State Wage and Hour Laws

In recent years, a growing number of states and localities have enacted unique minimum wage laws and ordinances entitling employees to be paid more – in some cases, substantially more – than the federal minimum wage, which has stood at $7.25 for nearly a decade.

As these minimum wages become more particularized, multi-jurisdictional employers face an increasing challenge to maintain compliance.

Below is an overview of notable increases slated to take effect on January 1, 2019, unless otherwise noted.

Please note that, at this late date, the 2019 minimum wage remains the subject of debate in several jurisdictions, including Michigan, where the modification of a bill in December 2018 has stirred controversy as it awaits executive signature.

Minimum Wage Hikes Applicable in the States and Territories

   

Current

New

State

Categories
(if any)
Minimum Wage Tipped Minimum Wage Minimum Wage

Tipped Minimum Wage

Alaska $9.84 $9.89
Arizona $10.50 $7.50 $11.00 $8.00
Arkansas $8.50 $9.25
California 26 or more employees $11.00 $12.00
25 or fewer employees $10.50 $11.00
Colorado $10.20 $7.18 $11.10 $8.08
Delaware $8.25 $8.75
District of Columbia $13.25 $14.00
Florida $8.25 $5.23 $8.46 $5.44
Maine $10.00 $5.00 $11.00 $5.50
Massachusetts $11.00 $3.75 $12.00 $4.35
Minnesota Large employer (annual gross revenue of $500,000 or more) $9.65 $9.86
Large employer 90-day training wage $7.87 $8.04
Large employer youth wage (under 18 years of age) $7.87 $8.04
Small employer (annual gross revenue of less than $500,000) $7.87 $8.04
Missouri $7.85 $3.93 $8.60 $4.30
Montana $8.30 $8.50
New Jersey $8.60 $8.85
New York (effective December 31, 2018)* $10.40 $7.85 (when tips are $2.55 or more)

$8.85 (when tips are at least $1.55, but less than $2.55)

11.10 $8.40 (when tips are $2.70 or more)

$9.45 (when tips are at least $1.65 but less than $2.70)

Ohio** Employers with gross revenues equal to or exceeding $314,000 (previously $305,000) $8.30 $4.15 $8.55 $4.30
Employers with gross revenues less than $314,000 (previously $305,000) $4.15 $4.30
Rhode Island $10.10 $10.50
South Dakota $8.85 $4.43 $9.10 $4.55
Vermont $10.50 $5.25 $10.78 $5.39
Washington $11.50 $11.50 $12.00 $12.00

* The minimum wages identified herein with respect to New York State and its localities are the general minimum wages. Different rules apply to certain categories of employees within certain regions and industries, including hospitality and building services.   Employers in New York State should take extra care to consult the state or local rules that may apply within their industries.

** Employees under the age of 16 may be paid no less than the federal minimum wage.

Localized Minimum Wage Hikes

Current New
Locality Categories
(if any)
Minimum Wage Tipped Minimum Wage Minimum Wage

Tipped Minimum Wage

Arizona          
Flagstaff, AZ $11.00 $12.00
California          
Belmont, CA $12.50 $13.50
Cupertino, CA $13.50 $15.00  
El Cerrito, CA $13.60 $15.00  
Los Altos, CA $13.50 $15.00  
Mountain View, CA $15.00 $15.65  
Oakland, CA $13.23 $13.80  
Palo Alto, CA $13.50 $15.00  
Redwood City, CA N/A $13.50  
Richmond, CA+ Without specified medical benefits $13.41 $15.00  
With specified medical benefits $11.91 $13.50  
San Diego, CA $11.50 $12.00  
San Jose, CA $13.50 $15.00  
San Mateo, CA 501(c)(3) non-profit $12.00 $13.50  
Other businesses $13.50 $15.00  
Santa Clara, CA $13.00 $15.00  
Sunnyvale, CA $15.00 $15.65  
New Mexico          
Albuquerque, NM++ Specified benefits not provided $8.95 $5.35 $9.20 $5.50
Specified benefits provided $7.95 $5.35 $8.20 $5.50
Bernalillo County, NM $8.85 $9.05
Las Cruces, NM $9.20 $3.68 $10.10 $4.04
New York

