Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Usually legislative and regulatory developments slow down in the summer months, which is good news because July brings more pressing matters than reading bills or proposed rules, like eating too many hot dogs or yelling at an air conditioner. So to help employers work on their compliance tans – and avoid getting burned – below we will quickly recap this month’s minimum wage, overtime, and tip-related developments.
Groups Want to Leave 20% Tip Rule: Two organizations have filed suit against the U.S. Department of Labor (DOL), and have asked the court to find that certain provisions in the DOL’s Field Operations Handbook (FOH) are invalid. The groups specifically challenge the “20% rule,” which prohibits an employer from applying a tip credit toward payment of the minimum wage to a tipped employee when the employee spends more than 20% of hours worked on tasks that are unrelated to the employee’s tipped occupation. The suit asks the court to permanently enjoin the DOL “from enforcing, publicizing, or otherwise encouraging any person or court to follow or to defer to” the FOH provisions, and to order the DOL to rescind them.
Here, There, and Delaware: Governor John Carney (D) of Delaware signed two minimum-wage-related bills. SB 170 schedules two minimum wage increases; first from $8.25 to $8.75 per hour, then to $9.25 per hour. HB 483 will allow employers to pay certain employees a wage that is 50 cents per hour less than the minimum wage. Employers will be able to pay employees that are 18 years old or older a “training wage” for their first 90 days of employment, and a “youth wage” will generally be payable to employees that are under 18. Although SB 170 says the first minimum wage increase will occur on October 1, 2018, HB 483 contains a provision that delays the increase until January 1, 2019. Accordingly, both of SB 170’s minimum wage increases will occur in 2019, with the second increase occurring on October 1, 2019. The training and youth wage rates will apply on January 1, 2019.
Nothing De Minimis About Impact of California Supreme Court Ruling: The California Supreme Court held that the de minimis doctrine contained in the federal Fair Labor Standards Act (FLSA) was not incorporated by, and could not be applied to the plaintiffs’ claims arising under, California wage and hour law, thereby allowing wage claims based on a few minutes of off-the-clock time that was consistently excluded from pay. However, the decision “leave[s] open whether there are wage claims involving employee activities that are so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”
Extra Time for Overtime Exemption Comments: Pennsylvania’s Department of Labor and Industry has extended the date to submit comments on proposed changes to the executive, administrative, and professional exemptions from July 23 to August 22, 2018. For employers, arguably the item of greatest interest is the proposal to increase the minimum amount such employees must be paid to $610 per week when the revised rules take effect, then to $766 and $921 per week in subsequent years, with further updates occurring every three years thereafter. Current pay rates to qualify for an exemption are less than the FLSA’s $455 per week: $155 per week under the “long” test, and $250 per week under the “short” test.
Out-of-State But Not Out of Mind: The California Supreme Court will decide whether the state’s minimum wage, wage payment, and paystub laws apply to out-of-state employers’ employees who work in California episodically and for less than a day at a time. It will also decide whether a formula that does not always base pay on all hours on duty, but never results in payment of an average hourly wage that is less than the minimum wage, complies with California court decisions that require the minimum wage to be paid separately for each hour of work.
Ballot Boxing: The Arkansas Secretary of State concluded that an insufficient number of signatures were collected to place a minimum wage increase measure on the November 2018 ballot. Of the 69,413 signatures collected, only 52,124 were considered valid and 67,887 were required. Proponents will have an additional 30 days to gather the required number of valid signatures.
The Council of the District of Columbia introduced the “Tipped Wage Workers Fairness Amendment Act of 2018” to repeal a June 2018 ballot measure D.C. voters approved to increase the minimum wage and gradually eliminate the tip credit. Both the ballot measure and the repeal bill (if passed) must undergo congressional review to becoming effective.
Efforts are underway to prevent a Michigan minimum wage proposal from appearing on the November 2018 ballot. An unsuccessful challenge was lodged with the Bureau of Elections by one group, while another group filed a lawsuit in state court.
Local Matters: The U.S. Court of Appeals for the Eleventh Circuit breathed new life into a lawsuit that alleges the state’s preemption of Birmingham, Alabama’s minimum wage ordinance was racially motivated. The court partially reversed a trial court judge’s decision to grant the state’s motion to dismiss. It found the plaintiffs plausibly alleged that the state preemption law, enacted in response to the city’s ordinance, “had the purpose and effect of depriving Birmingham’s black citizens equal economic opportunities on the basis of race, in violation of the Equal Protection Clause of the Fourteenth Amendment.”
The City of Alameda, California, located in the San Francisco Bay Area, held workshops throughout July concerning whether to introduce and enact a minimum wage ordinance. Currently the Bay Area has 18 separate local minimum wage laws.
Under a Cook County, Illinois regulation, if an administrative charge alleges a minimum wage ordinance violation but an employer provides evidence it is fully complying with, or has come back into full compliance with the law, the Human Rights Commission will terminate the investigation, not issue a finding of violation, and dismiss the complaint with prejudice. This approach was originally scheduled to be in place between July 1, 2017 and June 30, 2018 – the first year the ordinance was in effect – but the Commission extended the approach through June 30, 2019, and will again revisit – and possibly further extend – the rule by July 1, 2019.
Later in the month, the Cook County Board of Commissioners approved a resolution to put a non-binding advisory question on the November 6, 2018 ballot that asks “Shall the minimum wage in your municipality match the $13 per hour Cook County minimum wage law for adults over the age of 18 by July 1, 2020, and be indexed to the consumer price index after that?” To date, the vast majority of municipalities in Cook County opted to not be covered by the county’s ordinance.
In Case You Forgot: In addition to the above developments, numerous state and local minimum wage rates increased on July 1, which we laid out in a chart in our May article.
We will continue to monitor and report on minimum wage and overtime developments as they occur.