Maryland appears poised to increase its minimum wage to $15 per hour over the next few years, joining California, Illinois, Massachusetts, New Jersey, New York, and various local jurisdictions, including its own Montgomery County and neighboring District of Columbia.

On March 14, 2019, the Maryland Senate approved a bill (SB 280) that would increase the state-wide minimum wage for companies with at least 14 employees from $10.10 to $15 by January 1, 2025, starting with an increase to $11 on January 1, 2020. Smaller business would have until January 1, 2028 to reach $15. Although this differs slightly from the version (HB 166) that the Maryland House approved on March 1, 2019, which would require all business to reach $15 by 2025, it seems likely that the two chambers will work out their differences.

Both bills contain a provision allowing the Board of Public Works to temporarily suspend an increase on a one-time basis if it determines as of October 1 2020, and each year thereafter until October 1, 2024, that the seasonally adjusted total employment for the most recent six months is negative as compared with the immediately preceding six month period. If it does so, the remaining increases will be delayed by one year.

Both bills also require future annual increases of 4% in state funding of reimbursements to providers of nursing home, medical day care, private duty nursing, personal care and Home-and-Community-Based services provided through the Community First Choice Program to help them pay the higher minimum wage, although these do not necessarily make up the full cost of the required minimum wage increases. However, the Senate bill provides slightly higher annual increases than the House bill for reimbursements of health and human services organizations such as those that that serve people with disabilities or offer addiction treatment.

Although neither version changes the existing tip credit of $3.13, the Senate bill would require the Commissioner of Labor and Industry to adopt regulations requiring restaurant employers using the tip credit to provide a written or electronic wage statement for each pay period that shows the effective hourly tip rate as derived from cash wages plus all reported tips.

Finally, both bills lower the age at which employer can pay a so-called “training” wage of 85% of the state minimum wage from under age 20 to under age 18.

The House and Senate still have to work out their differences before sending the bill to Governor Hogan. However, even if he vetoes the bill, he would face a likely override because both the House and Senate passed their bills by veto-proof margins.

In the meantime, the minimum wage in Montgomery County is already set to increase to $13 on July 1, 2019, and to $15 by July 1, 2021. And the minimum wage is already at $11.50 in Prince George’s County.

Illinois Governor Pritzger has signed a bill raising the Illinois minimum wage to $15 per hour by 2025, making Illinois the first Midwestern state to hike the minimum wage to that level. States on both coasts, including California, Massachusetts, and New Jersey, have already moved to enact such a hike.

Currently, the minimum wage in Illinois is $8.25 per hour. Under the new legislation, the minimum wage will increase to $9.25 by January 1, 2020 and to $10 on July 1, 2020. The minimum wage will then increase by $1 per hour each January 1 until it reaches $15 per hour in 2025.

The business community opposed this across the board increase, arguing that there should be a longer phase-in and a regional approach with a lower minimum wage outside the city of Chicago. Payroll tax credits provided for in the new legislation are supposed to ease the burden for the business community.

The Illinois State Legislature expanded the Illinois Wage Payment and Collection Act to include a new section (820 Illinois Compiled Statues 115/9.5) (“Amendment”) that now requires every Illinois employer to reimburse an employee for all “necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.” The Amendment became effective January 1, 2019.

“Necessary expenditures” include any reasonable expenses or losses that the employee incurs that primarily benefit the employer and are a result of the employee discharging the duties of his or her position (e.g., required travel to an off-premises work site or required usage of a personal data plan, but not an ordinary commuting expense). Importantly, the Amendment allows employers to establish written guidelines for “necessary expenditures,” and an employer is not required to reimburse any expenses exceeding those guidelines. For example, employers that reimburse for an employee’s data or Internet charges for a personal device may establish a certain limit on the amount that is reimbursable.

Read the full Advisory online.

In August, Illinois Governor Pat Quinn signed into law HB 5622, amending the Illinois Wage Payment and Collection Act (IWPCA), which now recognizes for the first time payment of wages by payroll card. The law goes into effect on January 1, 2015. While the law provides a new option for Illinois employers, they must be careful to comply with the conditions under which payroll cards may be used.

Under the current Illinois law, employers are required to pay employees via check or direct deposit. The current law is silent as to whether payroll cards, which operate like debit cards, can be used to pay wages. Some businesses prefer using payroll cards because, by simply loading the card electronically, they can save the costs involved in preparing physical checks. Employees, however, have been adverse to payroll cards because of fees that have been deducted from their wages. The Illinois Attorney General’s Office found that these fees were both excessive and unfair.

Under the new law, payroll cards will be a recognized method of wage payments, but only if the following criteria are met:

• The employee must voluntarily agree to the use of a payroll card as the method the employee chooses to receive his or her wages and/or final compensation. It is not voluntary if the employee is given to understand that it is a condition for hire or his or her present working conditions or continuance of his or her employment would be adversely affected by non-acceptance. An employer cannot mandate the use of a payroll card.

• If an employee voluntarily chooses to accept the use of a payroll card for the payment of wages and/or final compensation, the employer must disclose in writing to the employee all fees, penalties, and costs associated with the use of the payroll card. The employee must be able to deposit and/or obtain the full monetary value on the payroll card without discount.

• If the employee chooses the payroll card as a method of payment, the employer is required to provide an itemized statement of all hours worked, rate of pay, and all lawful deductions made from the wages and/or final compensation for each pay period.

• An employee can revoke his or her authorization of the payroll card as a method of payment at any time, and the employer is obligated to provide to the employee another alternative method for the payment of wages and/or final compensation.

• An employer is not permitted to offer employees only the choice between two voluntary methods of payment. Because payment by either payroll card or direct deposit must be voluntary, an employer offering either or both of these payment methods must also provide an additional choice of payment by cash or check, in accordance with the IWPCA.

Despite the clear financial and practical benefits of using payroll cards for wages, employers must strictly comply with the specific requirements under the law which takes effect on January 1, 2015. As a new law, it is likely that the Illinois Department of Labor and Office of Attorney General will be watching closely.