Minimum Wage

Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour and has not increased since July 2009. However, some states have a higher minimum wage rate. The FLSA minimum wage standard does not supersede any state or local minimum wage rate. Therefore, if a state or municipality has a minimum wage that is higher than the federal minimum, employers are required to pay workers the higher amount. Several states and localities have announced minimum wage changes for 2018.

One thing to note is that the minimum wage for federal contractors in 2018 is $10.35 per hour. Basically, a federal contractor is someone who works under a federal contract between a department or agency of the Federal Government and any person for the purchase, sale, or use of goods or services.

Pay by State

In a few states, the minimum wage varies from one city to another in the state. For example, the minimum wage for Los Angeles and Chicago is higher than the mandated minimum wage for their state. This variance is due to differences in the cost of living, usually in urban communities. At the present time, 29 states have minimum wages above the federal minimum wage ($7.25/hour), and five states have not set a state minimum wage. In these states, including Alabama, Louisiana, Mississippi, South Carolina, and Tennessee, the federal minimum wage applies unless the employer is exempt according to the Fair Labor Standards Act. Determining an FLSA exemption often requires analysis and consultation with an FLSA lawyer.

Pas de Deux

The interplay between the FLSA and the minimum wages that exceed the federal mandates is an interesting ballet, as the additional wages could pirouette into additional damages and sometimes may be enforced contractually. However, the computation of damages in federal court for a pure minimum wage overtime rather than a FLSA overtime may still be unsettled in certain jurisdictions.

Below is a list of the states increasing their minimum wage and the dates reflecting the changes in the upcoming year. Many states have local differences, so it’s best to verify through an attorney that is knowledgeable about wage and hour laws.

 

State Minimum Wage Changes Effective December 31, 2017

 

NYC:              $13.00 Large Employers (11 or more)

$12.00 Small Employers (10 or less)

State Minimum Wage Changes Effective January 1, 2018

 Alaska:           $9.84 per hour

Arizona:         $10.50 per hour

California:     $11.00 per hour with 26 employees or more

                        $10.50 per hour with fewer than 26 employees

Colorado:       $10.20 per hour

Florida:          $8.25 per hour

Hawaii:          $10.10 per hour

Maine:            $10.00 per hour

Michigan:      $9.25 per hour 

Minnesota:    $9.65 per hour (annual gross revenue of $500,000 or more)

$7.87 per hour (annual gross revenue of less than $500,000)

Missouri:        $7.85 per hour

Montana:       $8.30 per hour

New Jersey:   $8.60 per hour

 

Ohio:           $8.30 per hour (gross receipts of $305,000 or more)

$7.25 per hour (gross receipts under $305,000)

 Rhode Island: $10.10 per hour

South Dakota: $8.85 per hour

Vermont:       $10.50 per hour

Washington:  $11.50 per hour

State Minimum Wage Changes Effective July 1, 2018

D.C.:               $13.25 per hour

Maryland:      $10.10 per hour

Oregon:          $12.00 per hour (Portland metro area)

 

Image link: https://pixabay.com/en/dollar-money-profit-revenue-2947948/

A former Life Time Fitness policy that dictated that uniform costs be subtracted from employees’ first paychecks led to an alleged violation of minimum wage rules, according to the U.S. Department of Labor.

Life Time Fitness’s former policy that specified uniform costs be withdrawn from employees first paychecks has led to numerous allegations of minimum wage violations according to the U.S. Department of Labor.

Life Time Fitness in Chanhassen, Minnesota is required to repay $976,000 in back wages and additional damages to a total of 15,909 employees after continued violations of minimum wage law occurred.

Natalie Bushsaw, the company’s public relations director, confirmed that the former policy for Life Time Fitness dictated that the cost of employees uniforms be deducted from an employees first paycheck when starting employment at the company. This policy resulted in lowering the employees wages to below minimum wage standards for their first pay week. Bushsaw commented that Life Time Fitness currently purchases uniforms for new employees and had ended the former policy over a year ago.

Bushsaw stated that “Life Time Fitness are pleased to reach a resolution that is acceptable to all parties with the Department of Labor.”

Life Time Fitness is also required to provide additional specialised training for all company managers who supervise employees regarding wage and hour and other labor laws to stay complaint with the Fair Labor Standards Act (FLSA).

