Most employment and benefits laws apply once a company meets a minimum headcount. To get a handle on these risks and help you plan for the future, MBG member and Principal of Fenway Law LLC Michael Loconto provides a general guide for growing breweries across Massachusetts.
So, you founded a brewery — seizing on a passion to make great beer while devoting every waking minute of your existence over the last few years to make your art and your business shine. You may have been joined by a few partners, and maybe even hired a few employees to wash kegs and work the tap room.
People Often Come Before Policy
As many brewers grow – particularly in those frantic first few years, the need for headcount can quickly materialize. What often sneaks up on a company are the compliance requirements that accompany staffing growth.
The good news is that there are plenty of reasonable and outsourced benefits and human resources management options available to companies. These outfits can help with assuring that your staff gets access to a health insurance plan and paid on time — and may even help your company sort through the new leave laws popping up, like paid family and medical leave and the celebration of Juneteenth that have taken effect in 2021 (follow the link for a reminder about premium pay obligations for retailer employees on the upcoming June 19 holiday).
What can be less obvious to employers are the legal requirements that impact operations in the workplace. Some employment laws cover even the smallest of workplaces, while other requirements kick in with a minimum FTE headcount. Small businesses and startups need to be aware of these triggers in order to maintain legal compliance and minimize workforce risks.
This guide is written to provide Massachusetts brewers with some practical tips and a reminder to consult with experts for legal advice and planning. While we hope you find it helpful, this primer is no replacement for direct legal advice – consult with an attorney to assure compliance.
Congratulations on Your Company — Now Comply
Your legal obligations as an employer begin with the first employee (in fact, it may be you!). Employment obligations for companies with one or two employees include:
· Common law issues like contracts, defamation, and accidents
· Worker’s compensation insurance (required by the Massachusetts Department of Industrial Accidents)
· Unemployment insurance and related payroll tax withholding
· Leave & re-employment rights for members of the military
· Civil rights, anti-discrimination, and equal pay requirements, including the Massachusetts laws prohibiting sexual harassment, discrimination (on the basis of sex, race, color, creed, national origin, age, and handicap), and gender-based pay discrimination, and related protection from threats, intimidation, and coercion.
· Earned Sick Time (M.G.L. c. 149, §148C): all employers must provide up to 40 hours of sick leave (unpaid for companies of fewer than eleven employees).
· During the current pandemic, the federal Families First Coronavirus Relief Act (FFCRA) requires paid sick leave and family leave for employees of businesses with less than 500 employees. Employers with less than 50 employees are exempt from leave related to school closures and childcare if the employee’s leave would “jeopardize the viability of the business as a going concern.” Employers receive a 100% tax credit for all paid leave and related individual employee benefits costs accruing during a FFCRA leave.
· State wage laws on timely payment, minimum wage and overtime pay apply (and note: some cities and towns have additional minimum wage ordinances that may apply). When your business grows to two or more employees, certain federal laws (like the Fair Labor Standards Act and the Equal Pay Act) also take effect to mimic or enlarge state employee rights in areas like minimum wage, overtime, and equal pay.
· The “Grand Bargain” legislation in 2018 implemented a system of paid family and medical leave for all employees in Massachusetts. Most aspects of the law took effect on January 1, 2021, while paid leave to care for a sick family member takes effect on July 1. Paid FML is funded in the Commonwealth through a payroll tax that includes both employee and employer contributions and provides a state-paid benefit of up to 75% of an employee’s base pay (up to $850 per week) for qualifying leave. Qualified benefits duration ranges from a maximum of 12 weeks for births, adoptions, and care for an ill family member or to address issues arising from a family member’s military leave, to up to 20 weeks for an individual’s own serious medical condition, and up to 26 weeks for an individual caring for an injured service member. Employers can also seek a private insurance option as an alternative to the state system.
While federal COBRA regulations governing health insurance continuation for terminated employees do not impact a business with less than twenty employees, Massachusetts companies should also be aware of the Commonwealth’s “mini-COBRA” law (M.G.L. c. 176J, §9) that applies to businesses with at least two employees.
With Continued Growth Comes Added Responsibility for Employers
With six or more employees, businesses are also required to develop and adopt certain policies. Businesses should also order employee rights posters to comply with legal notice requirements and to keep employees informed about benefits and basic rights. Posters are simple and inexpensive, available from numerous vendors, and can be displayed in breakrooms or some other central employee space within a physical office space.
Consider the following:
· The Massachusetts Fair Employment Practices Act extends equal rights protection in the workplace (no discrimination in hiring, preemployment criminal record and mental health inquiries, promotions, termination, and other aspects of the employment relationship). Chapter 151B expands prohibitions on discrimination in the workplace to include race, color, religion, national origin, sex, ancestry, age, sexual orientation, veteran’s status, genetic information, or disability, and also forbids employers from retaliation against employees for complaints about discrimination or for participating in the investigation of a claim.
· Chapter 151B also requires employers that have met the six-employee threshold to adopt a sexual harassment policy. The policy must be provided to new employees and annually to all employees. The Massachusetts Commission Against Discrimination (MCAD), which enforces Chapter 151B requirements, publishes a model policy that brewers can use to draft a policy.
· Eight weeks of unpaid parental leave becomes available to all full-time employees (mothers and fathers) at the time of birth or placement of a child. To be eligible, a full-time employee must have completed the initial probationary period set by the employer (to a maximum of six months, or three months if no period is specified). The employee must give two weeks’ notice of his or her expected departure date and intention to return. (Note: if both parents work for the same employer, the family unit shall only be entitled to eight total weeks of parental leave for the birth or placement of the same child).
