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

Summer, summer, summertime; time to sit back and unwind with minimum wage, overtime, and tip-related developments that occurred in June 2019.

A Reminder that Minimum Wage Rates May Increase on July 1: As we discussed in detail last month, numerous state and local minimum wage, minimum cash wage, and/or tip credit rates will change on July 1, 2019, so employers in these jurisdictions should ensure they implement necessary changes and properly notify employees of their new wage rates, where required.

Minnesota Employers Must “Budget” for New Wage & Hour Obligations: Couched within Minnesota HF 2, a state budget bill signed by Governor Tim Walz (D), are various wage and hour related provisions that take effect on July 1, 2019.1 One notable provision requires employers to provide each employee a written notice detailing various pieces of information, including but not limited to, the individual’s employment status, whether the employee is exempt from minimum wage and overtime provisions and on what basis, and any meal or lodging credits the employer will claim. Employers must provide written notice when employment begins and before changes occur.

Employees Strike Gold in the Silver State: Governor Steve Sisolak (D) signed Nevada AB 456, which increases the state minimum wage in July 2020 – from $7.25 and $8.25 per hour to $8.00 and $9.00 per hour – and each subsequent July, with the minimum wage increasing by 75 cents per hour per year, until it reaches $11.00 or $12.00 per hour in July 2024.2 In Nevada, if an employer offers qualifying health benefits, it may pay the lower minimum wage rate. However, questions remain concerning whether the legislature can amend minimum wage rates, given that the Nevada Constitution establishes minimum wage standards.

Oregon Subs Out Subminimum Wage for Individuals with Disabilities: Governor Kate Brown (D) signed Oregon SB 494, which amends state minimum wage provisions to provide that employers that are authorized to employ individuals with disabilities at subminimum wage pursuant to a special certificate issued under the federal Fair Labor Standards Act (FLSA) or per state law cannot employ or agree to employ individuals with disabilities at an hourly rate lower than, on July 1, $9.25 (2020), $10.75 (2021), or $12.50 (2022). Additionally, the subminimum wage rate will be eliminated on July 1, 2023.

Things Are Getting Done in Washington (State, That Is): The Washington Department of Labor & Industries issued proposed amendments to its white-collar overtime exemption rules.3 Notable proposed changes include, but are not limited to, increasing the salary and/or fee amount employers must pay exempt executive, administrative, and/or professional (EAP) employees, increasing the hourly pay rate for exempt computer professional employees, and mostly aligning these exemptions’ duties tests with federal Fair Labor Standards Act (FLSA) rules. (The mostly qualifier refers to the fact that, under the proposal, the state would still decline to recognize the highly compensated employee exemption that exists under the FLSA). For salary, fee, or, in the case of computer employees, hourly, pay requirements, the proposed rules will use a multiple of the state minimum wage. For example, beginning July 1, 2020, employers would be required to pay EAP employees 1.25 or 1.75 times the minimum wage for a 40-hour workweek, excluding board, lodging, or facilities, if they have 50 or fewer, or 51 or more, Washington-based employees, respectively. For hourly computer employees, the rate would initially remain $27.63 per hour for employers with 50 or fewer employees, but would be 2.75 times the minimum wage for employers with 51 or more employees. In future years, the minimum wage multiplier would increase. For perspective, the Washington State minimum wage will increase from $12.00 to $13.50 per hour on January 1, 2020, and each subsequent January 1 the rate will be adjusted based on consumer price index changes. As a result, for the first proposed increase, the minimum salary or fee amount for EAP employees will be either $945 or $1,080 per week, which is more than double the current $455 rate under the FLSA and exceeds the proposed increased rate of ($679 per week) currently under consideration by the U.S. Department of Labor. Moreover, the $37.13 per hour rate for computer professionals of employers with 51 or more employees would exceed the $27.63 per hour FLSA rate. Public comments concerning the Washington State proposals must be received by September 6, 2019.

San Francisco, CA Bay Area! You’re Surrounded, Come Out with Your Minimum Wage Rates Up: Sonoma, California enacted a local minimum wage ordinance (MWO), becoming the 22nd city or county in Northern California’s San Francisco Bay Area to adopt a generally-applicable MWO. (There are also industry-specific rates in the area, and the state.) With Sonoma’s new law, there are now MWOs in the North Bay, in addition to existing laws in the East, South, and “West” (i.e., San Francisco) Bays. Like its state-law counterpart, Sonoma will use a two-tier system, with one rate applying to employers with 25 or fewer employees, and a higher rate applicable to employers with 26 or more employees. The new rates will initially apply on January 1, 2020 – $12.50 or $13.50 per hour – with increases in future years on January 1: $14.00 or $15.00 (2021); $15.00 or $16.00 (2022); $16.00 or $17.00 (2023); TBD (2024 and future years). Notably, beginning on January 1, 2021, if an employer pays at least $1.50 per hour per employee towards a qualifying employee medical benefits plan, it can pay the employee the minimum wage less $1.50 per hour.