(effective December 31, 2018)

NYC more than 10 employees $13.00 $9.80 (when tips are $3.20 or more)

$11.05 (when tips are at least $1.95, but less than $3.20)

$15.00 $11.35 (when tips are $3.65 or more)

$12.75 (when tips are at least $2.25, but less than $3.65)

NYC 10 or fewer employees $12.00 $9.05 (when tips are $2.95 or more)

$10.20 (when tips are at least $1.80, but less than $2.95)

$13.50 $10.30 (when tips are $3.30 or more)

$11.45 (when tips are at least $2.05, but less than $3.30)

Nassau, Suffolk, & Westchester Counties, NY $11.00 $8.30 (when tips are more than $2.70)

$9.35 (when tips are at least $1.65, but less than $2.70)

$12.00 $9.05 (when tips are more than $2.95)

$10.20 (when tips are at least $1.80, but less than $2.95)

Washington          
Seattle, WA+++ Small employer (500 or fewer employees) $14.00

(or $11.50, with difference made up in tips or benefits)

$15.00

(or $12.00, with difference made up in tips or benefits)

 
Large employer (501 or more employees) – with medical benefits $15.45

(or $15.00, with difference made up in benefits)

$16.00  
SeaTac, WA Hospitality and transportation employees $15.64 $16.09  
Tacoma, WA $12.00 $12.35  

+ An employer may pay employees $1.50 less than the minimum hourly wage provided that the employer pays at least $1.50 per hour, per employee, towards an employee medical benefits plan that allows employees to receive employer-compensated care from a licensed physician.

++ Employers may offer a lower minimum wage if they provide the employee with healthcare and/or childcare benefits equal to or greater than an annualized cost of $2,500.00.

+++ In 2019, the two-tier system in which employees that offer certain benefits may offer a lower minimum wage will no longer apply to large employers.

On December 4, 2018, New York City’s Taxi and Limousine Commission (“TLC”) voted to require ride-hailing companies operating in New York City to compensate its drivers who are treated as independent contractors, and not employees, on a per-minute and –mile payment formula, which will result in a $17.22 per hour wage floor.

This new rule is scheduled to take effect on December 31, 2018.

This new minimum wage for independent contractor drivers who operate vehicles on behalf of ride-hailing companies – including Uber, Lyft, Via, and Juno – will surpass the new $15 minimum wage for many New York City-based employees, which will also take effect on December 31, 2018.

This appears to be the first time a government entity has imposed wage rules on privately owned ride-hailing companies.

The main reason for this new requirement is that independent contractor drivers are often required to cover their own expenses that affects their hour wages.

Prior to this rule, ride-hailing app-based drivers were reportedly paid an average of $11.90 per hour (after deducting expenses), which resulted in drivers complaining of severe financial hardship. According to TLC Chair Meera Joshi, this rule would increase driver earnings by an average of $10,000 a year. Joshi also stated that traditional yellow taxicab drivers already earn on average at least $17.22 per hour pursuant to separate regulations.

The wage requirement is expected to have far-reaching repercussions, including:

  • Fare hikes by Uber that may result in customers using New York City yellow taxicabs and Boro Taxis, particularly given the rise of apps that allow riders to hail taxis from their phones, similar to Uber, Lyft, Via, and Juno.
  • Passage of similar minimum wage protections in other locales with a large population of ride-hailing drivers, such as San Francisco.
  • To avoid paying the higher wage prescribed by the rule, Uber, Lyft, Via, and Juno may consider reclassifying their for-hire vehicle drivers as employees, as the new minimum wage rule applies only to drivers who are independent contractors. However, it is anticipated that these companies will conclude that the others costs of employing drivers, such as providing employee benefits, would outweigh the costs of paying drivers the newly instituted minimum wage.

Effective December 31, 2018, New York State’s salary basis threshold for exempt executive and administrative employees[1] will increase again, as a part of amendments to the minimum wage orders put in place in 2016.[2] Employers must increase the salaries of employees classified as exempt under the executive and administrative exemptions by the end of the year to maintain these exemptions.