There are practical risk mitigation steps that an employer can take at this stage. First, employers are strongly urged to conduct sexual harassment training — an ounce of prevention can mean a pound of cure. Second, employers can be proactive and adopt a respectful workplace policy to help inform the individuals across the company about many of the rights and responsibilities addressed above. The Society for Human Resource Management (SHRM) offers a respectful workplace policy template (the link will open a Word document) that businesses may adapt to create a policy.
And finally, given the additional risks and affirmative policy obligations at this stage of growth, startups are strongly urged to consider working with an attorney or an HR consultant to adopt an Employee Handbook. A written, shared understanding of the basic terms and conditions of employment, the benefits available to employees, and the grievance procedures that employees may use to address problems in the workplace, can reduce uncertainty and promote clarity for staff and owners.
With eleven or more employees, Earned Sick Time becomes a paid benefit under Massachusetts law. A business of this size must allow all employees (full-time, part-time, and temporary) to earn at least one hour of paid sick time annually for each 30 hours worked.
With fifteen or more employees, federal discrimination laws also become applicable in a workplace. Specifically, the federal laws prohibiting discrimination on the basis of race, color, creed, national origin, and sex (Title VII of the Civil Rights Act of 1964) and disability (Americans with Disabilities Act) cover workplaces with 15 or more employees. Most Massachusetts employers should already have compliant practices in place at this stage since the comparable state laws (like Chapter 151B) kick in with six employees.
Where Did All These People Come From? And Other Concerns for the Mid-Sized Brewer
Once a company’s headcount reaches twenty or more employees, most major employment laws and regulations will apply to your workforce. A human resources consultant or direct hire can be invaluable at this stage to help oversee hiring, benefits, and workplace conflict resolution. Consider a few of the additional workplace benefits and protections that now apply:
· Most people are familiar with COBRA (the federal Consolidated Omnibus Budget Reconciliation Act of 1985), which requires employers to provide terminated employees and their dependents with health and dental insurance coverage continuation (at the employee’s own expense). Recall that Massachusetts includes a “mini-COBRA” requirement for companies with as little as two employees.
· The American Rescue Plan Act (ARPA) that was signed into law by President Biden on March 11 requires that most employees who lost health insurance coverage during the pandemic must be offered free COBRA coverage between April 1 and September 30, 2021. The law also provides an opportunity for employees that did not opt-in to COBRA coverage when first eligible to sign up now for the free benefit. Companies will receive a tax credit for COBRA-related expenses during the covered period.
· A personnel record-keeping system is required by the time the company has reached 20 employees. The Massachusetts personnel records law also requires employers to retain personnel records for three years following an employee’s termination, and mandates certain basic information that must be included in the record. Employees also have rights to access their records and respond in writing to any negative information in the file, and may seek enforcement through the Attorney General’s Office.
· A Massachusetts employer with more than six employees will have already taken steps to restrict age discrimination in the workplace, but the similar federal Age Discrimination in Employment Act (“ADEA”) and Older Workers Benefit Protection Act of 1990) apply to workplaces with at least 20 employees. This most directly affects Massachusetts employers negotiating separation agreements — companies need to use care in dealing with an older worker to assure that the individual has knowingly and voluntarily waived potential claims under the ADEA.
A number of other well-known provisions apply to employers with fifty or more employees:
· The federal Affordable Care Act (ACA) requires businesses with 50 or more employees to provide health insurance options for employees. Companies with smaller workforces may be eligible for additional tax credits (salary restrictions apply). Consult with an insurance agent or broker for more information.
· Massachusetts employers are now required to offer paid family and medical leave, but the federal Family and Medical Leave Act (“FMLA”) has long provided eligible employees in companies with 50 or more workers the right of up to twelve weeks per year of unpaid leave, as well as benefit continuation and reinstatement rights. This period runs concurrent with state-level family and medical leave benefits.
Unlike paid FML in Massachusetts, which applies to all employees, an employee must have worked for the employer for at least twelve months, for at least 1,250 hours in the twelve months prior to the first day of leave in order to qualify for FMLA leave. FMLA regulations also mandate strict record-keeping and leave designation under the law, and limits employer rights to access information necessary to verify a request for leave.
Practically speaking, the FMLA also requires employers to publish and distribute information among the workforce regarding employee rights under the law — another reason for businesses to develop and adopt an Employee Handbook if one has not already been created at this stage.
· The Massachusetts’ Small Necessities Leave Act (“SNLA”) provides employees with up to twenty-four hours of additional unpaid leave to attend to particular family obligations. Practical uses of SNLA include time off to use professional services (like tax preparation), attending activities at a child’s school, or accompanying a child or a parent to medical appointments.
· Victims of domestic violence are also eligible for up to fifteen days of unpaid leave per year in Massachusetts. The Domestic Violence Leave Act defines domestic violence, stalking, sexual assault or kidnapping as qualifying reasons for leave and includes measures to protect victim identification.
At one hundred or more employees:
· An employer becomes covered by the federal WARN (Worker Adjustment and Retraining Notification) Act, which requires notification to employees sixty calendar days in advance of plant closings and mass layoffs as defined under the law.
§ Generally speaking, most private companies at this size must also annually disclose certain staff demographic information (sex, race, and ethnicity in certain occupational categories) by filing the EEO-1 report with the federal Equal Employment Opportunity Commission (EEOC).
Concluding Thoughts
Running a business is hard - but planning for your future does not have to be. As your workforce expands, timely human resources and legal support can mean the difference between managed risk and disruptive claims. These requirements do not need to be seen as obstacles – effectively planning for growth now can avoid future surprises.
Please consult a professional for support when growing your workforce – so you can get back to doing what you love.
Note: this article originally ran on Medium on April 15, 2021 as a guide for Massachusetts tech startups and small businesses. It has been adapted for length and the brewing audience.
