Is Your Business Ready for Premium Pay Repeal?

Is your business open on Sundays? Are you a retailer subject to premium pay under the MA Blue Laws? Do you regularly schedule employee’s to work over 40 hours a week?  With changes to the Retail Premium Pay Law coming on January 1, 2019, now is the time to review your current payroll and scheduling practices and consider making changes to facilitate compliance with state and federal wage and overtime laws.

For employees you know will not exceed 40 hours in a work week, Retail Premium Pay compliance is straightforward—starting January 1, 2019, work performed on Sundays and required holidays must be compensated at 1.4 times the employee’s regular rate of pay.  The multiplier will then continue to reduce on an annual basis as follows—1.3 in 2020, 1.2 in 2021, 1.1 in 2022, then straight time starting in 2023.  While employers may choose to apply the 1.4 premium rate to all employees, for full-timers eligible for overtime compensation additional considerations discussed below should be made.   

Regardless of employee type, the easiest step for businesses to take in an effort to facilitate compliance is to adopt a Monday through Sunday payroll period.  This will simplify your payroll process and provide for easier, more accurate accounting of employee hours thereby allowing you to better manage your scheduling in light of the law change and to prevent payroll mistakes.  Making a switch in your payroll start date is as simple as notifying your employees in advance of the change and then running a payroll for a short week to transition your employees to the new day.

Switching to a Monday start date will be particularly helpful in monitoring and managing full-time employees eligible for overtime compensation for hours worked in excess of 40 hours in a week.  In Massachusetts, Sunday and holiday hours compensated at the current 1.5 retail premium may be excluded from overtime calculations.  However, the offset will no longer apply for employers choosing to take advantage of the reduced Sunday and holiday premium pay schedule.    

Businesses who regularly schedule overtime hours may therefore want to consider continuing to pay the current retail premium rate of 1.5 on Sundays and required holidays in order to continue taking advantage of this offset.       

Whether you choose to remain at the 1.5 rate or move to the newly allowed 1.4 rate for work performed on Sunday and required holidays, a switch to a Monday start date will allow you to track hours worked over the course of a pay week and react appropriately.   

Many employers have begun preparing for this law change by contacting their payroll service providers and employment attorneys in order to explore best options for their business.  RAM again strongly urges all RAM members to do the same.  Please note that in Massachusetts employers are required to provide employees 90 days written notice of certain changes to an employee’s payroll period.  Members should therefore take action now in order to provide enough time for notification in the event it is required. 

Members with questions regarding applicability of the Blue Laws, the forthcoming changes to premium pay requirements or the issues discussed in this article please feel free to contact the RAM office.  Also stay tuned for RAM’s 2018-2019 holiday calendar which will provide further guidance on premium pay requirements.