Pennsylvania Governor Tom Wolf announced earlier this month that he had directed labor regulators to devise a plan to clarify the duties test in the state’s overtime regulations and raise the salary threshold at which employees become exempt from overtime, the Pittsburgh Post-Gazette’s Daniel Moore reported:
The proposal, which expands overtime in phases over three years, would raise the amount that certain salaried employees can earn and still qualify for overtime pay. Beginning Jan. 1, 2020, the state would raise the salary limit to $31,720, or $610 per week. The threshold will increase to $39,832 on Jan. 1, 2021, followed by $47,892 in 2022, which the Wolf administration estimates will extend overtime eligibility to up to 460,000 workers.
But the proposal’s future could hinge on the outcome of the gubernatorial election, as Gov. Wolf faces multiple Republican challengers in a re-election battle this year. The governor has unsuccessfully pressed the legislature to pass an increase in the minimum wage, which sits at $7.25 an hour, the lowest allowed by federal standards.
The Pennsylvania Department of Labor & Industry is expected to publish an initial proposal for public comments in March. Wolf’s proposal is similar to the new overtime rule the Obama administration attempted to enact in 2016, which was set to abruptly raise the overtime salary threshold from $23,660 to $47,476 until a federal judge invalidated it last August.
In 2016, a year that saw a wave of ballot initiatives raising the minimum wage in various states and localities, the city of Miami Beach, Florida, passed an ordinance to raise the local pay floor to $10.31 per hour at the start of this year and gradually raise it further to $13.31 by 2021—well above Florida’s state minimum wage, which currently stands at $8.10. Local political leaders said at the time that the higher pay floor was meant to help workers cope with the high cost of living in the city, among the highest in the state.
The Florida Retail Federation, Florida Restaurant & Lodging Association and Florida Chamber of Commerce sued the city in December 2016 to prevent the law from going into effect, arguing that it was preempted by state law. Last March, a state circuit court ruled against the city, which appealed to a higher district court.
In December, that court upheld the judgment against Miami Beach, finding that a state law enacted in 2003 preventing local governments from establishing a higher minimum wage than the state or federal standard was still in force despite a later decision by voters in the state to raise the minimum wage statewide. Sarah Smith Kuehnel, an attorney with Ogletree Deakins in St. Louis, went over the court’s reasoning when that ruling was handed down last month:
In 2004, Florida voters passed a citizens’ initiative to amend the Florida Constitution, establishing a higher, statewide minimum wage. The amendment expressly allowed “the state legislature [and] any other public body,” to increase the minimum hourly rate above the federal standard, but it left subsection two of section 218.077 intact, without addressing whether local governments can establish their own wage floors. …
Even as the Trump administration rolled back numerous Obama-era regulations at the federal level and took more employer-friendly stances on a number of hot-button labor issues, 2017 also witnessed the continued proliferation of new laws and regulations in states and localities, particularly those whose legislatures are dominated by Democrats. Many of these policy changes came into force on January 1, while others will become effective later in 2018, meaning countless US organizations will have to adjust to a new and more complex regulatory landscape this year.
Minimum Wages Rise for Millions of Workers
To begin with, minimum wages rose on Monday in 18 states, including several that passed referenda to that effect in 2016. Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont, and Washington saw increases ranging from 35¢ to $1.00 per hour due to legislative or ballot measures, while the pay floors in Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota, which are pegged to inflation, rose automatically. The left-leaning Economic Policy Institute calculates that 4.5 million employees in total will see their pay increase thanks to these measures—though opponents of minimum wage hikes would argue that some of these employees will be laid off as their employers can no longer afford to pay them at the new rate.
California Keeps on Being California
With its huge labor market, diverse economy, and liberal government, California is a longstanding laboratory of progressive legislation, which serves as a bellwether for emerging regulatory trends and has an impact beyond the state’s borders as multi-state employers often opt to comply with California’s stricter rules nationwide for simplicity’s sake. A number of new laws came into effect in the Golden State this week that employers there need to be aware of. Mark S. Spring, a partner at Carothers DiSante & Freudenberger LLP, breaks down all of these changes at TLNT. Here are the changes in brief:
When Massachusetts became the first US state to bar employers from asking candidates for their salary histories in an amendment to the Bay State’s equal pay law last year, some observers predicted that it would be the first of many to do so. Sure enough, others have followed suit this year, including New York City in April and California in October, along with Delaware and Oregon. Democrats in the House of Representatives even proposed a bill last September to ban salary history inquiries nationwide, which they introduced in May in response to a federal court ruling that gender pay gaps based on salary history were not discriminatory.