The increases to New York’s salary basis threshold for the executive and administrative exemptions will take effect as follows:

Employers in New York City 

  • Large employers (11 or more employees)
    • $1,125.00 per week ($58,500 annually) on and after 12/31/18
  • Small employers (10 or fewer employees)
    • $1,012.50 per week ($52,650 annually) on and after 12/31/18
    • $1,125.00 per week ($58,500 annually) on and after 12/31/19

Employers in Nassau, Suffolk, and Westchester Counties

  • $900.00 per week ($46,800 annually) on and after 12/31/18
  • $975.00 per week ($50,700 annually) on and after 12/31/19
  • $1,050.00 per week ($54,600 annually) on and after 12/31/20
  • $1,125.00 per week ($58,500 annually) on and after 12/31/21

Employers Outside of New York City and Nassau, Suffolk, and Westchester Counties

  • $832.00 per week ($43,264  annually) on and after 12/31/18
  • $885.00 per week ($46,020 annually) on and after 12/31/19
  • $937.50 per week ($48,750 annually) on and after 12/31/20

What New York Employers Should Do Now

  • Review executive and administrative exempt positions in New York State with salaries below the stated thresholds to determine whether (a) the employee’s salary should be increased or (b) the employee’s position should be reclassified as non-exempt.
    • For executive and administrative employees remaining exempt, increase their salaries to the new threshold based on their primary work location as of the December 31, 2018, effective date.
    • For employees reclassified to non-exempt, ensure that all of their work time is accurately recorded as of December 31, 2018.
  • Consider establishing procedures to track and update the weekly salaries for employees who work in different locations within New York State.
  • Conduct a regular review of primary duties tests for the executive, administrative, and professional exemptions because meeting the salary threshold alone does not confer exempt status upon employees.

Download a PDF of this Advisory.

_______________

[1] New York law does not contain a salary threshold for employees who meet the duties requirements of the professional exemption.

[2] See Epstein Becker Green’s prior Act Now Advisory titled “New York State Department of Labor Implements New Salary Basis Thresholds for Exempt Employees.”

Joining several other federal appellate courts including the Fourth and Ninth Circuits , on October 22, 2018 the Seventh Circuit concluded in Herrington v. Waterstone Mortgage Corporation, No. 17-3609 (7th Cir. Oct. 22, 2018) that the arbitrability of a class claim is one for the court to decide, not the arbitrator. In so doing, the court placed in jeopardy a $10 million arbitration award in a wage-hour case.

Herrington originally filed suit against Waterstone, alleging that Waterstone failed to pay her and other employees minimum wages and overtime pay in violation of  the FLSA. Waterstone moved to enforce an agreement to arbitrate that stated the “arbitration may not be joined with . . . any claims by any person not party to this Agreement.” Despite that language, the district court sent the parties to arbitration, instructing the arbitrator to allow other employees to join the case.

In a collective arbitration , the arbitrator awarded more than $10 million in damages.

Following the Supreme Court’s decision in Epic Sys. Corp. v. Lewis, ___ U.S. ___, 138 S. Ct. 1612 (2018), the Seventh Circuit concluded that the waiver of class claims was enforceable. One question not addressed by Epic, however, was whether the court or the arbitrator should make this determination.

Because the availability of a class or collective action is a “gateway matter,” the Seventh Circuit concluded it is a question of arbitrability for the court to decide, not the arbitrator. The fundamental question was whether the employees had agreed to arbitrate — and whether Waterstone also agreed. The Court noted  that in agreeing to arbitration, an employer essentially waives appellate review—which could result in a large arbitration award with little or no opportunity for review.

In view of Herrington, two issues now seem settled in the Seventh and several other circuits. First, agreements mandating individual arbitration of wage-hour claims are enforceable. Second, it is for the court to interpret the arbitration agreement to determine whether it permits class claims, not the arbitrator .

The question whether an individual may be held liable for alleged wage-hour violations is one that occasionally arises in class action litigation – and, for obvious reasons, it is one that is particularly important to individuals who own entities or who are responsible for overseeing wage-hour compliance.

