not.
In 2020, the Massachusetts Attorney General created a new Data Privacy and Security Division in order to protect consumers’ privacy of their personal data. This new effort highlights the importance for employers to identify potential vulnerabilities and cybersecurity risks.
As remote work becomes increasingly common due to and following the COVID-19 pandemic, employers should review their policies and ensure that confidential information is protected when an employee uses his or her own device or is working remotely from a company-owned device. Virtual Private Networks (VPNs) and virtual desktops are two common ways employers leverage additional cyber protections for remote workers.
The Massachusetts Privacy Act protects all individuals from “unreasonable, substantial, or serious interference[s]” with their privacy. To determine whether an employer has violated the Privacy Act, courts balance the employer’s legitimate business interests against the degree of the intrusion on privacy. For example, courts have held that employers’ general interest in promoting a drug-free workplace is insufficient to justify a random drug-testing policy. Rather, such a policy should focus on employees whose job duties create a safety risk or exigency.
If employers choose to implement testing or monitor symptoms, such as taking an employee’s temperature when reporting to work, the employer must maintain employee privacy rights by keeping COVID-19 test results confidential and separate from an employee’s personnel file. Additionally, any information related to vaccination status should also be kept separate from an employee’s personnel file.
Employees in Massachusetts enjoy robust protections against workplace discrimination. Employers with six or more employees are prohibited from discriminating against current or prospective employees based on race, color, religious creed, national origin, ancestry, sex, gender identity or expression, age, handicap (disability), mental illness, sexual orientation, genetic information or military status. Under this rubric, sexual harassment is classified as unlawful sex discrimination. In addition, most employers are prohibited from asking about an applicant’s criminal history on an initial job application, and employers may not ask an applicant for employment – at any stage of the hiring process – to provide a copy of their criminal offender record information or arrest records.
Employment discrimination laws also protect against retaliation for engaging in protected conduct, which would include lodging an internal complaint of discrimination or harassment. All employers have a duty to thoroughly and competently investigate any claims of unlawful harassment or discrimination and, in the event evidence of unlawful conduct is found, to take prompt remedial action.
Although Massachusetts law makes clear that courts may not second-guess an employer’s honest business judgment with respect to the performance of its employees, recent cases have also emphasized the importance of conduct or remarks evidencing implicit bias in proving discrimination claims. As courts become more receptive to claims of implicit or unconscious bias in the employment discrimination context, it is important for employers to be proactive in providing employees with training on proper workplace conduct and the roles that stereotyping and unconscious bias play – especially with regard to the experiences of persons who belong to groups that have historically suffered from discrimination and unequal treatment. Employers should also be mindful that all of their personnel policies, whether related to disability leave, paid time off or progressive discipline, are applied in an even-handed manner. Failure to do so can lead to unnecessary exposure to claims of discrimination.
Recent Discrimination Court Decisions
On June 15, 2020, the Supreme Court decided the landmark case Bostock v Clayton County, which prohibits employers from discriminating against employees based on their sexual orientation and/or their gender. While many employers ban LGBT+ discrimination in the workplace, employers may need to add sexual orientation and transgender status as protected categories, and expand the definition of “sex” in employee handbooks or conduct policies. Employers should be aware of other obligations, including permitting employees to use restrooms that reflect their gender identity.
In February of 2021, a Massachusetts federal court issued an opinion on "Black Lives Matter" (BLM) attire in the workplace. In Frith v Wholefoods Market, the grocery store employer began disciplining employees for wearing BLM attire – eg, face masks – while working. Employees filed suit alleging discrimination in the workplace, but the court found that selectively enforcing a dress code did not violate federal discrimination laws, and that this was a First Amendment issue. Employers should be mindful of their dress codes and ensure enforcement of such a policy is applied equally to avoid exposure.
Many corporations and businesses have spoken out in solidarity with the black community and the BLM movement. This outward expression of support by corporate America has increased discussions within the workplace regarding such social issues. For example, only days after issuing a statement of solidarity with "Black Lives Matter" and committing to donate USD1 million to racial justice groups, Starbucks prohibited its employees from wearing pins and other gear supporting BLM. Starbucks stated that this policy was in place because such a statement is political and could incite violence. This decision caused significant backlash against Starbucks by both workers and customers and resulted in Starbucks amending its policy to permit such gear.
