We’ll spare you the taxing introduction and jump straight to itemizing developments concerning the minimum wage, tips, and overtime.
U.S. Department of Labor Developments: By a 53-45 vote, the U.S. Senate confirmed Cheryl Stanton to head the Department’s Wage and Hour Division (WHD).
Also in April, the WHD released a Notice of Proposed Rulemaking (NRPM) on joint employment standards under the Fair Labor Standards Act (ACT).1 The DOL released the NPRM shortly after issuing two other sets of proposed FLSA rules concerning minimum pay requirements for exempt “white collar” employees and types of compensation that must be included when calculating the regular rate for overtime purposes.
In addition to rulemaking, the WHD released four new FLSA opinion letters. FLSA2019-3 addressed whether a youth residential care facility may implement an “8 and 80” overtime pay system. FLSA2019-4 addressed whether a public university’s nutritional outreach instructors qualify for the professional exemption. FLSA2019-5 addressed whether the agricultural exemption applies to the freezing, cutting, packing, storing, and/or transportation of a farm’s own fruit, vegetable, or meat products. FLSA2019-6 addressed whether a service provider for a virtual marketplace company is an employee or an independent contractor.
State Supreme Court Updates: The Massachusetts Supreme Judicial Court clarified class action standards for wage and hour cases. It held that the same civil procedure rules applicable to other class actions apply to wage claims, that uncertainty in the exact number of persons who might have a valid claim is not a reason to deny class certification, and that an offer of judgment to a class action plaintiff that included all potential relief the individual might recover does not extinguish that person’s claims.2
The Michigan Supreme Court will issue an advisory opinion concerning the constitutionality of amendments state legislators made to minimum wage and overtime (and paid sick) ballot measures they adopted as law and later revised during the lame-duck session. Oral arguments will occur on July 17, 2019.
Enacted State Bills: State legislators and governors enacted numerous minimum wage, tip, and/or overtime bills.
- Arkansas HB 18503 adopted the Internal Revenue Service’s 20-factor test for determining whether an individual is an employee or an independent contractor under various labor and employment laws, including the Arkansas Minimum Wage Act (AMWA). Separately, HB 1751 increased the maximum credit an employer may apply toward meeting its minimum wage or overtime pay obligations if it customarily and regularly furnishes board, lodging, apparel, or other items to employees; created a two-year statute of limitations for actions under the AMWA; and provided that AMWA liquidated damages will only be available for willful violations.
- Indiana SB 231 amended the state’s minimum wage law to provide that the term “employee” did not include “direct sellers,” which are, generally speaking, individuals in the trade or business of selling or soliciting the sale of consumer products or services, where substantially all remuneration is directly related to sales or other input, and services are performed per a written contract that provides such services will not be treated as employment for tax purposes. Separately, SB 512 provides that overtime pay requirements do not apply to employees of an air carrier subject to Title II of the federal Railway Labor Act for hours worked exceeding 40 in a workweek if the employee voluntarily agreed with another employee to trade or reassign scheduled work hours.
- Iowa HB 327 amends the state’s minimum wage law (and other labor and employment laws) to provide that, for work performed on or after July 1, 2019, a franchisor will not be considered an employer of a franchisee or its employees unless the franchisor agrees to be an employer or the state labor department finds the franchisor exercised a type or degree of control over the franchisee or its employees that was not customarily exercised by franchisors in protecting their trademarks and brands.
- Nevada’s Labor Commissioner announced that, on July 1, 2019, the state minimum wage rates will not change and will remain $7.25 per hour for employees who are offered qualifying health benefits, and $8.25 per hour for all other employees.
- New Mexico SB 4374 requires the $7.50 per-hour minimum wage to increase as follows on January 1: $9.00 (2020); $10.50 (2021); $11.50 (2022); $12.00 (2023). For covered tipped employees, the $2.13 per-hour minimum cash wage will increase to: $2.35 (2020); $2.55 (2021); $2.80 (2022); $3.00 (2023). The state-level increases will have a knock-on effect concerning some local minimum wage ordinances. Additionally, SB 437 narrows who may participate in valid tip pools to “wait staff,” though the term is undefined and has created uncertainty.
