Business owners looking to build or expand their company in Massachusetts not only have to comply with federal employment requirements, but also state-specific laws that provide additional coverage for employees. By using a professional employment organization (PEO), CFOs and finance departments can more easily balance compliance responsibilities with their core financial tasks.
Here’s a closer look at the advantages and process of engaging a Massachusetts PEO service.
Understanding the role of PEOs in Massachusetts
PEOs are specialized firms that companies partner with to delegate a range of employee management duties. These include payroll, benefits administration, HR tasks, and adherence to both state and federal employment regulations.
Engaging with a PEO involves entering a co-employment agreement, where the PEO assumes certain legal employment liabilities and the client company retains day-to-day control over its workforce.
In Massachusetts, PEOs must adhere to state-specific regulations, including registration with the state, compliance with labor laws, providing workers’ compensation and unemployment insurance, and ensuring health insurance plans meet state standards.
They must also establish clear agreements with client companies, detailing the division of employer responsibilities in the co-employment relationship. These regulations ensure that PEOs operate legitimately, protect employee rights, and fulfill their role in managing HR, payroll, and compliance tasks effectively.
Learn more: What is a PEO?
Advantages of partnering with a Massachusetts PEO
Choosing to work with a PEO allows Massachusetts businesses to streamline HR processes, improve employee benefits, and simplify workforce management.
Streamlined HR operations
CFOs and Finance teams are often tasked with streamlining HR operations to enhance efficiency and control costs.
By outsourcing these functions to a PEO, businesses can significantly reduce the time and resources spent on HR tasks, enabling the finance team to allocate more effort toward strategic financial planning and analysis. Using a PEO is often more cost-effective than hiring a team of full-time HR staff, and offers a pricing model that is predictable month-over-month, which can help limit unforeseen costs.
PEOs also bring sophisticated HR technology platforms to the table, which automate and simplify payroll processing, track payroll spending, and provide real-time analytics. For CFOs, this means a more focused approach to growth and profitability, with the confidence that HR management is in expert hands.
Enhanced and cost-effective employee benefits
One of the key benefits of collaborating with a PEO is the capability to provide broader and more affordable employee benefits packages. Because PEOs co-employ a large number of workers, they’re able to secure better rates on benefits, therefore reducing costs for client companies.
PEOs typically offer primary benefits, ancillary plans, and benefits enrollment and administration. Primary benefits include major medical, dental, and vision coverage, retirement plans, health savings accounts (HSA), flexible spending accounts (FSA), and direct care.
Expertise on demand
Small businesses and startups often lack the resources for in-house payroll and HR expertise covering all state-specific regulations. A PEO partnership grants them access to comprehensive knowledge and resources, normally beyond their reach.
This arrangement empowers HR teams, CFOs, and finance departments to make decisions based on expert insights concerning payroll, human resources, and compliance, ensuring strategic choices are supported by specialized knowledge.
Enhanced compliance assistance
In many cases, Massachusetts laws regarding labor, payment, and employment go above and beyond the federal requirements. This includes a higher minimum wage and additional continuing healthcare coverage for employees at both small businesses and large corporations.
By entrusting compliance tasks to a PEO, CFOs and finance teams can focus on financial strategy and growth, ensuring their businesses stay competitive and compliant with additional state-specific requirements.
Harness the cost-effective scale of a Professional Employer Organization with our in-depth guide.
Payroll, labor, and employment laws in Massachusetts
Massachusetts takes a proactive stance in safeguarding employee rights while balancing employer obligations. Here’s a brief overview of some key laws and regulations specific to Massachusetts:
Payroll and benefits laws
- Minimum wage: Massachusetts’ basic minimum wage rate per hour is $15.00 USD. At a minimum, the state’s minimum wage rate is set at $0.50 higher than the federal minimum rate
- Overtime: In Massachusetts, employees are entitled to 1.5 times their regular rate for hours worked over 40 in a week, though exemptions apply to certain roles, with a 2024 exemption threshold of $35,568
- Payment methods: Employers can mandate direct deposit but can't dictate the financial institution, nor can they impose fees for accessing wages
- Final paychecks: Employees who resign are entitled to their final paycheck by the next scheduled payday or by the first Saturday following their resignation if there is no regular payday. Those who are terminated or laid off must receive their full pay on their final working day
- Paid Family and Medical Leave (PFML): PFML is a statewide program that allows Massachusetts workers to take paid leave for up to 12 weeks to care for a family member with a serious health condition, up to 20 weeks for their own serious health condition, and up to 12 weeks for bonding with a new child or for certain military considerations
- Massachusetts Equal Pay Act (MEPA): MEPA is designed to ensure gender pay equity, encourages transparency in pay practices, and provides employees with the right to discuss wages freely without retaliation from their employer
- Employer Medical Assistance Contribution (EMAC): EMAC is a tax paid by employers subject to the state's unemployment insurance, aimed at funding health care initiatives, including state-subsidized health insurance
Labor laws
- Prohibition of discrimination against union members: Massachusetts labor laws protect workers from discrimination based on union membership or activity. Employers cannot discriminate against employees for participating in union activities, including organizing, being a union member, or bargaining collectively
- Meal and rest breaks: Massachusetts workers are entitled to at least a 30-minute meal break if they work more than six hours during a calendar day
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Massachusetts Blue Laws: Massachusetts has specific laws governing retail operations on Sundays and holidays, known as Blue Laws. These laws restrict certain types of work and retail activities on Sundays and some holidays unless a permit is obtained
- Right to Know Law: This law requires employers to inform employees about hazardous substances in the workplace. It mandates training and access to information about chemicals and other hazardous materials they may be exposed to at work
Employment laws
- Worker Classification: The Massachusetts government uses a three-prong test to determine whether a worker should be classified as an employee or independent contractor. Classification is based on the amount of freedom the individual has in their role and the type of work they are engaged in inside and outside of the role
- Non-Compete Agreements: Massachusetts law restricts the use of non-compete agreements, making them enforceable only under specific conditions. For example, they must be limited in time (up to 12 months), geography, and scope, and they must be necessary to protect a legitimate business interest
- Pregnant Workers Fairness Act (PWFA): The PWFA requires employers to provide reasonable accommodations for pregnant employees and prohibits discrimination based on pregnancy or related conditions, including breastfeeding
See also: Your Ultimate Guide to US Payroll in Massachusetts
Manage payroll, benefits, and HR for your US team with Deel’s PEO and US payroll.