This example demonstrates the fact that many policies that may have been acceptable in the past, may not suffice going forward. Employers should review policies regarding discrimination in the workplace and incorporate methods of handling potential conflict between workers in a prompt and reasonable manner while balancing their First Amendment rights. Employers should also consider hosting trainings to address some of these high-profile issues.
Lastly, employers have an obligation under the Massachusetts Personnel Records Law to maintain employees’ personnel records, which are records that identify an employee, to the extent that the record is used or has been used, or may affect or be used relative to, that employee’s qualifications for employment, promotion, transfer, additional compensation, or disciplinary action. (See M.G.L. c. 149, § 52C.)
Employers of 20 or more employees must retain employees’ personnel records for three years after termination of employment. Employees have a right to review their personnel records, to obtain copies of them, and to include statements in the personnel record with respect to any disagreement with the record. An employer must allow an employee to review his or her personnel records, upon request, within five business days of a written request, up to two times per calendar year. Note that employees have an expectation of privacy of information in their personnel files, and accordingly, an employer should not disclose such records except upon request by the employee or pursuant to a court order or other compulsory process.
In Massachusetts, regulation of workplace safety in private workplaces is principally governed by the federal Occupational Safety and Health Administration (OSHA). OSHA and regulations promulgated by the agency set forth standards for ensuring safe working conditions and provision of a workplace free from serious recognized hazards. Employers should examine their workplace conditions to make sure they conform to applicable OSHA standards. Additionally, OSHA requires employers to maintain records of work-related injuries and illnesses.
Under the Massachusetts workers’ compensation statute, employees who suffer personal injuries arising out of and in the course of their employment must apply for benefits administratively with the Department of Industrial Accidents. (See M.G.L. c. 152 § 10.) Employees – unless they notify their employers at the time of hire of their intent to retain their rights at common law – are barred under the workers’ compensation scheme from bringing actions at common law against their employers for workplace injuries. Any appeal from a denial of benefits must likewise be applied administratively, subject to judicial review.
Public health requirements and standards are constantly updating and changing due to COVID-19. As of May 29, 2021, all COVID-19 restrictions were lifted, permitting return to 100% capacity for Massachusetts businesses. On August 13, 2021, OSHA issued new guidance on preventing COVID-19 exposure in the workplace. This guidance is aimed at protecting unvaccinated and high-risk workers, as well as workers in areas of substantial or high community transmission of COVID-19. This guidance encourages employers to offer paid time off for workers to get vaccinated and/or recover from vaccine side effects and recommends regular COVID-19 testing for unvaccinated workers. This guidance is particularly important in light of the COVID-19 Delta variant and reiterates best practices such as physical distancing, revising sick time policies to encourage workers to not report to work if ill, and use of face coverings provided by employers in public indoor settings.
Employers should remain up to date on OSHA’s policies related to COVID-19. For example, in April of 2021, a Massachusetts tax preparation service was fined USD136,532 for prohibiting its employees and customers from wearing masks and ignoring social distancing and other OSHA safeguard requirements.
Distribution of an employee personnel manual or handbook is a way in which an employer may establish clear expectations and standards of conduct to be applied uniformly across the workforce. To ensure that the provisions of an employee handbook are not construed to alter the at-will nature of employment or give rise to contractual obligations to the employee, a handbook or manual for Massachusetts employees should contain an explicit and prominent disclaimer of contractual rights and a clear statement that the handbook or manual is not intended to alter the at-will default rule. Employers should also insure they maintain a right to unilaterally modify and revise their handbooks. Handbooks should contain written non-discrimination and sexual harassment policies.
The Massachusetts Commission Against Discrimination offers helpful model employee policies related to sexual harassment, disability discrimination and parental leave, among other topics.
Employers should review their employee handbook to ensure it includes necessary updates such as new procedures and protocols for workplace safety related to COVID-19 implementations.