In Atempa v. Pedrazzani, the California Court of Appeal held that persons responsible for overtime and/or minimum wage violations in fact can be held personally liable for civil penalties, regardless of whether they were the employer or the employer is a limited liability entity. And the Court concluded that private plaintiffs may pursue and collect these penalties for “aggrieved employees” on behalf of the state of California through the Private Attorneys’ General Act (“PAGA”).

Defendant Paolo Pedrazzani was the owner, president, director, and secretary of Pama, Inc.. Two former employees filed a variety of wage-hour claims against Pedrazzani and Pama in July 2013, including claims for civil penalties on the basis of unpaid minimum wages (Cal. Lab. Code 1197.1) and unpaid overtime (Cal. Lab. Code 558). Following a judgment in favor of the employees that Pedrazzani and Pama were jointly and severally liable for the civil penalties, Pedrazzani appealed and Pama filed for bankruptcy.

The Court of Appeal held that Pedrazzani was personally liable for the civil penalties because “the Legislature has decided that both the employer and any ‘other person’ who causes a violation of the overtime pay or minimum wage laws are subject to specified civil penalties.” (italics original). And because neither statute mentions corporate structure, corporate form, or suggests that the same has any bearing on liability, it concluded that “the business structure of the employer is irrelevant.”

The Court also held that personal liability can attach even if a person has no formal relationship with the corporate employer (e.g., employee, manager, officer). Rather, for overtime violations, it is sufficient that that the “other person” was “acting on behalf of the employer”; and for minimum wage violations, it is sufficient that the “other person” “pays or causes to be paid less than the prescribed minimum wage.” Summarizing, the Court held that the statutes at issue “provide for an award of civil penalties against the person who committed the underlying statutory violations.”

After establishing the basis for Pedrazzani’s personal liability, the Court went onto explain that the former employees had standing to seek and collect the penalties under PAGA, and that such penalties are subject to the standard division between the aggrieved employees and the State (25% to the former; 75% to the latter).

Unfortunately, the Court did not address the standard or evidentiary showing needed to establish that someone is an “other person” who can be held personally liable for the civil penalties.

On August 13, 2018, in Ehret v. WinCo Foods, the California Court of Appeal held that a provision in a collective bargaining agreement (“CBA”) regarding employees’ meal periods during shifts lasting between five and six hours effectively waived employees’ rights under California Labor Code section 512. In so holding, the Court held that the waiver in question passed the “clear and unmistakable” standard used to determine whether a provision in a CBA is intended to waive a statutorily protected right. Although WinCo argued that the “clear and unmistakable” standard only applies to waivers of “non-negotiable” rights, not “negotiable” rights like a meal break for shifts between five and six hours, the Court avoided that question and found that, even assuming that the standard applies to waivers of any statutory right, negotiable or non-negotiable, the waiver in the WinCo CBA was “clear and unmistakable.”

California Labor Code section 512(a) states, in part: “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.” (Emphasis added.)

The WinCo CBA in question provided: “Employees who work shifts of more than 5 hours will be provided a meal period of at least 30 minutes, except that when a work period of not more than 6 hours will complete a day[‘]s work, a meal period is not required…. It is WinCo Foods policy not to mutually agree with employees to waive their lunch period.” (Emphasis in original.)

The Court held that the agreement effectively waived employees’ meal periods because it explicitly stated that no meal period is required for shifts of under six hours. Because that provision was “flatly irreconcilable” with Labor Code section 512, the Court held that it was a “clear and unmistakable” waiver of that statutory provision. Importantly, the Court distinguished cases that concern arbitration clauses in CBAs, which have held that statutory rights must be clearly stated in the agreement before they can be waived. The Court also rejected the employees’ contention that, under Choate v. Celite Corporation, 215 Cal. App. 4th 1460 (2013), to be valid, the waiver must either cite to the applicable statute explicitly or “specify the content of the statutory right.” Rather, the Court interpreted Choate to hold that the waiver need only “mention” the statutory protection.

The Court found of no import that the CBA also stated: “It is WinCo Foods policy to not mutually agree with employees to waive their lunch periods.” The Court held that that section of the agreement referred to waivers by individual employees, and had no effect on the collective waiver in question. The Court also flatly rejected the employees’ argument that a waiver must explicitly use the words “waiver,” “waived” or “waiving.”

