September 2016 Bar Bulletin
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September 2016 Bar Bulletin

Initiatives Push Statewide
Minimum Wage Movement

By Mona K. McPhee

 

The minimum wage issue continues to heat up in Washington, with voters having the opportunity to vote on a statewide initiative on November 8.

The Washington Secretary of State’s office in July certified Initiative 1433, a labor-backed initiative that asks voters to decide whether to raise the statewide minimum wage to $13.50 an hour by 2020 and require businesses to guarantee paid sick leave for many employees.

Under I-1433, the minimum wage would increase to $11 per hour in 2017, then go up 50 cents a year until 2019, with a final boost to $13.50 in 2020. After that, it would be increased based on the Consumer Price Index. The current statewide, hourly minimum wage is $9.47, but certain cities — including Seattle, Tacoma and SeaTac — have increased the minimum wage above that level.

Although minimum wages are set on the federal, state and local levels, the law or regulation most favorable to employees governs. That means employees will earn the highest minimum wage, and benefit from the most liberal overtime and benefits laws of the jurisdiction in which they perform their work. Companies that operate in multiple jurisdictions, such as ride services, must shift the wages they pay based on where the employee is working during any given time. With different municipal minimum wages that are higher than the state wage, this creates an administrative burden and compliance risk.

Meanwhile, the restaurant industry and other businesses attempted to ameliorate perceived faults in I-1433 by filing their own measure, Initiative 1518. However, I-1518 failed to get enough signatures to qualify for the ballot. Still, it is interesting to consider because it offered an alternate approach to the same concerns addressed by I-1433. I-1518 would have provided paid sick leave while countering the details (or lack thereof, as the sick leave policy is drafted) in I-1433. It would have increased the minimum wage to $10.50 in 2017 with 50-cent yearly increases until 2020, when it would have hit $12. After that, the minimum wage would have increased based on the Consumer Price Index.

One of the criticisms of I-1433 is that it would create a statewide minimum wage that doesn’t take into account the different costs of living in urban versus rural areas. Businesses in Republic, for example, where the cost of living is much lower, would have to pay the same minimum wage as in high-priced Seattle.

An across-the-board minimum wage would be similar to the statewide minimum wage law passed in California this past April. Oregon, meanwhile, adopted a statewide minimum wage law that will ultimately require different minimum wages in urban versus rural areas.

As noted above, I-1433 would also significantly change sick leave rules, requiring employers to provide one hour of paid sick leave for each 40 hours an employee works. The current state law requires employers to provide sick leave for employees, but does not require that it be paid.

Under I-1433, employees would accrue one hour of paid sick leave for every 40 hours worked, with no limit on the number of hours accrued each year. Employees would also be allowed to roll over 40 hours of sick leave each year. Due to the open-ended drafting of this portion of the law, this initiative — if passed — could cause a lot of confusion and litigation.

I-1518, meanwhile, proposed to offer a competing paid sick leave provision that would have included exceptions for employers that have equivalent paid time off programs that include a flexible combination of holidays, vacation, sick leave and, potentially, parental leave. Sick leave would have only accrued for non-overtime pay, something that is not addressed in I-1433. Under I-1433, companies with paid time off programs would have to retool those programs to determine how best to provide paid sick leave.

I-1433 also requires that all tips and service charges be paid to the employee, in addition to the minimum wage, which is a significant change from current law. For example, restaurants currently can apply tips and service charges toward an employee’s minimum wage. The new law would significantly increase compensation for restaurant workers, something that is good for the workers’ bottom line, but something that could also be so expensive to restaurants that most will see an effect on their workforce and costs.

Across the Country

We’re definitely seeing a trend of changes in wage laws across the country, especially along the west and east coasts as progressive politics take hold. In addition, federal overtime regulations this year changed significantly for more than 43 million white-collar workers. The number of workers eligible for overtime pay will increase significantly, as the annual wage ceiling for eligible workers will rise from $29,000 to $41,000.

In the future, overtime regulations will be reviewed and the earning level will be increased every three years. It will be important for employers to be prepared for how this affects their businesses and to create a process to evaluate employees’ job duties and compensation to determine whether to permanently increase their salary or compensate them for overtime.

Employers should also be aware that employee laws apply based on where a worker is employed at any point in time. For example, if employees work in Bellevue, but live in Tacoma, and work at least 80 hours a year in Tacoma, they must be paid Tacoma’s minimum wage (since it is higher than Bellevue’s minimum wage) for the hours they spent working in Tacoma, including hours spent telecommuting. Employers must anticipate this in advance and pay the higher city’s minimum wage to avoid violating the law.


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