In addition to the federal Consolidated Omnibus Reconciliation Act of 1985 (COBRA law), which governs continuation of employer-based health and welfare benefits plans after the cessation of employment for employers with 20 or more employees, Massachusetts also has a “mini-COBRA" law that applies to employers with between two and 19 employees. (See M.G.L. c. 176J, § 9.) Under Massachusetts’ mini-COBRA law, small group health carriers must provide continuation of coverage benefits, at the employee’s expense, for periods of 18 or 36 months, depending upon the nature of the mini-COBRA qualifying event. The employer’s small group carrier must promptly notify an employee or qualified beneficiary of their rights to continuation coverage.
The American Recue Plan Act of 2021 established a temporary subsidy for enrolees in COBRA. If an employee lost their coverage for involuntary termination or reduction of hours between April 1, 2021 and September 30, 2021, they may be eligible for premium assistance. Employers are encouraged to notify their current and/or former employees of this benefit as soon as possible.
On October 1, 2019, employers began making payroll withholdings for the new Massachusetts Paid Family Medical Leave Act (PFML), which went into effect in January 2021. (See M.G.L. c. 175M.) Under the PFML, employees are entitled to paid leave of up to 20 weeks for an employee’s own health condition, and family leave of up to 12 weeks to care for family members, for a total combined annual leave period of 26 weeks. The PFML may be used to bond with a child in connection with childbirth, adoption or foster-care placement, as well as for leave associated with a family member’s military service. As of July 1, 2021, employees are now able to leverage their paid family leave to care for a family member regardless of where that family member resides.
The provisions for the PFML mirror those for unemployment benefits. The benefits apply to employees for whom employers are required to report W-2 wages to the Department of Unemployment Assistance in Massachusetts. The employees need not live in Massachusetts, but must work in Massachusetts and earn enough money in Massachusetts in the prior year to meet the financial test to obtain unemployment insurance.
The law contains a specific anti-retaliation provision, which protects against employees who exercise their rights under the PFML. Any negative change to an employee’s status or adverse employment action during leave, or within six months after, creates a presumption of retaliation, which can be contradicted with clear and convincing evidence.
Employers may apply for an exemption online if they offer an approved private plan for paid family and medical leave and will be notified immediately of approval or denial. Employers with qualifying private plans are not required to remit payments to fund the state plan. The private plan must cover all individuals with the employer’s federal tax identification number. To be eligible for an exemption, the benefits must be greater or equal to the benefits provided under the PFML. However, even if an employer is exempt by way of a private plan, employees are still entitled to protection under the PFML, including the right to appeal their application if denied, job protection during leave and protection against retaliation.
See 1.1 The Impact of COVID-19 on the Workplace, discussing the COVID-19 Emergency Paid Sick Leave Program in Massachusetts.
Employers are well advised to clearly delineate the parameters of the employment relationship at its inception in order to maintain control of the termination process. Key considerations include the nature of employment, whether the employer wants the employee to be bound by restrictive covenants, the procedure for terminating an employee, and any resulting employment disputes and litigation.
Non-compete Agreements and Garden Leave
One of the most important considerations for an employer is whether an employee will be subject to a non-compete agreement at the end of their employment. In 2018, Massachusetts passed legislation significantly limiting the enforceability of non-compete agreements, such that agreements will only be enforced if the employee is terminated for “cause.” (See M.G.L. c. 149, § 24L (2018).) This law applies only to non-compete agreements entered on or after October 1, 2018. Thus, defining “cause” at the inception of the employment relationship is likely to play an outsized role in the enforceability of most non-compete agreements in Massachusetts. Additionally, to be considered enforceable, the non-compete must be no broader than needed to protect the employer’s (i) trade secrets, (ii) confidential information or (iii) goodwill.
Notably, this legislation also contains a “garden leave” provision, which requires that the employer pay the employee 50% of the employee’s highest base salary over the preceding two years for the duration of the restricted period. Alternatively, the employer may provide the employee with mutually agreed-upon consideration. Employers should note that this legislation does not affect other types of restrictive covenants, such as non-solicitation agreements.
Employers should also be aware of the Biden administration’s increased focus on promoting competition in the US economy. On July 9, 2021, President Biden signed a broad-sweeping Executive Order that encouraged the Federal Trade Commission to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” (See Exec. Order No. 14036, 86 F.R. 36987, 36992.) While Biden’s Executive Order does not change current non-compete law, it does signal increased scrutiny on employee restrictive covenants, and underscores why employers should keep abreast of state and federal developments related to non-compete policy and legislation.
