We provide this press release from the Senate President’s Office.
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Senate Passes Unemployment Insurance Reform Bill
BOSTON – The Senate on Thursday voted 33-4 to pass legislation that will lower costs for businesses and support the growing economy in the Commonwealth. The bill introduces an updated rating table, puts in place a multi-year rate freeze and expands the seasonal employer exemption.
“This bill will provide financial predictability, reward positive employment histories with lower costs and foster a healthy economy that supports the business community,” Senate President Therese Murray (D-Plymouth) said. “These reforms strike a careful balance between providing businesses with a helping hand without taking that same hand away from the unemployed. I want to thank Senator Wolf for his dedication to this issue and I am proud of the Senate for taking action today.”
“Today the Massachusetts State Senate is taking a much-needed and balanced step towards reforming our Unemployment Insurance program,” Senator Daniel A. Wolf (D-Harwich), Senate Chair of the Joint Committee on Labor and Workforce Development, said. “The legislation protects those most in need by preserving the current state benefits while providing our business community stable, predictable and fair rates for years to come. It also assures that our Unemployment Insurance fund maintains adequate reserves, and that the rates charged each business better reflect employment histories.”
The Senate’s bill expands the experience rating table to allow stable employers to pay lower rates and require negatively rated employees to pay higher rates, from $153.30 per employee to $2,337.30 per employee. The expanded rating table also increases the taxable wage base to $21,000 from the current $14,000.
In addition to a one-year freeze at Schedule E for 2014, this bill also freezes rates for 2015, 2016 and 2017. The rate freeze for 2014 will save employers a projected $421 million alone.
The bill reduces unemployment insurance costs for employers by expanding the seasonal employer exemption to 20 weeks. Under current law, to qualify for certification a seasonal business must be in operation for fewer than 16 weeks or employ workers in one or more functionally distinct job titles for fewer than 16 weeks.
Business owners will be allowed to collect unemployment benefits if they leave their company but will be required to pay back any money collected if they return to the same company within the same benefit year. Individuals will also be allowed to collect benefits if they quit a second job before they were laid off from their primary job.
The bill also authorizes the Department of Unemployment Assistance to participate in a federal program that allows the interception of federal tax refunds to recover benefit overpayments.
The bill also does the following:
Adds whistleblower protections for employees who testify about their employers’ defrauding the system;
- Requires the Department of Unemployment Assistance to hold at least one annual public hearing to receive input from employers;
- Requires the Department of Unemployment Assistance to provide eligibility determination within 30 days;
- Prohibits crewmembers on commercial fishing vessels from being denied unemployment benefits if unemployment is the result of federal fisheries management restrictions;
- Clarifies language to prevent a company from shedding its experience rating by reorganizing or renaming itself; and,
- Requires all public contractors to certify that they do not owe back Unemployment Insurance payments.
The bill now goes to the House of Representatives for consideration.
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I was pleased to support this bill. Senator Wolf and the Senate President did an excellent job in pulling business and labor together around needed reforms.
I just learned that the House passed a bill to increase minimum wages to $10.50 over 3 years, but did not pass Indexing to Inflation, and raised tipped worker wages only from 33% to 36% of the minimum wage. No cuts were made to unemployment benefits or eligibility.
That’s something, but the Senate’s bill is better. Please do what you can to reconcile so that low-wage workers will have a better outcome!
Geoff, got it. I absolutely support raising the minimum wage and, as you urge, I hope we can get closer to the Senate bill.
I have to say that having heard a lot about the issue now I don’t support a disproportionate increase in the tipped minimum wage — employers are required to make up the difference between the regular minimum wage and the sum of tips received and the tipped minimum wage. To the extent they aren’t doing that, it’s part of a larger problem of people being paid under the table. A big increase in the tipped minimum wage would raise wages for a lot of people who are relatively well-paid (through tips) and would change the economics of the restaurant business very substantially. It would also probably drive more employers into paying under the table.
