On Wednesday April 15th, Democratic legislators from New York City announced a new bill that would raise the state minimum wage to $15 per hour for employees of businesses with annual gross revenues of $50 million or more. The bill also would apply to chain stores and restaurants with 11 or more locations. Manufacturers would be exempt.
Sponsors of the bill say that it would not impose the new minimum wage on small and medium-sized businesses and argue that national chains like McDonald’s and Wal-Mart earn billions in profits each year and can afford to pay their workers a “fair wage.” Proponents of the bill argue that paying the state’s poorest workers a living wage would ease the burden this population places on taxpayers because of their use of state and federal benefits like Medicaid and food stamps.
Opponents of the bill claim that small and medium-sized businesses will be impacted because they will be forced to compete for employees with the large chains paying a higher wage. The law also potentially could have a negative impact on franchise operations, which are typically family-owned and do not earn the same profit margins as large corporations. Opponents also argue that there is no rationale behind the argument that large businesses should pay more than small businesses for employees who do the same work.
If passed, the law likely would create considerable litigation. The bill contains many apparently vague terms, particularly regarding what employers the law would cover. Moreover, the plaintiffs’ bar would likely seek out employers who violate any aspect of the law, as well as any who attempt to misclassify employees to avoid having to pay the higher wage. The law also could create confusion and litigation around how tipped restaurant workers are paid, since some restaurant chains would be covered by the current version of the bill. Finally, a challenge to the constitutionality of the law would not be out of the question.
The bill likely will face an uphill battle in Albany. Recently, Democratic Governor Andrew Cuomo and state legislators quickly rejected Mayor Bill de Blasio’s proposal to let New York City set its own minimum wage.
Though the bill will not face an easy road to becoming law, employers should be aware of the push that lawmakers and organizers around the state are making to increase low-wage workers’ incomes and how a potential change to the minimum wage law may impact business.