Acts Preventing Age Discrimination
To the extent that an employer grants a release or is involved in a settlement with a former employee, the employer should be cognizant of certain protections for individuals over the age of 40 under federal law. The Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA) expressly prohibit discrimination on the basis of age. (See 29 U.S.C. § 621, et seq.) In order to comply with the provisions of the ADEA and OWBPA, an employee must be given 21 days to consider and accept the terms of any agreement, and is further allowed to rescind the agreement within seven days of signing. In the context of group layoffs or reductions in force, the OWBPA and the ADEA also impose obligations on employers to provide individuals whose employment is being terminated with a schedule containing certain statistical information concerning the other individuals affected by the termination.
Persons over the age of 65 are at higher risk of COVID-19. The Age Discrimination in Employment Act (ADEA) prohibits employers from involuntarily excluding persons over the age of 40 from work. Therefore, employers must be cautious when making decisions regarding work schedules in order to avoid liability. Additionally, decisions on social distancing, usage of personal protective equipment, and furloughing/firing decisions should be standardized across age groups so as to avoid liability for unfair discrimination against older employees.
Arbitration, Class Action and Mass Terminations
Employers should also establish whether the termination of an employment relationship will be handled through alternative dispute resolution at the outset of the relationship. There is clear deference to arbitration in both Massachusetts and federal courts. Employers should also consider the possibility of eliminating the threat of class action litigation through a well-drafted class action waiver. Notably, the Supreme Court recently upheld the enforceability of class action waivers in relation to an employee arbitration agreement, signaling the continued viability of this option for employers moving forward. (See Epic Sys. v Lewis, 138 S. Ct. 1612 (2018).)
With regard to plant closings or mass layoffs, employers must be aware of federal and state legislation containing specific notice requirements. Under the Worker Adjustment and Retraining Notification (WARN) Act, employers must provide 60 days’ notice when laying off more than 50 employees within a 30-day period. (See 29 U.S.C. § 2101, et seq.)
When the employment relationship ends, employers should also be aware of requirements under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA). This federal law requires that employers of 20 or more employees who offer healthcare must continue to provide coverage to employees who are terminated or fall into other specific categories. (See 29 U.S.C. § 1161, et seq.) In addition, the Massachusetts small group continuation of coverage law requires the continuation of health benefits to employees of small businesses with two to 19 employees. (See M.G.L. c. 176J, § 9.) Besides healthcare-related concerns, employers should also consider potential issues raised pursuant to the Employment Retirement Income Security Act (ERISA) when an employee departs or is terminated. (See 29 U.S.C. c. 18.)
In Massachusetts, absent an employment agreement providing for employment for a defined temporal period, employment is at will, meaning the employment relationship is terminable by either the employee or the employer without notice, for almost any reason or for no reason at all. However, Massachusetts courts have recognized certain exceptions to this rule.
Given the length of the COVID-19 pandemic, it is unlikely that it will significantly impact employment contracts. A force majeure claim, or clauses that excuse performance if certain events should occur, may be a possible argument for an employer but becomes more and more difficult as the employer continues to provide employment. However, a recent Massachusetts case upheld the usage of a force majeure clause in the context of a commercial lease context. Future litigation may ensue regarding how these clauses are to be interpreted in the employment context. Either way, as a best practice, employers should look to incorporate force majeure clauses as more than just boilerplate language, and instead use them as opportunities to outline situations that may implicate the usage of the clause – such as a pandemic.
Breach of Good Faith
Firstly, employees may bring wrongful termination claims against their employers for breach of the implied covenant of good faith and fair dealing (a covenant that is implied in every Massachusetts contract, including employment contracts) where a discharged employee is terminated in bad faith for the purpose of depriving the employee of future compensation that is clearly connected to work already performed. Under this bad-faith theory, the employer’s conduct must be taken in bad faith either to deprive the employee of the benefits of labor already substantially earned, or for the purpose of unfairly leveraging contract terms to secure undue economic advantage. Thus, for example, an employee whose termination was motivated by the employer’s desire to avoid paying commissions already earned may state a claim for breach of contract against their employer.