“The U.S. Department of Labor takes all complaints and concerns very seriously when it comes to the wage rights of workers in the U.S.” Karen Chaiken, regional administrator for Wage and Hour Law commented. “This agreement ensures that the hard-earned dollars of workers will end up where they belong. This comprehensive agreement with Life Time Fitness will enable effective compliance regulations between the company and the FLSA and make sure that all workers take home their rightful wage.”

Life Time Fitness recently ranked third in the club industry’s top 100 Health Clubs just last year. The club industry estimated Life Times revenue stood at a substantial $1.354 billion, which makes ones wonder why it would try to be petty when onboarding new staff.

The Department of Labor estimates that, since July 2009, the cost of living has increased by nearly 12% nationwide.  Nonetheless, the federal minimum wage has remained locked at $7.25 per hour since that time.  Recent attempts to increase that minimum wage were blocked by republican majorities in the legislature.  However, in recognition of the increased cost of living, many states, counties, and cities increased the required minimum wage.  As of July 1, 2017, employers in some areas of the country will be required to abide by new minimum wage requirements.

Counties, cities, and states with new minimum wage requirements:

• Chicago – $11 per hour;
• Cook County, IL – $10 per hour;
• Flagstaff, AZ – $10.50 per hour;
• Los Angeles County – $12 per hour ($10.50 for employers with 25 or less employees);
• Maryland – $9.25 per hour;
• Montgomery County, MD – $11.50 per hour;
• Oregon – $10.25 per hour ($10 for rural counties);
• Pasadena, CA – $12 for larger employers ($10.50 for smaller employers);
• Portland, OR – $11.25 per hour for metropolitan area;
• San Francisco – $14 per hour;
• San Jose – $12 per hour; and
• Washington, DC – $12.50 per hour.

 

Employees in these areas should be aware of these increases and understand that, even if they are paid on a salary basis, when their salary is reduced to an hourly rate, the hourly rate should still meet the new minimum wage requirements identified above.

The fate of the Obama administration’s proposal to increase the salary threshold for overtime exemptions to the Fair Labor Standards Act (FLSA) remains uncertain.  The rule would have increased the minimum salary of an employee classified as exempt from $26,661 to $47,476.  However, the rule was blocked last year by a nationwide injunction.  The injunction, which was issued by a federal judge in Texas, was subsequently appealed by the Department of Labor and remains undecided.  However, after President Trump tapped Alexander Acosta as the new Secretary of Labor, the Department’s position on Obama’s overtime rule may be headed in a different direction.

Department of Labor submitted a formal Request for Information (RFI) regarding the overtime rule

On June 27, 2017, it was announced that the Department of Labor Wage and Hour Division submitted a formal Request for Information (RFI) regarding Obama’s overtime rule to the White House’s Office of Management and Budget.  It is reported that the RFI will seek information from employers who adjusted their wages in anticipation of the rule’s passage, in particular, any economic burden those adjustments may have created. The RFI will be published in the Federal Register, which will afford employers the opportunity supply comments regarding the effects of the proposed increase to the salary threshold.

Change in Opinion from the White House

Three days after the RFI was submitted, the Department filed a reply brief in opposition of the injunction that, in part, maintained the appeal initiated by the Department under the previous administration.  However, the reply brief did not advocate for the proposed salary increase.  The Department commented that it “has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary should be.”

The change in opinion about the appropriate minimum salary comes as no surprise.  Since President Trump has taken office, the Department of Labor has ousted most pro-labor officials (pro-employees) and replaced them with pro-business officials (pro-employers).  The change has been far from subtle and has been reflected in the most recent actions of the Department.

Although the current Department did not advocate for the originally proposed salary increase, the appeal of the injunctive order that blocked the rule was maintained on broader grounds.  The Department argued that the reasoning and legal conclusions used by the federal district judge (Judge Amos L. Mazzant) to enjoin the rule were incorrect.  Specifically, the injunctive order concluded that the Department had no authority to set any minimum salary for a FLSA exemption.  The Department disagreed with this legal conclusion and maintained the appeal of the injunction.  If Judge Mazzant’s unprecedented reasoning were to stand, it would also invalidate the current version of the overtime rule that requires a salary of at least $26,661 in order for an employer to rely on an exemption.  The Department’s authority to adjust the minimum salary requirement has been in place since 1940 and has never been challenged by a district court judge.