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Human Resources, Payroll

Minimum Wage, Tip, and Overtime Updates

Hey Compliance Warriors!

Here’s some information regarding minimum wage increases by state that will go into effect starting July 1st, 2019. Read on…

Article via: littler.com

Status of U.S. Department of Labor Rules: May 21, 2019 was the deadline to submit public comment concerning the U.S. Department of Labor’s (DOL) proposed rules governing the minimum salary or fee amount employees must receive to qualify for the executive, administrative, professional, or highly compensated employee exemption. The DOL extended the public comment deadline from June 10 to June 25 for its proposed joint employer rules, and from May 28 to June 12 for its proposed regular rate calculation rules.

Enacted State Bills & Adopted Regulations

    • Colorado HB 1210 repeals prohibitions against local minimum wage ordinances and gives local governments the authority to enact such laws. However, the new law sets limits concerning not only how many local laws may be enacted, but also what the laws can and cannot do, e.g., local minimum wage ordinances must provide for a tip credit.
    • Connecticut HB 5004 increases the $10.10 per hour state minimum wage to $15.00 per hour by 2023, with annual adjustments beginning in 2024.1 The first rate increase will occur on October 1, 2019. The bill also tweaks pay standards for covered tipped employees. Currently, three rate standards apply to wait staff, bartenders, and “other” employees. Effective July 1, 2019, the latter category will no longer be covered and rate standards will exist only for tipped employees in the hotel or restaurant industries, and bartenders. Moreover, the law will transition from setting the maximum tip credit to establishing the minimum cash wage, which will be $6.38 and $8.23 per hour, respectively.
    • Michigan’s Department of Licensing and Regulatory Affairs adopted rules increasing the minimum salary employees must receive to qualify for the state’s executive, administrative, or professional employee exemption. Previously, to qualify for exemption, an employee had to be paid on a salary basis not less than $250 per week (less than the FLSA amount, which is currently $455 per week). As amended, effective May 6, 2019, employees must receive compensation on a salary basis that is not less than the FLSA standard.
    • Nevada has a two-tier minimum wage. A $7.25 per hour rate applies to employees to whom an employer offers qualifying health benefits; for all other employees an $8.25 per hour rate applies. Nevada SB 192, effective January 1, 2020, defines what it means to provide health benefits, e.g., benefits available under a health benefit plan and the level of coverage.2

Passed Both Houses

    • Nevada AB 456 seeks to increase the minimum wage in July 2020 – from $7.25 and $8.25 per hour (see above) 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.

Successfully Moving Between Houses

    • Illinois HB 3405 proposes a new law to clarify that tips are an employee’s property that employers cannot keep. It would also obligate employers to pay tips to employees within 13 days after the end of the pay period in which the employee earns tips. However, under the bill employers could withhold processing fees from credit card tips if certain conditions exist. The state senate amended the bill, and the amendments, thus far, have been well received in the house.

Passed at Least One House

California AB 5 proposes to codify the ABC test approved by the California Supreme Court for determining whether individuals are employees or independent contractors under numerous labor and employment statutes, including minimum wage and overtime laws.

New Hampshire HB 186 would increase the $7.25 per hour state minimum to $12.00 per hour by 2022, and increase the minimum cash wage for covered tipped employees from 40 to 50% of the minimum wage.

Oregon SB 494 would eliminate the ability to pay a subminimum wage to certain individuals with disabilities, beginning July 1, 2023.

Local Matters: Multiple developments occurred in northern California’s San Francisco Bay Area. The Menlo Park, California City Council received a presentation on implementing a local minimum wage ordinance and directed staff to work on a proposal with an implementation date of January 2020. The Sonoma, CaliforniaCity Council held its first reading of a proposed minimum wage ordinance. The Emeryville, California City Council passed amendments to its minimum wage ordinance that establish a lower $15.00 per hour minimum wage rate for small independent restaurants, i.e., a restaurant that is a “small business” with 20 or fewer locations globally, excluding franchisees associated with a franchisor or a network of franchises with franchisees with more than 20 locations globally (rates below).

