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

Time on 2018 has just about run out, so without delay, here are the developments impacting the minimum wage, tips, and overtime that occurred in 2018’s final month.

Labor Department Pen Pal: The U.S. Department of Labor published an opinion letter in which it confirmed an employer was compliant with the Fair Labor Standards Act’s (FLSA) minimum wage requirements when it paid employees an average hourly rate that may vary from workweek to workweek. Weekly pay was calculated by multiplying employees’ client time by their hourly pay rate, then dividing the product by total hours worked, which included client time and travel time between client locations. The final amount was guaranteed to meet federal and state minimum wage rate requirements. The Department cautioned, however, that to comply with the FLSA’s overtime requirements, any overtime due must be based on an employee’s regular rate, not on an arbitrarily selected figure.

In a separate opinion letter released the same day, the DOL concluded that members of an egalitarian religious commune were not subject to the FLSA. The DOL observed that members neither worked at a for-profit business nor expected to receive pay in exchange for their services. Even if members were employees, the DOL concluded they would fall within the FLSA’s ministerial exception; including those working at the commune’s two non-profit ventures that manufactured devices to help individuals with disabilities become more mobile and made wood furniture for children and schools, activities the agency found was “an inextricable part of their religious communal life.”

D.C. Amendments Take Effect: On December 13, 2018, the District of Columbia “Tipped Wage Workers Fairness Amendment Act of 2018” took effect. The Act repeals Initiative 77, a June 2018 voter-approved measure eliminating the tip credit, and includes workplace training, posting, reporting, and recordkeeping requirements, though many amendments did not take effect on December 13 because their fiscal impact has not been included in an approved D.C. budget and financial plan.

New Year’s Eve Developments in New York and Washington State: On December 31, 2018, the minimum wage will increase in New York City from $13.00 or $12.00 to $15.00 or $13.50 per hour (depending on business size), $11.00 to $12.00 per hour in Nassau, Suffolk, and Westchester Counties, and from $10.40 to $11.10 per hour in the remainder of the state. The minimum wage increase will also impact the amounts that must be paid to tipped employees, as well as exempt executive and administrative employees.1

Washington State’s Department of Labor & Industries extended to December 31, 2018, the deadline to comment on its latest pre-draft proposal concerning the minimum salary an employee must receive to be considered an exempt executive, administrative, or professional, along with proposed changes to the duty-related requirements for those exemptions.

Michigan Overhauls Law: During the lame duck session, Senate Bill (SB) 1171 was enacted, which amends recent amendments the legislature made when it adopted as law a proposed ballot measure. SB 1171 will increase the minimum wage from $9.25 to $9.45 per hour on March 29, 2019 (the 91st day after adjournment of the 2018 legislative session). In addition to the 2019 increase, scheduled increases, between 21 and 26 cents per hour, will occur each year through 2030, at which point the minimum wage will be $12.05 per hour. SB 1171 also reinstates the tip credit – previously it was to be phased out and eliminated – and resets the minimum cash wage for tipped employees at 38% of the minimum wage. Finally, it eliminates any reference to voluntary tip pooling, and reverts to previous tip pooling standards.

New State Bills & What’s in Store for 2019: In Indiana, Senate Bill (SB) 214 was pre-filed, which would increase the state minimum wage to $11.12 an hour, and eliminate the tip credit.

New Jersey Assembly Bill (AB) 15 would increase the minimum wage, continue annual adjustments, and establish a tip credit rate (currently the FLSA’s minimum cash wage is recommended by the state labor department). News reports suggest the legislature will not vote on minimum wage proposals before the end of 2018, but Democratic leaders of the state assembly and senate have been working with the Democratic governor on advancing a minimum wage increase.

In New Mexico, multiple bills have been pre-filed for the upcoming 2019 legislative session. House Bill (HB) 31 would increase the minimum wage in July 2019, 2020, and 2021 ($10.00, $11.00, $12.00), with annual increases each subsequent year based on cost-of-living increases, and eliminate the tip credit. HB 46 would increase the minimum wage to $15.00 per hour on January 2020, with annual increases each subsequent January, and eliminate the tip credit.

Virginia HB 1757 would define what constitutes a “tip” and who constitutes a “tipped employee.” Senate Bill (SB) 1079 proposes to eliminate various exceptions, including those for ushers, doormen, concession attendants and cashiers in theaters, and employees of employers with fewer than four employees at any one time. SB 1103 seeks to remove the exception for individuals who normally work and are paid based on the amount of work done.

According to a press release from the Democratic Party of Hawai’i, raising the minimum wage in 2019 is a top priority. Illinois Governor-elect J.B. Pritzker (D) recently reconfirmed his campaign promise to work toward increasing the minimum wage once he takes office in January.

Local Developments: The Fremont, California City Council received the results of public outreach concerning adopting a citywide minimum wage ordinance, along with options it might consider when enacting a law. As early as January 2019, the city council could move forward with a proposal. In Mountain View, California, a city councilmember unsuccessfully attempted to delay the 2019 annual adjustment of the minimum wage, which on January 1 will increase, as scheduled, from $15.00 to $15.65 per hour. The Erie County, New York County Legislature adopted a resolution opposing state-led efforts to eliminate the tip credit. Columbus, Ohio enacted an ordinance that conditions receiving a Jobs Growth Incentive, a Downtown Office Incentive, and/or a Jobs Creation Tax Credit on paying employees to which the incentive applies a minimum wage of no less than $15.00 per hour. Philadelphia, Pennsylvania increased the minimum wage certain city contractors must pay their employees from $12.00 to $12.40 per hour on January 1, 2019; the rate will eventually increase to $15.00 per hour on July 1, 2022, and will be annually adjusted each subsequent July 1.

Before You Ring in the New Year: Ensure you read our article on the minimum wage, tip, and exempt employee pay increases that we know will occur in 2019 (however, note that Michigan’s increases occurred after we published that article; scroll up for Michigan’s new rates).

We hope you have a happy New Year!

See Footnotes

1 For more details about the changes, including those that will occur on December 31, 2019, see Libby Henninger and Sebastian Chilco, Minimum Wage, Tipped and Exempt Employee Pay in 2019: A Rates-Only Update, Littler Insight (Nov. 19, 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.