Raising the tipped minimum wage to 50% of the regular minimum wage would help some of our most vulnerable workers. Servers are three times as likely to live in poverty as other workers. Other than the small handful that work at high-end restaurants, most struggle to get by, and often have to use food stamps and other entitlement programs. If the minimum wage is raised, the ones who work for small businesses might end up getting paid under the table, but good labor enforcement–enforcement that truly empowers those workers–could address that. And the huge number of servers that work for national chains would have to be paid fairly if the state told them to because it’s harder for them to hide malfeasance. Please do not throw restaurant workers under the bus. I highly recommend connecting with the Restaurant Opportunities Center for more information on this issue.
Jessie, here’s my take: I’m sympathetic to all low wage workers. We are talking about a substantial increase in the minimum wage. We should initiate enforcement to assure that tipped workers get the full benefit of that increase. But I’m having trouble understanding why tipped workers should get a much larger increase than other low-wage workers, which is what the disproportionate increase you advocate would result in. In fact, the increase you urge would help many who are earning well above the minimum wage. Not that I begrudge it to anyone. I’m just not seeing the fairness of targeting tipped workers in particular.
I think your concern for the conditions of restaurant work can only be addressed by wage and hour enforcement. Not that enforcement is easy, but it’s the only thing that will work. Even if we pass the increase you urge, the employers you are talking about won’t pay it without more enforcement.
Thanks for your attention to this, Will. I do not doubt that you have given the matter real thought, and I appreciate the fact that you have a forum here to discuss these issues.
The targeting of tipped workers for a larger increase would reflect the fact that these workers have been ignored in recent wage increases. The tipped minimum wage used to be a calculated percentage of the regular minimum wage, but was frozen at $2.63 in 1999. In 2000, the minimum wage was $6.00 and the tipped minimum wage was about 44% of the non-tipped minimum. Could the House see their way to at least restoring that balance? That would mean a tipped minimum of $4.62 instead of the proposed $3.75. When it has been so long since tipped workers have received an increase, restoring what we used to consider a fair ratio doesn’t feel disproportionate to me.
The restaurant industry (as with all industries) fights increases in the minimum wage by claiming that it will hurt employment growth, but in reality increases in the tipped minimum wage do not seem to have this effect (See this study from Berkeley on how state increases in the tipped minimum wage have played out http://irle.berkeley.edu/workingpapers/155-13.pdf). Restaurant work has grown at a rate much faster than the rest of the economy over the last two decades, and in the meantime, Massachusetts has provided the lowest tipped minimum wage in New England.
Even if there are, as you say, many tipped workers who already make a good living, in reality the median tipped worker brings home about $8.84/hour, well below what we consider a good target for minimum wage for other workers. This has real effects: the lower the tipped minimum wage, the higher the rates of poverty are for those workers, who are overwhelmingly female, many of them raising families.
Thanks again for your work on this.
Jessie, thanks again for these thoughtful contributions. I will bring this thread to the attention of Senator Wolf, the Senate Chair of Labor and Human Resources.
Wow. I am horrified that in this day and age anyone can get away with paying anyone $4.62 – I come from South Africa and workers would be out on the streets screaming if such slave wages were allowed. I have to agree with Jessie that this situation needs serious attention. I’m reading Thomas Piketty’s book, “Capital in the Twenty First Century” which should be required reading for all political figures and he makes it clear how persistent inequity is debilitating economic growth.
Thanks, Charlene, agreed that $4.62 would be unacceptably low. The model in the tipped industries though is that a substantial portion of the compensation comes through tips, so total earnings is much higher. When tips don’t come through employers are obliged to contribute to bring the wage up to the regular minimum. The gap that Jessie points out is that not all employers meet their obligations.
On one side of the argument:
If we increase the minimum wage then there will ultimately be less minimum wage type jobs available. When people cannot find work then there are only two alternatives. (1) public assistance; (2) crime.
We certainly have a growing and vibrant prison system in the USA for sure.
Yes, the price of burgers will go up. So will prices at WalMart. This will ripple through society. Society will pay more. But then again, society pays with crime upsurge and with prison systems and with public assistance.
Sounds to me like the lessor of all of those evils is to increase the minimum wage but we should really be talking about expanding jobs..
But I mean real jobs. Jobs which require skill and jobs which cannot be replaced with a days training or a week …. jobs that require years to replace with equivalent talent.
Thats the discussion we should be having.
Oh that also takes us back to the elimination of non-compete agreements… (different thread).