Category: Economy

MA Judge Upholds Sick Time Law

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Massachusetts District Court Judge Rya Zobel recently dismissed a complaint filed by two construction contractors, and six construction employee associations, seeking to challenge the Commonwealth’s new sick time law.

The Massachusetts Earned Sick Leave law went into effect on July 1, 2015 following overwhelming support from voters in the fall elections. The legislation requires employers with more than 11 employees to provide up to 40 hours of accrued paid sick time to workers at their “same hourly rate” of pay. Employers with fewer than 11 employees are obliged to provide the accrued time as unpaid leave.

Sick time law don't be your own doctor

An hour of sick time is accrued for every 30 hours worked under the new sick time law, accumulating to up to 40 hours annually. After 90 days of employment, sick time may be used for an employee’s physical and mental health concerns or similar concerns for a direct family member. Employers providing existing leave benefits, if equal to or more comprehensive than the requirements of the new sick time law, will not be required to change their employee benefits.

Employers and employer organizations, including the Labor Relations Division of Construction Industries of Massachusetts, filed petitions with the court to challenge the law under concerns that it would change their existing union contracts. Citing the potential for pre-existing union negotiations would be negated by the change, they argued that the new state sick time law was preempted by the federal Labor Management Relations Act (LMRA). The LMRA, a federal collective bargaining law, was a core component of their argument against having to abide by the new rules for union employees. They contended that employees with benefits currently negotiated through a collective bargaining agreement should be exempt from the new legislation.

In addition, the plaintiffs brought concerns regarding the definition of “same hourly rate” and posed situations under which the term could cause confusion when calculating a sick time pay rate. Additionally, the plaintiffs requested an amendment stating that the new regulations be preempted by a separate federal law known as the Employee Retirement and Income Security Act (ERISA), which was also denied by the court.

Zobel held in the recent hearing that the LMRA does not preempt the new Massachusetts sick time law. In addition, regarding the interpretation of “hourly rate”, Zobel wrote, “If petitioners’ assumptions about how the law will be implemented and applied transport us from the factual to the hypothetical, then their scant allegations about the agreements with which it will conflict carry us on to the fantastical.”

The plaintiffs were provided with two weeks after the hearing date to file a new complaint on the allegation of the law’s conflict with ERISA.

The Realities of Reshoring US Manufacturing

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Offshoring—or outsourcing—is the practice of moving factories and jobs overseas. In the last 20 years, American companies have started sending manufacturing operations to countries with cheaper labor, fewer regulations, and more forgiving tax schedules. The phenomenon is familiar to anyone talking to tech-support in India, but it has also occurred in the manufacturing industry. Before 2000, US manufacturing grew almost as fast as the nation’s Gross Domestic Product (GDP) at ninety-four cents on the dollar, but since the turn of the millennium that number dropped to only 45%, until this year.  Currently, US manufacturing has grown faster than the GDP.

The reason for this is called reshoring—returning factories to US soil. Many companies are finding good reasons to move their operations back to America, and the result is higher domestic manufacturing rates, and in some markets, more general growth. Companies have returned to the US to: reduce the complexity of their management and supply chains, avoid the costs and delays of shipping, ensure quality control, and to take advantage of some lower energy costs.

Some corporations are not moving their existing operations, but instead opening new facilities. This geographic diversification insulates businesses against economic hardships like labor disputes, natural disasters, political upheaval, and more.

made in usa

Unfortunately, reshoring is not a marvel of American job-creation. Companies are choosing to move back stateside because it is the most economically feasible option. They are utilizing automation and optimization consultants to make their operations as lean as possible. The cost of healthcare and other benefits, coupled with government labor regulation, makes reshoring labor-intensive industries less likely to return. Those who do reshore have reported problems finding qualified employees, as too many applicants cannot pass drug screenings, do not have a grasp of basic math skills, or are unreliable.

Bill Conerly, an economics expert writing for Forbes, sums it up perfectly when he writes, “The fastest-growing parts of manufacturing will be those that use the least labor. Productivity in factories continues to improve, so the best jobs picture we can hope for is flat. The peak year for US manufacturing employment was 1979, and we’re not going back there.”