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MASSACHUSETTS: An Introduction

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For Massachusetts employers 2017 was a year of relative stability. Early indications are that 2018 will be more of the same. However, there are several issues which will require the attention of Massachusetts employers in the coming months.

From a political perspective, state leadership has been, and should continue to be, stable. Republican Governor Charlie Baker (who is up for re-election in 2018) has continued to be very popular in a heavily Democratic state. His pragmatic approach has broad appeal with the electorate, and for the most part he has been able to work cooperatively with the overwhelmingly Democratic state legislature. The legislature itself has experienced several changes over the last year, particularly in Senate leadership positions. However, that has seemingly had little effect on the functioning of state government as a whole.

The economic climate continues to be strong in Massachusetts. Unemployment is at a low rate. A number of large employers have increased their operations in the state. For example, in February 2018 Amazon announced that it would be adding 2,000 jobs in the thriving Seaport section of Boston. Boston has also made the list of “finalist” cities as Amazon continues the process of finding a location for its second headquarters (“HQ2”).

Also, progress continues as to the construction of two casinos (one in Eastern Massachusetts and one in Springfield) which were authorized by the 2011 Gaming Act. The Springfield facility in Western Massachusetts is expected to open in 2018 and the Eastern Massachusetts casino, in Everett, is scheduled to open in 2019. The state Gaming Commission expects that the two casinos will result in 7,000 permanent jobs.

Massachusetts voters in 2016 passed a referendum legalizing recreational marijuana. Progress on actually implementing the law has been slow. However, rules should be finalized in 2018. If the example of other states which have taken similar action holds true here, legalization will lead to substantial economic activity relating to the manufacture and distribution of the now-legal drug. Perhaps the most significant concern for this industry is whether federal law enforcement policies (marijuana remains illegal under federal law) will hinder the industry’s growth.

There are, as always, several concerns for Massachusetts employers. With the job market so strong, it will remain difficult for many Massachusetts employers to find qualified workers. This concern will be heightened if the policies of the Trump administration continue to make it more difficult for foreign workers to enter the US. A number of businesses that are important to Massachusetts, such as education, technology, healthcare, and hospitality services, rely heavily on non-US born workers.

Massachusetts employers are similarly concerned about possible changes in trade policy. Bay State employers have significant trade relations with China, Mexico and Canada. Therefore, changes in trade relations with those countries could well have significant impacts for a number of employers in the state. Recent actions of the Trump administration in imposing tariffs on foreign-produced steel and aluminum will do nothing to lessen this concern, as such action may result in retaliatory trade measures on the part of other nations.

There are several issues which have been perennial concerns for Massachusetts employers. Those include energy prices, affordable housing for workers, and public transportation. However, these concerns are not expected to significantly limit economic activity in 2018.

Another political/economic issue that bears watching relates to an initiative petition that may to be on the state ballot in November 2018. That petition, if enacted, would impose an additional 4% tax on taxpayer income in excess of $1 million, with the money to be spent on education and public transportation. However, the legality of this so-called “millionaires’ tax” is currently under review by the Massachusetts Supreme Judicial Court.

The most significant challenges facing employers in the coming year are likely to relate to changes in the law. The major concern in this regard is undoubtedly the Massachusetts Pay Equity Act. This law was passed in 2016, and becomes effective on July 1, 2018.

The Pay Equity Act will require a number of actions on the part of Massachusetts employers in 2018. As but one example, starting on July 1, 2018 employers will no longer be permitted to ask, prior to an offer of employment being made, about an applicant’s salary history.

Further, and more significantly, the Pay Equity Act limits the factors that can be used to justify discrepancies in pay and salary rates, and imposes significant liability for gender pay inequities that cannot be justified using these criteria. The law does allow for an employer to minimize liability by engaging in a self-audit of pay practices, and making “reasonable progress” toward correcting any inequities discovered. For this reason, most Massachusetts employers should be carefully evaluating/auditing their current pay practices to identify areas of potential concern, and preparing to take action to correct any inequities that are uncovered.

In other legal developments, the state minimum wage remains unchanged at $11.00 per hour. However, there is a strong push to increase this to $15.00 per hour over several years. Similarly, there is a move afoot to mandate paid family and medical leave. These issues may also be in the initiative ballot in November.

Finally, as mentioned above, the Massachusetts law legalizing recreational marijuana use is expected to be implemented in 2018. Note that the law expressly states that an employer is not required to permit or accommodate employee marijuana use in the workplace. Also, employers may continue to enact and enforce policies as to employee marijuana use outside of the workplace.