Across the country, advocates are seeking to raise the minimum wage to $15 per hour. Frustrated by political roadblocks to gain minimum wage increases on a federal level, the “Fight for $15” campaign and other interest groups, have met with success increasing the minimum wage in California and New York, as well as major cities including Seattle, Portland and Chicago. Since 2014, 27 states and the District of Columbia have increased the minimum wage, and 34 municipalities have increased the minimum wage. In an effort to block cities and counties from adopting minimum wage increases, some state legislatures are attempting to pre-empt a municipalities’ authority to enact minimum wage increases, and courts are weighing in on the lawfulness of these preemptive state efforts.
While this political battle will surely continue for some time, employers need to remain aware of the current and applicable minimum wage for workers, especially those employers who have workers who perform work in multiple locations, such as home health care workers. As a general rule, when there are multiple laws covering an employment term, like minimum wage, the employer’s obligation is to follow all the laws, and in the event of a conflict between the laws, follow the one that is most beneficial to employees. It is also important to note that some laws set different minimum wages based on the size of the employer or have exemptions for certain categories of employees. Additionally, some public agencies establish living wage rates for government contractors that are different than minimum wage rates set for the jurisdiction. Compliance requires a reading of the local minimum wage ordinances and contracts with public agencies to understand these nuances in coverage.
Let’s consider an example. An employer in San Francisco is covered by the following minimum wage laws:
Despite the federal and California minimum wage being lower, a San Francisco employer must pay at least $13 per hour to an employee who is not a “government supported” employee who works more than two hours in the city limits a week. A review of the city ordinance reveals the definition of an “employee” as someone who performs at least two hours of work in the city and includes a definition of “government supported employee.” If the employee works in multiple jurisdictions, the employer needs to either pay the highest wage rate, or track hours worked in each jurisdiction separately on time cards and pay stubs. Multiple wage rates complicate the calculation of the “regular rate” for overtime purposes, requiring a separate calculation based on the hours worked in each workweek.
Employers have to also be aware that changes to the minimum wage rate affect other employment law obligations in certain states. For example, in California, the minimum wage is included in the formula for the overtime exempt salary minimum and split-shift differentials. Because of these ever-changing obligations, employers should do a calendar review of compensation rates to make sure that changes to the minimum wage are reflected appropriately in employees’ rates of pay.