This decision is welcome news to employers that have similar provisions in their CBAs. However, it is not binding upon other Courts of Appeal, and should the California Supreme Court decide to review the issue, it may well reach a different conclusion.

On July 18, 2018, the Ninth Circuit issued a published opinion in Rodriguez v. Taco Bell Corp., approving Taco Bell’s on-premises meal periods for employees who choose to purchase discounted food.

Like many food services employers, Taco Bell offers discounts on its food to its employees. And it requires that employees consume such food on premises.

In Rodriguez, employees contended that requiring employees to consume discounted meals on premises results in a meal period or unpaid wage violation, arguing that employees must be relieved of all duty and must be permitted to leave the premises during a statutory meal period. The Ninth Circuit rejected those arguments.

As the Court explained, Taco Bell employees were not required to purchase meals – “[t]he purchase of the meal is entirely voluntary.” And the “requirement that [a discounted] meal be eaten on the premises was to ensure that the benefit was utilized only by employees and that the food did not leave the premises to be given to friends and family.” That is, “employees had to consume the discounted food in the restaurant to prevent theft.” As the Court noted, Taco Bell “employees are free to purchase meals at full price and eat them wherever the employees wish.”

The Ninth Circuit concluded that Taco Bell satisfied its meal period and wage obligations by relieving employees of all duties during their meal periods and exercising no control over how or where they spent their meal periods. That is, “employees were free to use the meal break time as they wished, and that a requirement to remain on the premises was imposed only if an employee voluntarily chose to purchase a discounted meal.” And there was no evidence that Taco Bell “required or pressured [employees] to conduct work activities while on premises during the meal period.” The policy actually prohibited that, requiring employees who purchased discounted meals to eat them away from the food production and cash register area.

The Ninth Circuit’s Rodriguez opinion confirms that employers that relieve employees of all duty during meal periods do not violate California law merely by imposing certain requirements to benefits (e.g., discounted food) that an employee may voluntarily accept.

In our June 28, 2018 post on District of Columbia voters approving Initiative 77, which would incrementally increase the minimum cash wage for tipped workers to $15.00 per hour by July 1, 2025, and effectively eliminate the tip credit staring July 1, 2026, we noted the possibility of action by the D.C. Council to amend or overturn it. Consistent with the opposition to the initiative previously expressed by a majority of the Council, on July 9, 2018, a seven-member majority of the Council introduced a bill (Tipped Wage Workers Fairness Amendment Act of 2018) to repeal Initiative 77. As the Council is now on a two-month summer recess, no further formal action will occur until the fall. Furthermore, considerable publicly expressed opposition to repealing a voter-approved initiative may lead to a compromise that extends the phase-in period or otherwise modifies the terms of the initiative, rather than a complete repeal. Meanwhile, two federal Congressmen have sponsored a budget rider barring spending funds to implement the initiative, although such efforts often fail. In short, it appears the future effectiveness of the initiative will remain in doubt for some time.

Voters in the District of Columbia on June 19, 2018 approved an initiative (Initiative 77) that would incrementally increase the minimum cash wage for tipped workers to $15.00 per hour by July 1, 2025, and starting July 1, 2026 to the same amount as the then-minimum wage for all other workers, effectively eliminating the tip credit. If the initiative takes effect, the District would join seven states that do not have a separate minimum wage for tipped workers, i.e., Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington.

The D.C. Council previously enacted legislation raising the minimum cash wage for tipped workers to $3.33 on July 1, 2017; $3.89 on July 1, 2018; $4.45 on July 1, 2019; and $5.00 on July 1, 2020, consistent with increases in the general minimum wage to $12.50, $13.25, $14.00, and $15.00 that will take effect on the same dates. Each year thereafter, the minimum wage will increase in proportion to the annual average increase in the CPI-U for the Washington area. D.C. Code §32-10003.

