WPI Wage Watch: Minimum Wage, Tip, and Overtime Developments (August Edition)

Though in August summer is almost over and fall is just about upon us, federal, state, and local developments concerning the minimum wage, tips, and overtime transcend the seasons.

U.S. Department of Labor Developments:1 The U.S. Department of Labor sent to the Office of Management and Budget a proposed rule concerning the fluctuating workweek method of calculating overtime pay. Reports suggest the Department will release very soon its revised rules concerning exempt, white-collar employee pay.

The DOL also released two wage-and-hour-related opinion letters, though both involve public employers. FLSA2019-11 addresses the 7(k) overtime exemption and public agency employees engaged in both fire protection and law enforcement activities, and FLSA2019-12 addresses the employment status of volunteer reserve deputies who perform paid extra duty work for third parties.

State Legislative Developments: August's highlights come to us via the Midwest and Northeast.

Illinois Governor J. B. Pritzker (D) signed HB 3405, which creates a new statute that expressly says tips belong to employees and requires that employers pay tips owed within 13 days after the end of the pay period in which employees earn them. Additionally, from credit card tips employers can withhold a proportionate amount of any processing fee if the amount withheld does not exceed the proportion of the amount of the tip to the amount of the overall bill. Finally, the new statute provides that it does not prohibit lawful tip pooling.  HB 3405 goes into effect on January 1, 2020.

The Minnesota Department of Labor announced that, on January 1, 2020, the state hourly minimum wage will increase from $9.86 to $10.00 for employers whose annual gross volume of sales made or business done is not less than $500,000, and from $8.04 to $8.15 per hour for employers whose annual gross volume of sales made or business done is less than $500,000.   Additionally, the lower rate applies when a covered hotel, motel, lodging establishment, or resort enters into a contract with an employee working on a summer work travel exchange visitor program nonimmigrant visa (“J visa”), and the contract includes a provision that the employer will provide food or lodging benefit.

In New Hampshire, Governor Chris Sununu (R) vetoed Senate Bill 10, which proposed an increase to the state minimum wage.

Various Massachusetts bills seek to increase the pay threshold for employees to be an exempt executive, administrative, or professional employee. Currently, Massachusetts uses the standard under the federal Fair Labor Standards Act (FLSA): $455 per week, excluding board, lodging, or other facilities ($23,660 annually). These proposals would increase the pay threshold to no less than $35,000 (2021), $45,000 (2022), $55,000 (2023), and $64,000 (2024). Additionally, in subsequent years the threshold would be the higher of the following rates: 1) 2,080 times twice the state minimum wage; or 2) the preceding year's rate, adjusted.

State Case Law Developments: The Arizona Supreme Court denied a petition to review an appellate court decision that found an amended state preemption statute was unconstitutional because it violated the Voter Protection Act.

Local Matters: In August, California experienced a gold rush of minimum wage ordinance activity, mostly in Northern California's San Francisco Bay Area.

Petaluma, California enacted the 23rd generally applicable minimum wage ordinance in the Bay Area. On January 1, 2020, a $15.00 per hour minimum wage will apply to employers with 26 or more employees, and a $14.00 per hour rate will apply to employers with 25 or fewer employees. However, the two-tier system will last one year only, with the higher rate, adjusted for inflation, applicable to all employers on January 1, 2021. Later in the month, South San Francisco City Council voted in favor of a proposed minimum wage ordinance; a second hearing will occur on September 25. If the proposal is enacted, effective January 1, 2020, all employers will be subject to a $15.00 per hour minimum wage, which the city will annually adjust beginning in 2021.

Sonoma created a webpage for its minimum wage ordinance, which includes the required poster and frequently asked questions. The San Carlos City Council voted to discuss a minimum wage ordinance at a later date. The Novato City Council had a spirited hearing about its proposed ordinance and agreed to revisit the proposal in late September. Menlo Park held a community meeting concerning a draft minimum wage ordinance, which the city council will consider in September and October.

In Southern California, the El Monte City Council voted to draft an ordinance to require ride-share drivers in the city to receive a $30.00 per hour minimum wage.

Three developments occurred in the Twin Cities. The Saint Paul, Minnesota Department of Human Rights and Equal Economic Opportunity proposed rules to implement the city's minimum wage ordinance. Public comments must be submitted by November 22, 2019. Minneapolis, Minnesota City Council. adopted2 a wage theft prevention ordinance, which previously the city said would "complement other new municipal labor standards, including the City’s minimum wage and sick and safe time ordinances, by requiring that employers provide written pre-hire notices and a statement of earnings at the end of each pay period, including the number of sick and safe time hours accrued and unused, among other things" Additionally, reports suggest two Minneapolis councilmembers want to expand wage theft protections to independent contractors, like New York City does via its Freelance Isn't Free Act.

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

See Footnotes

1 For a more general discussion about DOL developments, see Michael Lotito and James Paretti Jr., What’s New and on the Horizon at the U.S. Department of Labor?, Littler Podcast (Aug. 12, 2019).

2 To learn more, see Susan Fitzke and Stephanie Sarantopoulos, Minneapolis Follows the State’s Lead and Enacts its Own Wage Theft Ordinance, Littler Insight (Aug. 12, 2019).

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.