That bill has virtually no hope of becoming law in the current Congress, but inspiring federal legislation is not the only way that these state and local bans can have nationwide impacts. California, Massachusetts, and New York City represent large labor and consumer markets where most nationwide businesses have a footprint, and to keep things simple, many organizations base their employment policies around the requirements of the most tightly regulated jurisdiction in which they operate. California law is well understood to affect national employment practices in this way: Because it is the most populous state and has some of the most stringent employment laws and regulations in the country, multi-state and multinational employers will often set their US policies to meet California’s standards rather than draft different policies for employees in different states.
New York City’s salary history ban is now beginning to have the same effect.
The New York City Council passed an amendment to the city’s paid sick leave law last week that would require employers to grant paid time off as “safe time” to employees when they or a family member have been the victim of domestic violence, sexual abuse, stalking, or other “family offense matters,” according to Newsday’s Matthew Chayes:
The bill, Introduction 1313-A of 2016, passed unanimously, and extends existing rules governing an employee’s “earned” sick time, which accrues over the course of time on the job, to family abuse claims.
“Often times, women would miss appointments with either a DA, or miss appointments at the police precinct, or, unfortunately in cases, had to go and serve orders of protection, they had to go themselves and weren’t able to do that because they weren’t able to take the time off work,” said Councilwoman Julissa Ferreras-Copeland (D-Queens), a prime sponsor of the bill.
Mayor Bill deBlasio has not yet signed the bill into law, but is expected to do so soon, and if he does, it will go into effect 180 days after his signature. At Lexology, a group of Jackson Lewis attorneys detail the circumstances under which employees would be entitled to “safe time”:
California Governor Jerry Brown on Thursday signed a bill that will prohibit all public and private employers in the state from asking job candidates about their prior salaries and require them to give candidates a pay range for the role to which they are applying upon request. The new law, which is meant to help close the gender pay gap, takes effect January 1, SF Gate reports:
Last year, the state passed a weaker law that said prior compensation, by itself, cannot justify any disparity in compensation. The new bill goes further by prohibiting employers, “orally or in writing, personally or through an agent,” from asking about an applicant’s previous pay. However, if the applicant “voluntarily and without prompting” provides this information, the employer may use it “in determining the salary for that applicant.” …
The bill was one of nine Brown signed Wednesday designed to help women and children. One of them, SB63, will let mothers and fathers working for employers with 20 to 49 employees take 12 weeks of unpaid, job-protected leave to care for a newborn or newly adopted child or foster child. Businesses with 50 or more workers already had to provide this. The leave can be taken in two-week increments.
With this bill, California joins Delaware, Massachusetts and Oregon as states with bans on salary histories coming into effect within the coming year. The governor of Illinois vetoed a similar ban in August, but the trend among liberal-leaning states is otherwise unmistakeable. Salary history bans have also been enacted at the local level in places like New York City and San Francisco, while a version in Philadelphia has been held pending a court challenge.
It’s not every day that minimum wages decrease, but at a moment when multiple US states are passing preemption laws to prevent localities from creating their own employment regulations, some employers are facing a situation in which they were forced to raise wages for their lowest-paid employees when the pay floor went up, only for it later to be brought back down. Such was the case in St. Louis, Missouri, which raised its local minimum wage to $10 an hour this May, but was undercut by a state law that overrides local hikes and forces cities to adhere to Missouri’s state minimum wage of $7.70.
That law went into effect earlier this week, so many St. Louis employers now have to decide what to do about the employees whose wages they raised in May in response to the now-defunct local ordinance. Steve Boese considers their options, all of which have downsides:
- Cut everyone who was bumped up to $10 back to their wage level as of May.
- Keep everyone at $10 who was given the bump in May.
- Pick and choose who gets to stay at $10, (the better performers, more essential folks), and bump others back to their May hourly rate, or some other rate less than $10 that better reflects their performance, value, and position relative to their peers.
Options 1 and 2 are the easiest to implement, and for different reasons, the easiest to justify back to the employees. Which is why I would expect that the vast majority of employers will opt for one of these approaches.
The differentiating strategy of Option 3, Boese argues, “could possibly drive better overall performance, as better workers feel more rewarded, and the others see a way to work towards the wages they desire.” It would also, however, be much trickier to implement, requiring organizations to precisely gauge the value of individual low-level employees and communicate its reasoning clearly and convincingly. For that reason, he suspects most organizations won’t opt for it.
Indeed, after Missouri’s preemption law was passed, some St. Louis businesses said they planned to go with Boese’s second option and keep the raises in place, at least for current employees, though they may pay new entry-level hires the lower minimum wage. A pressure campaign by local pro-labor activists, called “Save the Raise,” has threatened to picket and boycott businesses that revert to the state-mandated wage floor, but also plans to publicly laud those employers that choose to stick with the $10 minimum.