Another narrow exception to the at-will employment rule has been recognized in Massachusetts where employment is terminated contrary to a well-defined public policy. Thus, an employee who is terminated for asserting a legally guaranteed right (such as the filing of a workers’ compensation claim), for engaging in legally required conduct (such as jury service) or for refusing to commit a violation of the law (such as committing perjury), may state a claim for wrongful termination against the employer. Additionally, the public policy exception has been recognized in the case of retaliation for an employee’s cooperation with a law enforcement investigation concerning the employer.
Wrongful termination and breach of contract claims against employers may be pursued in the Massachusetts state courts. If a basis for federal jurisdiction exists, such as diversity of parties with an amount in controversy at or above USD75,000, then such claims may also be adjudicated in the federal courts located in Massachusetts.
In the wake of COVID-19, claims are being brought by former employees claiming wrongful termination for reporting COVID-19 compliance issues, contracting COVID-19, and other pandemic-related issues. Employers are advised to ensure their sick leave and COVID-19 mitigation policies are properly followed to avoid wrongful termination liability.
The Massachusetts Commission Against Discrimination (MCAD) has original jurisdiction over complaints of employment discrimination under Massachusetts’ anti-discrimination statutes, which include claims of sexual harassment and retaliation for complaining about alleged discriminatory conduct either internally or to an administrative agency. An aggrieved employee asserting a discrimination complaint generally must file an administrative charge with the MCAD within 300 days of the last discriminatory act complained of.
Beginning 90 days after the filing of an MCAD complaint, the plaintiff may elect to remove the case from the MCAD and file a claim in the Massachusetts Superior Court. Upon removal, a plaintiff must file any complaint in the Superior Court within three years of the date of the last discriminatory act. Prevailing plaintiffs in discrimination cases are entitled to various types of damages, including back pay, front pay and emotional distress damages. Punitive damages are also available in cases where the employer’s conduct is found to be outrageous due to an evil motive or reckless indifference to the rights of others.
Provided that an employer places clear and conspicuous disclaimers of contractual obligation in a personnel handbook or manual, as a general matter, an employer’s failure to comply with its handbook provisions (eg, a discipline policy) will not give rise to independent liability for breach of contract. An employer’s failure to follow its own internal policies and procedures with respect to a particular employee, however, may be used as evidence of discrimination or retaliation.
Collective Bargaining Agreements
Claims that are substantially dependent upon analysis of the terms of a collective bargaining agreement are governed exclusively by the federal Labor Relations Act. Accordingly, when a court is confronted with such claims couched in terms of state law, it will either dismiss the complaint as pre-empted by federal labor law or it will treat the claim as arising under federal labor law. Federal courts maintain exclusive jurisdiction over all disputes requiring interpretation of a collective bargaining agreement.
Wage Act and Minimum Fair Wages Law
The Massachusetts Wage Act, and Minimum Fair Wages law, require prompt payment of wages. For employees who voluntarily leave their employment, all outstanding wages must be paid in full on the following regular payday; employees who are discharged from their employment must be paid in full on the day of termination.
“Wages” under the Massachusetts Wage Act include, in addition to salary, accrued and unused holiday or vacation time to the extent provided under an oral or written agreement. Wages also include commission payments to the extent that such commissions are definitely determined and are due and payable to the employee. Bonus and other incentive payments that are contingent in nature, as well as fringe benefits (eg, provision of a company car or business expense reimbursements) generally do not constitute wages.
Additionally, although employers with 11 or more employees must allow employees to accrue paid sick time, accrued and unused sick leave does not constitute wages. However, employees may, with the consent of the Massachusetts Attorney General, file civil actions against their employers to recover unpaid sick leave.
The Massachusetts Minimum Fair Wages law provides the minimum hourly wage that an employer may pay to employees. The current minimum wage for non-tipped employees is USD13.50 per hour. Under recent legislation, this minimum wage will gradually increase between now and January 1, 2023 to USD15 an hour. Employers are strictly liable for violations of the Massachusetts Wage Act and Minimum Fair Wages laws, and violations of these laws automatically result in trebling of damages and recovery of attorneys’ fees and costs.