- Ohio HB 62 excludes from the definition of “employee” under various labor and employment laws – including the state’s overtime statute – an individual who operates a vehicle or vessel when performing work for or on behalf of a motor carrier transporting property. Various requirements must be met to qualify for the exemption. The individual must: 1) own the vehicle or vessel or lease it under a bona fide lease agreement that is not a temporary replacement lease agreement; 2) be responsible for supplying necessary personal services; 3) be paid based on factors related to work performed, and not solely on hours or time expended ; 4) substantially control the means and manner of performing the services; 5) enters into a written independent contractor agreement; 6) be responsible for substantially all of the principal operating costs of the vehicle or vessel and equipment used to provide the services; and 7) be responsible for any economic loss or economic gain from the arrangement with the carrier.
Quick Legislative Recap: In addition to above-referenced enacted measures, below we quickly recap the state of minimum wage-, tip-, and overtime-related legislative affairs around the country, focusing primarily on bills that have been sent to the governor, and bills that have passed out of one legislative house.
- Passed Both Houses
- Colorado HB 1254 would prohibit employers from retaining tips left for employers, and make tips the sole property of an employee unless each patron receives written notice that employees share tips.
- Hawaii HB 1191 and SB 789 proposes to raise the state minimum wage to $15.00 per hour by 2023. However, the measures will not reach the governor because a joint committee either could not reconcile (HB 1191) or did not consider (SB 789) the bills.
- Washington HB 1706 seeks to prevent the state labor department from issuing certificates that allow payment of a sub-minimum wage for individuals whose earning capacity is impaired by disability, and to eliminate the state labor department’s authority to issue regulations allowing payment of subminimum wage to individuals whose earning capacity is impaired by age.
- Passed One House
- Colorado HB 1210 would repeal existing prohibitions against local minimum wage ordinances and create a new statute that provides local governments the authority to enact such laws.
- Illinois HB 3405 proposes a new statute that says tips are an employee’s property that employers cannot keep, and requires employers to pay owed tips within 13 days after the end of the pay period in which the employee receives tips. Under the bill, employers can withhold from credit card tips a proportionate amount to account for the credit card processing fee.
- In Nevada, different minimum wage rates apply based on whether an employer offers health care benefits. SB 192 would create certain requirements for such benefits, e.g., covered services and level of coverage.
- Oregon SB 494 would eliminate the ability to pay a subminimum wage to certain individuals with disabilities, beginning July 1, 2023.
Ballot Boxing: The Attorney General of Idaho certified a proposed minimum wage ballot measure for the November 2020 election. The measure proposes to increase, on June 1, the state minimum wage from $7.25 per hour to $8.75 (2021), $9.75 (2022), $10.75 (2023), and $12 (2024), with annual adjustments based on changes to the consumer price index taking effect on January 1, 2025 and each subsequent January 1. For covered tipped employees, the initiative proposes to increase the minimum cash wage from $3.35 to $4.85 (2021), $5.85 (2022), $6.85 (2023), and $8.10 (2024). Beginning January 1, 2025, the maximum tip credit for each year would be $3.90 per hour. Finally, the measure seeks to repeal a preemption provision and allow local minimum wage ordinances.
Local Matters: In a rare situation in California operations, the City Council of South Pasadena elected not to pursue a minimum wage ordinance.
In the San Francisco Bay Area, the City of Emeryville announced its adjusted minimum wage rate, effective July 1, 2019, will be $16.30 per hour. On July 1, one rate will apply to all employers. Previously, there were two rates depending on whether an employer had 56 or more, or 55 or fewer, employees. In San Francisco proper, officials announced the local minimum wage will increase from $15.00 to 15.59 per hour on July 1; for certain government-supported employees, the applicable rate will increase from $13.27 to $13.79 per hour. Meanwhile, the Petaluma City Council received a presentation concerning the ins and outs of developing a minimum wage ordinance.
The New Orleans, Louisiana City Council passed a resolution calling for the state to allow it and other local governments to enact local minimum wage ordinances, which state law currently prohibits.
Finally, a late addition that technically occurred in March: Portland, Maine announced its local minimum wage will increase from $11.00 per hour to $11.11 per hour on July 1, 2019.