WPI Wage Watch: Minimum Wage & Overtime Developments (June Edition)

With the World Cup in full swing, it’s difficult to fathom anything else occurring - yet minimum wage, tip, and overtime developments keep happening. Here’s our quick round-up for those of you taking a break from the on-field action.

Supreme Court Will Not “Go to the Video” to Review Tip Rule Decision: The U.S. Supreme Court declined two petitions to review a decision by the U.S. Court of Appeals for the Ninth Circuit that upheld an Obama-era Department of Labor rule.  The DOL rule, in part, prohibited tip pooling with non-tipped employees even if an employer paid tipped employees the full minimum wage and did not claim a tip credit.  This rule, however, was effectively reversed by Congress in March 2018 when the Appropriations Act was passed.  That Act included a clause amending the Fair Labor Standards Act’s tip credit provision and stating that the DOL’s rule barring tip pooling with back of the house employees in circumstances when employers were paying tipped employees at least the full FLSA minimum wage and do not receive a tip credit “shall have no further force or effect,” at least until the DOL takes further action to promulgate new rules.  As we noted last month, the DOL is expected to issue a proposed rule on tip pooling by August 2018.

“Grand Bargain” Results in Massachusetts Minimum Wage Increases: On June 28, Massachusetts Governor Charlie Baker (D) signed HB 4640,1 which increases the state minimum wage from $11.00 to $12.00 per hour, effective January 1, 2019, with preset increases in future years to: $12.75 (2020); $13.50 (2021); $14.25 (2022); and $15.00 (2023).  The bill also increases the minimum cash wage for tipped employees from $3.75 to $4.35 per hour on January 1, 2019, with preset increases in future years to: $4.95 (2020); $5.55 (2021); $6.15 (2022); and $6.75 (2023). HB 4640 also phases out the premium pay that certain retail employees must be paid for Sunday work.

D.C. Voters Approve Eventual Elimination of Tip Credit: On June 19, 2018, District of Columbia voters approved Initiative 77, which proposes to incrementally phase out the tip credit employers may apply when paying tipped employees.2  If Initiative 77 survives the 30-day congressional review period, and it is not later overturned or amended by the D.C. City Council, the tip credit will be eliminated on July 1, 2026.

Alaska Revises Tip Regulations: Alaska’s Department of Labor & Workforce Development made various changes to an employee tips rule, effective June 29, 2018.  The Department eliminated a reference to a valid FLSA tip pool.  Additionally, the revised rules require written notice to all tipped employees of a tip pooling arrangement – including changes thereto – and provide that tip pooling arrangements cannot be retroactive.  The revised rules specify that tip pools can involve only tipped employees, which will now be defined as employees engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips and whose primary duty is direct customer service.

Pennsylvania Proposes White Collar Exemption Salary & Duty Changes: On June 12, 2018, the Pennsylvania Department of Labor & Industry proposed rulemaking to update the executive, administrative, and professional exemptions to the state’s minimum wage and overtime requirements.3  The proposal includes three scheduled updates of the salary threshold, with further adjustments occurring every three years.  It also attempts to better align the tests’ duty requirements with those set forth in the FLSA rules.  The public has until July 23, 2018, to submit written comments concerning the proposed amendments.

A Reminder that Minimum Wage Rates May Increase on July 1: As we discussed in detail last month,4 numerous state and local minimum wage, minimum cash wage, and/or tip credit rates will change on July 1, 2018.  Accordingly, employers in these jurisdictions should ensure that necessary changes are implemented and that employees are properly notified of their new wage rates, where required.

What Passed at Least One Committee: Delaware SB 170, which cleared the State Senate Labor Committee, would increase the state minimum wage from $8.25 to $8.75 per hour on October 1, 2018, and on October 1 for the following three years: $9.25 (2019); $9.75 (2020); and $10.25 (2021).

What’s New: In Maine, LD 1913 seeks to further roll back changes approved by voters at the November 2016 election by delaying how fast the state minimum wage rate increases in future years and by eliminating the annual adjustments the law currently contains.  New Jersey A4083 would establish a 90-day training wage equal to 85% of the state minimum wage for employees who are above 15 years old and under 21 years old and enrolled in an established employer on-the-job or other training program which meets standards set by the state labor department.  North Carolina SB 806 would increase the state minimum wage from the FLSA rate of $7.25 per hour to $8.80 per hour, and require annual adjustments in later years.  Also, for tipped employees, the bill would set a maximum tip credit of $3.02 per hour (i.e., the maximum tip credit available under the FLSA in 2003).

Bills that Failed to Score: A pair of Massachusetts bills – HB 2365 and SB 1004 – unsuccessfully sought to eventually increase the state minimum wage to $15.00 per hour.

Local Matters: The Anaheim, California City Council voted to place on the November 2018 ballot an initiative to require hospitality businesses that receive subsidies from the city to pay workers at least $15.00 per hour on January 1, 2019, with preset annual $1 per hour increases until the minimum wage reaches $18.00 per hour, after which annual adjustments based on cost of living changes would occur.

On June 26, the Wilmette, Illinois Village Board voted to opt back into the Cook County Minimum Wage Ordinance (but continue to opt out of the Cook County Earned Sick Leave Ordinance).  The opt-in will be effective on October 1, 2018.  However, the village could revert to following the state minimum wage law if either the state minimum wage is increased or Cook County amends its ordinance. Additionally, the opt-in will only be valid until July 1, 2021, when Cook County begins annually adjusting its minimum wage based on changes to the consumer price index.

The Detroit, Michigan City Council approved a resolution supporting a $15.00 per hour minimum wage.

We will continue to monitor and report on minimum wage and overtime developments as they occur.

See Footnotes

For further discussion, see Chris Kaczmarek and Alice Kokodis, Massachusetts Increases Minimum Wage, Eliminates Premium Pay For Sunday Work, And Enacts New Paid Leave Program, Littler Insight (June 29, 2018).

For more detailed information, see Eli Freedberg, Steven Kaplan, and Helga Spencer, The District of Columbia Eliminates the "Tip Credit", Littler ASAP (June 21, 2018).

For a more in-depth discussion of the proposal, see Robert Pritchard, Christopher Michalski, and Joshua Vaughn, Pennsylvania Department of Labor and Industry Proposes Amendments to the State's White Collar Exemption Regulations, Littler Insight (June 14, 2018).

See Libby Henninger, Sebastian Chilco, and Corinn Jackson, WPI Wage Watch: Minimum Wage & Overtime Developments (May Edition), WPI Report (May 31, 2018).

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.