The voter initiative would change the minimum cash wage for tipped workers to $4.50 on July 1, 2018; $6.00 on July 1, 2019; $7.50 on July 1, 2020; $9.00 on July 1, 2021; $10.50 on July 1, 2022; $12.00 on July 1, 2023; $13.50 on July 1, 2024; $15.00 on July 1, 2025; and to whatever the minimum wage then is for other workers on July 1, 2026. These provisions will not apply to employees of the District of Columbia, or employees performing services under contracts with the District of Columbia.

It is not yet clear whether the initiative will become law, at least it its present form. It passed by only 55 percent in an election in which turnout was only 16.7 percent. Before it becomes law, it must clear review by the D.C. Council, which could amend or overturn it. So far, the measure has faced public opposition from Mayor Muriel Bowser and a majority (eight) of the D.C. Council, as well as many restaurant owners, wait staff and bartenders, who fear it will increase direct labor costs, force staffing reductions, and significantly reduce the amount of tips received. Both the Restaurant Association of Metropolitan Washington and the separate “Save our Tips” campaign already have stated that they will take their fight to the Council. If the Council approves the measure, it must then clear a thirty-legislative-day review period by the Congress. At best, the initiative is not likely to take effect until sometime in the fall of 2018.

In the meantime, employers currently taking the tip credit should note the increase in the minimum for tipped employees to $3.89 (and for all other employees to $13.25) taking effect on July 1, 2018. Notably, supporters of the initiative have stated that they will not seek retroactive effect of the initiative’s July 1, 2018 increase to $4.50.

[Read the update—July 16, 2018—“Proposed D.C. Council Legislation Puts Voter-Approved Elimination of Tip Credit Into Question.”]

A number of states and localities are about to implement mid-year hikes in the minimum wage. Below is a summary of the minimum wage increases (and related tipped minimum wage requirements, where applicable) that go into effect on July 1, 2018.

Current New
State Special Categories Minimum Wage Tipped Minimum Wage Minimum Wage Tipped Minimum Wage
Maryland $9.25 $3.63 $10.10 N/A
Nevada Employees with qualified

health benefits

$7.25 N/A
Employees without

health benefits

$8.25 N/A
Oregon General $10.25 $10.75
Urban (Portland Metro Urban Growth Area) $11.25 $12.00
Rural (Nonurban) $10.00 $10.50
Washington, D.C. $12.50 $3.33 $13.25 $3.89

 

Current New
Locality Categories Minimum Wage Tipped Minimum Wage Minimum Wage Tipped Minimum Wage
CA          
Belmont, CA N/A $12.50
Emeryville, CA 56 or more employees $15.20 $15.69
55 or fewer employees $14.00 $15.00
Los Angeles, CA (City) 26 or more employees $12.00 $13.25  
25 or fewer employees $10.50 $12.00  
Los Angeles, CA (County) Unincorporated areas of LA County, 26 or more employees $12.00 $13.25  
Unincorporated areas of LA County, 25 or fewer employees $10.50 $12.00  
Malibu, CA 26 or more employees $12.00 $13.25  
25 or fewer employees $10.50 $12.00  
Milpitas, CA $12.00 $13.50  
Pasadena, CA 26 or more employees $12.00 $13.25  
25 or fewer employees $10.50 $12.00  
San Francisco, CA Generally $14.00 $15.00  
Government-supported employees $12.87 $13.27  
San Leandro, CA $12.00 $13.00  
Santa Monica, CA 26 or more employees $12.00 $13.25  
25 or fewer employees $10.50 $12.00  
IL  
Chicago, IL $11.00 $6.10 $12.00 $6.25
Cook County, IL $10.00 $4.95 $11.00 $5.10
ME          
Portland, ME $10.68 $5.00 $10.90 N/A
MD
Montgomery County, MD 51 or more employees $11.50 $4.00 $12.25 N/A
11-50 employees, and provides certain home health services or is tax-exempt under 501(c)(3) $11.50 $4.00 $12.00 N/A
10 or fewer employees $11.50 $4.00 $12.00 N/A
MN
Minneapolis, MN 101 or more employees $10.00 $11.25
100 or fewer employees N/A N/A

This post was written with assistance from John W. Milani, a 2018 Summer Associate at Epstein Becker Green.