Additional requirements and enforcement
Employers in Massachusetts must also adhere to specific regulations regarding workplace safety (OSHA), workers' compensation insurance, and unemployment benefits. Where there is overlap between federal, state, and/or local law, companies will generally be required to comply with the law that offers the greatest rights or benefits to the employee.
See also: US Payroll Tax Guide: Massachusetts
Choosing the right PEO in Massachusetts
Use the following guidelines to find the best PEO company for your company—one that complements your workforce needs, team capabilities, and growth ambitions.
1. Define your business needs
Start with a detailed review of your current and projected HR-related costs, pinpointing opportunities where a PEO might bring savings or improve efficiency. Consider your requirements for payroll management, benefits administration, HR compliance, workers' compensation, and risk management. Reflect on how these services may evolve in line with your company's growth.
2. Look for PEOs with Massachusetts expertise
Narrow your search to PEOs with a solid presence and a verifiable track record in Massachusetts or in the US overall. Seek out case studies, client feedback, and instances of their success in navigating the intricate labor laws and business conditions unique to the state.
3. Assess service range and benefits quality
Assess the PEO's administrative services, tax filing support, HR services, and employee onboarding processes to ensure they address your company's specific payroll and HR needs. Evaluate the benefits packages for quality and cost-effectiveness, and whether the PEO service provider offers flexible solutions that can accommodate your company's fluctuating needs.
4. Evaluate their compliance and risk management
Look into the PEO's strategies for ensuring ongoing compliance with Massachusetts' labor laws, as well as federal and local regulations regarding payments, classification, and employment. The proper risk mitigation will reduce potential liabilities without your team taking on the time- and resource-intensive work of researching and implementing the latest compliance requirements.
Deel provides continuous compliance support with a Compliance Hub that gives you access to the latest regulatory updates and risk warnings, offering guidance and actionable alerts to enhance compliance.
5. Look into their customer support
Evaluate the PEO's reputation for customer service and support. Consider their promptness, the availability of dedicated support personnel, and the effectiveness of their HR technology platforms for managing employee services. Exceptional, attentive customer service is key for a harmonious partnership.
6. Review the contract
Thoroughly examine the PEO contract, paying special attention to the conditions, fees, and termination clauses, seeking legal counsel if needed. Work with the PEO provider to come to terms that benefit your company, ensuring flexibility, clarity, and a well-defined allocation of responsibilities.
7. Prepare for implementation
Get ready for the switch by informing your employees about upcoming changes and establishing protocols for continuous cooperation with the PEO. Proper planning and clear communication are essential to avoid interruptions and guarantee a successful transition.
See also: How to Choose a PEO or US Payroll Provider: 9 Questions to Answer
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Manage Massachusetts, US, and global workers with Deel
Deel simplifies payroll and HR management, whether you're hiring workers in a single state, nationwide, or globally.
As your PEO* Deel oversees payroll, HR, and benefits administration while ensuring compliance with state taxes and managing sensitive matters by offering:
- Expert payroll administration
- Access to benefit plans from leading carriers and benefits administration
- Robust HRIS with free IT, Finance, and PTO management
- State-specific trainings, HR policies, and on-demand HR support
- Advanced tax and benefits compliance
- And more
Book a demo to learn more about using Deel’s PEO in Massachusetts.
*Provided by Deel PEO US, LLC, Deel Employment Services, LLC, or through Deel's partnership with licensed providers where required.
Disclaimer: This article is intended for informational purposes and should not be considered legal advice. Consult a qualified licensed attorney for help on legal issues. Content is accurate at the time of publishing.