Legislative Updates

  • Passed Both Houses: In New Hampshire, SB 10 proposes, beginning in 2022, a two-tier minimum wage system based on whether an employer provides an employee at least 10 paid sick days. If so, an employer could pay such employees $1.00 less per hour than the proposed $12.00 per hour wage rate.
  • Passed at Least One House: In Rhode Island, SB 174 proposes to increase the state minimum wage from $10.50 to $11.50 per hour on January 1, 2020.
  • Passed at Least One Committee: In Delaware, SB 105 proposes to increase the minimum wage, on January 1, to: $11.00 (2020); $12.00 (2021); $13.00 (2022); $14.00 (2023); $15.00 (2024). Beginning in January 2025, and each subsequent January, the rate would be annually increased based on consumer price index changes. Currently, the state minimum wage is $8.75 per hour, and will increase to $9.25 on October 1, 2019.
  • Cradle & Grave: Legislators in Pennsylvania introduced SB 762, the Statutory Construction of Wage and Hour Laws Act, which proposes to require generally that FLSA standards apply to the state minimum wage law, though the state’s greater $2.83 per hour cash wage for tipped employees would still apply. At the other end of the legislative lifecycle, legislators failed to enact Maine LD 963, which sought to exempt overtime pay from state income taxes.

Local Matters: The Chicago, Illinois City Council introduced amendments to its Minimum Wage Ordinance. Notable proposed changes include, but are not limited to, increasing the citywide minimum wage from $13.00 to $14.00 per hour on July 1, 2020, and to $15.00 per hour on July 1, 2021, unless the federal or state minimum wage rate exceeds these rates, in which case those higher rates would apply. Standards for covered tipped employees would also change, such that employers must pay a minimum cash wage (MCW) to tipped employees that is the highest of the following, on July 1: the FLSA or state MCW plus $2.00 (2020), $3.00 (2021), or $4.00 (2022), or a specific city rate of $8.55 (2020), $10.70 (2021), or $12.85 (2022). Additionally, on July 1, 2023, the proposed amendments would eliminate the tip credit, so employers would need to pay tipped employees the full minimum wage. In Skokie, Illinois, the Board of Trustees removed from its June 3, 2019 agenda consideration of a proposal to opt out of Cook County’s minimum wage (and paid sick) ordinance(s).

The City Council of Minneapolis, Minnesota introduced the Wage Theft Prevention Ordinance, which requires employers to provide employees written notice concerning various pieces of information, including, but not limited to, the overtime policy applicable to the employee’s position, if any, including when overtime will be paid and the applicable rate(s) of pay. Employers would be required to provide written notice when employment begins and before changes occur.

Courtroom Tidbits: The Florida Supreme Court issued an order stating it will not hold oral arguments in a case involving the validity of a proposed ballot measure to amend the state constitution to increase the state minimum wage to $15.00 per hour by September 2026. Meanwhile, the full U.S. Court of Appeals for the Eleventh Circuit heard oral arguments in a lawsuit that alleges Alabama’s preemption of Birmingham, Alabama’s minimum wage ordinance was racially motivated. Previously, a three-judge panel of the appellate court partially reversed a trial court judge’s decision to grant the state’s motion to dismiss, finding 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.” Unsuccessful was a lawsuit challenging the validity of Oakland, California’s Measure Z, a ballot measure approved by voters at the November 2018 that, among other requirements, creates a two-tier minimum wage system for covered hotel employees, beginning July 1, 2019. A federal district court judge denied summary judgment to a business association challenging the law, and granted a motion to dismiss filed by the City of Oakland and an intervening union.

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

See Footnotes

1 See Joe Weiner, Minnesota Wage Theft Bill with New Employer Requirements Takes Effect July 1, Littler Insight (June 11, 2019).

2 See Rick Roskelley and Sandra Ketner, Nevada’s Continued Efforts to Increase the Minimum Wage, Littler ASAP (June 13, 2019).

3 See Dan Thieme and Will Kim, Proposed Washington State Regulations Would Radically Increase the Minimum Exempt Salary Rate, Littler ASAP (June 7, 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.