The Effingham County, Illinois Board considered a resolution opposing the recent statewide minimum wage increase.

Voters in Philadelphia, Pennsylvania approved a ballot measure to amend the city charter to call on the state to increase the minimum wage to $15.00 by 2025 or allow the city to implement a local minimum wage.

July 1 Minimum Wage, Minimum Cash Wage, and/or Tip Credit Rate Changes: On July 1, 2019, numerous state and local minimum wage (MW) rates will increase, as will the minimum cash wage (MCW) and/or tip credit (TC) for covered tipped employees.

Jurisdiction

Pre-July 1 MW

July 1 MW

Pre-July 1 MCW

July 1 MCW

Pre-July 1 TC

July 1 TC

California (Alameda)

$13.50

$15.00

Not Applicable

No Change

Not Applicable

No Change

California (Berkeley)

$15.00

$15.59

Not Applicable

No Change

Not Applicable

No Change

California (Emeryville: 56 or More Employees)

$15.69

$16.30

Not Applicable

No Change

Not Applicable

No Change

California (Emeryville: 55 or More Employees)

$15.00

$16.30

Not Applicable

No Change

Not Applicable

No Change

California (Emeryville: Small Independent Restaurant)

Not Applicable

$15.00

Not Applicable

No Change

Not Applicable

No Change

California (Fremont:
26 or More Employees3)

$12.00 (State Law)

$13.50

Not Applicable

No Change

Not Applicable

No Change

California (Long Beach: Hotel Ordinance)

$14.64

$14.97

Not Applicable

No Change

Not Applicable

No Change

California (City of Los Angeles: 26 or More Employees)

$13.25

$14.25

Not Applicable

No Change

Not Applicable

No Change

California (City of Los Angeles: 25 or Fewer Employees)

$12.00

$13.25

Not Applicable

No Change

Not Applicable

No Change

California (City of Los Angeles: Hotel Ordinance)

$16.10

$16.63

Not Applicable

No Change

Not Applicable

No Change

California (County of Los Angeles (Unincorporated): 26 or More Employees)

$13.25

$14.25

Not Applicable

No Change

Not Applicable

No Change

California (County of Los Angeles (Unincorporated): 25 or Fewer Employees)

$12.00

$13.25

Not Applicable

No Change

Not Applicable

No Change

California (Malibu: 26 or More Employees)

$13.25

$14.25

Not Applicable

No Change

Not Applicable

No Change

California (Malibu: 25 or Fewer Employees)

$12.00

$13.25

Not Applicable

No Change

Not Applicable

No Change

California (Milpitas)

$13.50

$15.00

Not Applicable

No Change

Not Applicable

No Change

California (Oakland: Hotel Ordinance (No Benefits))

$13.80 (Oakland General Law)

$20.00

Not Applicable

No Change

Not Applicable

No Change

California (Oakland: Hotel Ordinance (Benefits))

$13.80 (Oakland General Law)

$15.00

Not Applicable

No Change

Not Applicable

No Change

California (Pasadena: 26 or More Employees)

$13.25

$14.25

Not Applicable

No Change

Not Applicable

No Change

California (Pasadena: 25 or Fewer Employees)

$12.00

$13.25

Not Applicable

No Change

Not Applicable

No Change

California (San Francisco: General)

$15.00

$15.69

Not Applicable

No Change

Not Applicable

No Change

California (San Francisco: Government Supported Employee)

$13.27

$13.79

Not Applicable

No Change

Not Applicable

No Change

California (San Leandro)

$13.00

$14.00

Not Applicable

No Change

Not Applicable

No Change

California (Santa Monica: 26 or More Employees)

$13.25

$14.25

Not Applicable

No Change

Not Applicable

No Change

California (Santa Monica: 25 or Fewer Employees)