Employers should be aware of the risk of wage/hour claims for non-exempt employees that are working remotely. Non-exempt employees should ensure that they are working a prescribed set of time, and if working more than 40 hours that they are paid overtime. In addition, non-exempt employees must be paid their full salary if performing work during a week, regardless of how much work the employee performs.
The Massachusetts Equal Pay Act (MEPA), prohibits the payment of different wages to employees of different genders for “comparable work”, which is broadly defined to mean “substantially similar” work in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions. MEPA also makes it unlawful for employers to prohibit employees from discussing their salaries with each other or inquiring regarding each other’s compensation, and the law prohibits employers from asking about an employee’s salary history prior to extending an offer of employment that includes a salary offer. Unlike other discrimination claims, plaintiffs need not file a charge at the MCAD before bringing a suit under MEPA. Violations of MEPA result in automatic double damages.
The anti-discrimination, earned sick leave, MEPA, and wage and hour laws in Massachusetts all prohibit employers from retaliating against employees for exercising their legal rights under the law or engaging in protected conduct. Such protected conduct includes:
In addition, employers should be aware of state and federal whistle-blower statutes, which provide protection, under certain circumstances, against retaliation. Under the Massachusetts False Claims Act, private litigants – known as “qui tam relators” – may bring claims on behalf of the Commonwealth for recovery of damages resulting from false or fraudulent claims for payment made to the Massachusetts government and its agencies and instruments. The Massachusetts False Claims Act provides protection for employees against retaliation by employers for filing a qui tam action against their employers. The federal False Claims Act similarly provides protection against retaliation for employees who bring qui tam actions in federal court for alleged fraudulent or false claims for payment from the federal government.
A number of other federal laws also provide whistle-blower protection for employees who report suspected violations of law, including OSHA, the Sarbanes-Oxley Act of 2002, the Clean Air Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Securities and Exchange Commission’s whistle-blower program.
See 6.1 Contractual Claims as it pertains to whistle-blowing claims on COVID-19-based compliance.
Employers should ensure that those conducting interviews are aware of potential implicit bias. Guidance on anti-discrimination law and rigorous anti-bias training should be provided to ensure that employers are fostering a fair, equitable and safe work environment, and to further ensure that interviews are properly and fairly conducted. Additionally, Massachusetts law encourages employers to regularly provide training and education on issues of sexual harassment.
A general release of liability contained in a settlement agreement will not suffice to release an employer from liability under the Massachusetts Wage Act. Thus, employers looking to secure such a release in a separation or settlement agreement should ensure that it contains an explicit release of Wage Act claims.
Additionally, the Supreme Court of the United States recently held that waivers of class or collective arbitration of employment disputes do not violate federal labor law. Previous federal and Massachusetts case law had made clear that class-action arbitration waivers also may not be invalidated on the grounds that an individual plaintiff’s pursuit of a claim would be financially prohibitive.
Massachusetts courts will apply forum selection clauses as long as they are fair and reasonable. This extends to forum selection for employment-related disputes and includes adjudication of Wage Act claims; under Massachusetts law, there is a presumption that forum selection clauses are enforceable with respect to Wage Act claims. Thus, employers who wish to select a forum other than Massachusetts for resolution of employment-related disputes may generally do so.
Note, however, that the new non-compete legislation requires the application of Massachusetts law with respect to employment agreements entered into with any employee who has been a Massachusetts resident for 30 days at the time of termination. Thus, courts may meet forum selection clauses that have the effect of skirting the choice of law requirement of the non-compete act with skepticism.
Prevailing plaintiffs in discrimination cases are entitled to several elements of damages, including back pay (compensation for lost wages from the time of an employee’s unlawful termination or constructive discharge until the time of judgment), front pay (a prospective award of lost wages running from the time of judgment until a date in the future), and emotional distress damages. Punitive damages are also available in cases where the employer’s conduct is found to be outrageous due to an evil motive or reckless indifference to the rights of others. Prevailing discrimination plaintiffs are also entitled to awards of attorneys’ fees and, where applicable, costs.
Employers are strictly liable for violations of the Massachusetts Wage Act and Minimum Fair Wages laws, and violations of these laws automatically result in trebling of damages and recovery of attorneys’ fees and costs. Violations of the Equal Pay Act result in automatic double damages, along with attorneys’ fees and costs.
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