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

While most parts of the country were heating up in July, developments concerning the minimum wage, tips, and overtime were cooling off.  Many state legislatures have adjourned or are in recess, leaving it mainly to federal and local officials to keep things interesting.

Some State & Local Minimum Wage Rates Increased on July 1: As we discussed in detail in June, numerous state and local minimum wage, minimum cash wage, and/or tip credit rates changed on July 1, 2019, so employers in these jurisdictions should ensure they implemented necessary changes and properly notified employees of their new wage rates, where required.

U.S. Department of Labor Developments: On July 22, the DOL released an opinion letter concerning whether time spent in a truck’s sleeper berth constitutes "hours worked" under the Fair Labor Standards Act (FLSA). In the letter, the DOL opines that when in the berth the driver does not perform any work and is not on call to perform work.  The DOL concludes "[t]he driver’s time spent in the berth was time when the driver was relieved of all duties and was 'permitted to sleep in adequate facilities furnished by the employer,' and presumptively non-working, off-duty time."

On July 26, the DOL sent a proposed tip-pooling rule to the White House Office of Management and Budget.

Federal Legislative Updates: The Raise the Wage Act (H.R. 582), sponsored by Rep. Robert C. "Bobby" Scott (D-VA), passed out of the U.S. House of Representative by a 231 to 199 vote, essentially along party lines. The Act proposes to, e.g., increase incrementally the federal minimum wage from $7.25 to $15.00 per hour, and to increase the amount employers pay tipped employees.1 On the other side of the aisle, Rep. Francis Rooney (R-FL) introduced the Fight for a Modern Minimum Wage Act (H.R. 3728), which proposes to increase the federal minimum to $8.50 per hour on January 1, 2020, annually adjust the minimum wage every five years, and require the Secretary of Labor to set "regional" and "local" minimum wage rates that states and certain localities can opt into.

Relatedly, the Congressional Budget Office published a report that examined how increasing the federal minimum wage to $10, $12, or $15 per hour by 2025 would affect employment and family income. The results were mixed. For example, in the summary the CBO notes:

Of the three options, the $15 option would have the largest effects on employment and family income. That is because it would increase wages for the most workers, because it would impose the largest increases in wages, and because, in CBO’s estimation, employment is more responsive to relatively large wage increases and increases that will be adjusted for future wage growth. The $12 option would have smaller effects, and the effects of the $10 option would be smaller still.

However, it goes on to observe:

According to CBO’s median estimate, under the $15 option, 1.3 million workers who would otherwise be employed would be jobless in an average week in 2025. (That would equal a 0.8 percent reduction in the number of employed workers.) CBO estimates that there is about a two-thirds chance that the change in employment would lie between about zero and a reduction of 3.7 million workers.

State Regulatory Developments: As required by statutory amendments approved in March, Maryland's Division of Labor and Industry proposed a rule to implement the requirement that restaurant employers that claim a tip credit provide tipped employees a written or electronic wage statement that shows their effective hourly tip rate. As proposed, the statement must be provided no later than two weeks following the end of a pay period and include the employee's hourly rate, including the cash wage plus all reported tips for all tip credit hours worked for each workweek. An online system through which employees can obtain the information would satisfy the proposed requirement. In Washington State, the Department of Labor & Industries held a public hearing and a webinar on its proposed changes to state white-collar overtime exemption rules, and another public hearing will be held on August 15.

Local Matters: Unsurprisingly, there were developments in Northern California's San Francisco Bay Area. On July 15, the Petaluma City Council held its first reading of a proposed minimum wage ordinance that would set rates that exceed the state minimum wage, e.g., beginning on January 1, 2020, the rates would be $15.00 and $14.00 per hour, respectively, for employers with 26 or more, or 25 or fewer employees. A second reading will occur on August 5, 2019. On July 23, the Emeryville City Council officially repealed a recent amendment to its minimum wage ordinance that allowed small independent restaurants to pay a lower minimum wage. On July 1, the city's then-general minimum wage increased to $16.30 per hour; however, small restaurants could pay employees $15.00 per hour. But, shortly after the amendments were enacted, a referendum petition against the changes was circulated. The city council accepted the petition at its July 9 meeting, which temporarily halted the amendments. At a meeting two weeks later, instead of sending the issue to voters at a future election, the city council elected to repeal the amendments entirely, thereby making all employers subject to the $16.30 per hour minimum wage.

Recently, the State of Colorado repealed the statewide prohibition against local minimum wage ordinances and gave local governments the authority to enact such laws under certain conditions. On July 23, the Summit County, Colorado Board of Commissioners discussed whether and how it could adopt a countywide minimum wage ordinance. The commissioners intend to study the issue further.

There was also action in the Twin Cities. On July 24, the Saint Paul, Minnesota City Council considered an ordinance to create the Division of Labor Standards Enforcement and Education within the Department of Human Rights and Equal Economic Opportunity, which would take over enforcing the city's forthcoming minimum wage ordinance, in addition to other local employment ordinances. A third reading of the proposal will occur on August 7. Later in the week, on July 29, 2019, the Minneapolis, Minnesota City Council's Public Health, Environment, Civil Rights, and Engagement Committee held a public hearing on a proposed wage theft prevention ordinance, which 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."

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


See Footnotes

1 To learn more, see Jim Paretti and Michael Lotito, House Passes $15 Minimum Wage; Unlikely to Proceed in Senate, Littler ASAP (July 19, 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.