$12.00

$13.25

Not Applicable

No Change

Not Applicable

No Change

California (Santa Monica: Hotel Ordinance)

$16.10

$16.63

Not Applicable

No Change

Not Applicable

No Change

District of Columbia

$13.25

$14.00

$3.89

$4.45

$9.36

$9.55

Illinois (Chicago)

$12.00

$13.00

$6.25

$6.40

$5.75

$6.60

Illinois (Cook County)

$11.00

$12.00

$5.10

$5.25

$5.90

$6.75

Maine (Portland)

$11.00

$11.11

$5.50

No Change

$5.50

$5.61

Maryland (Montgomery County: 51 or More Employees)

$12.25

$13.00

$4.00

No Change

$8.25

$9.00

Maryland (Montgomery County: 11-50 employees / 11 or more employees & either a 501(c)(3) or certain home health or community based services providers / 10 or fewer employees)

$12.00

$12.50

$4.00

No Change

$8.00

$8.50

Maryland (Montgomery County: 10 or Fewer Employees)

$12.00

$12.50

$4.00

No Change

$8.00

$8.50

Minnesota (Minneapolis: 101 or More Employees)

$11.25

$12.25

Not Applicable

No Change

Not Applicable

No Change

Minnesota (Minneapolis: 100 or Fewer Employees)

$10.25

$11.00

Not Applicable

No Change

Not Applicable

No Change

Nevada (Health Benefits Offered)

$7.25

No Change

Not Applicable

No Change

Not Applicable

No Change

Nevada (No Health Benefits)

$8.25

No Change

Not Applicable

No Change

Not Applicable

No Change

New Jersey (General)

$8.85

$10.00

$2.13

$2.63

$6.72

$7.37

New Jersey (Small Employer)

$8.85

No Change

$2.13

$1.484

$6.72

$7.375

Oregon (General)

$10.75

$11.25

Not Applicable

No Change

Not Applicable

No Change

Oregon (Urban)

$12.00

$12.50

Not Applicable

No Change

Not Applicable

No Change

Oregon (Non-Urban)

$10.50

$11.00

Not Applicable

No Change

Not Applicable

No Change

July Minimum Wage Increases Will Impact Some Exempt Employees: In multiple states, the July 1 minimum wage increases will have a domino effect concerning exempt employee pay.

In Oregon, an exempt executive, administrative, or professional employee must earn a salary and be paid on a salary basis, excluding board, lodging, or other facilities. A salary is no less than the state minimum wage multiplied by 2,080 hours per year then divided by 12 months. It is a predetermined amount constituting all or part of the employee’s compensation paid for each pay period of one week or longer (but not to exceed one month). Because Oregon’s minimum wage rates will increase, so will the minimum salary amount employers must pay exempt employees.

In New Jersey, executive, administrative, or professional employees are exempt from state overtime requirements, but not exempt from state minimum wage requirements, so employers must pay them at least the applicable minimum wage for each hour worked in a workweek.

To qualify under the FLSA’s 7(i) overtime exception, the regular rate of pay of an employee of a retail or service establishment must exceed one-and-a-half times the federal minimum wage, and more than half the employee’s compensation for a representative period (not less than one month) must represent commissions on goods or services. In the following jurisdictions with July 1 rate changes, the 7(i)-type exemption requires – in part – an employee’s pay to either equal or exceed one-and-a-half times the above-referenced state minimum wage: District of Columbia; Nevada; and Oregon.

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

For more information: https://www.littler.com/publication-press/publication/wpi-wage-watch-minimum-wage-tip-and-overtime-developments-may-edition

About LISA SMITH

Lisa Smith is CEO of Andere Corporation and Chief Content Developer at HelpDeskSuites.com. Follow her on Twitter, connect with her on LinkedIn, listen to her Small Business Spoonfuls Podcast, and find more in her Compliance Warriors Facebook Group.

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