Federal Minimum Wage Hike Stalled, but Other Mandated Wage Increases Continue

President Obama gave impetus to a national debate on increasing the federal minimum wage when he proposed a $9.00 per hour minimum wage in his February State of the Union Address. Although the most recent effort to increase the federal minimum wage has stalled, the national push to continue to mandate higher employee wages continues through other means.

A bill to raise the federal minimum wage to $10.10 per hour stalled in the Senate on Wednesday afternoon (April 30) when a procedural vote failed to advance the measure. At present, it appears unlikely that the federal minimum wage, currently $7.25 per hour, will increase any time before the midterm elections in November. However, employers throughout the country will continue to feel the pressure of mandatory wage increases from a variety of sources as States, municipalities, and the Executive Branch, all use their authority to increase employee pay.

States can (and have) set minimum wages above the federal standard. Indeed, twenty-one states and the District of Columbia all currently have minimum wage rates higher than the federal rate, and legislation continues to be introduced to increase those rates. Although some states must pursue such wage increases by holding a vote each time they wish to increase their minimum wage, other states, including Missouri, have adopted minimum wage laws that automatically increase their minimum wage by tying it to a cost of living or consumer price index. These “automatic” minimum wage increases have caused some states to have a minimum wage well above the federal minimum. Washington State now has a minimum wage of $9.32 per hour for most employees; the highest minimum wage among states.

Some municipalities have also proposed higher minimum wages for employees working within their boundaries. New York City counselors began debate on increasing the minimum wage for workers in the five boroughs at the same time as the Senate’s procedural vote nixed the increase in the federal minimum wage. In November of last year, the Seattle, Washington suburb of SeaTac narrowly passed legislation to increase its minimum wage to $15.00 per hour for certain employers. On May 1, the Mayor of Seattle similarly proposed raising his city’s minimum wage to $15.00 per hour over three to seven years, depending on the size of the business; with further automatic increases tied to the Consumer Price Index. Albuquerque and Santa Fe, New Mexico and San Francisco and San Jose, California are just a few examples of cities which already have higher minimum wages that exceed their State’s already-higher-than-federal minimum wages.

President Obama’s administration has similarly taken unilateral action to increase the wages of some workers. In February of this year, the President signed an executive order requiring federal contractors to pay workers at least $10.10 per hour. President Obama has also proposed revising the Department of Labor’s regulations on “executive” employees currently exempt from overtime. Although the specifics of the changes are yet to be seen, these revisions will likely require that “executive” employees be paid more per week and spend a specific amount of time on “executive” tasks to qualify for the exemption. These changes will almost certainly require employers to pay those currently classified as “executive” more in salary; or abandon the classification altogether for some employees, and pay these individuals for overtime hours worked.

At the same time, lawsuits involving failure to pay required minimum wages and overtime have been on the rise in recent years, and current trends strongly suggest this increase will continue. These lawsuits are frequently brought as class-actions, and require employers to expend significant time and resources to defend.

To avoid local, state and federal violations of the minimum wage and overtime requirements, and the increasingly likely lawsuit by employees for such violations, employers must continually keep themselves apprised of the changing wage and hour laws in effect wherever they do business. McMahon Berger has been representing employers for over fifty years and has extensive experience advising and representing businesses in matters relating to minimum wages, overtime pay, and employee classification. Its experienced group of employment lawyers stand ready to assist you in navigating the ever-changing employment landscape, wherever you do business.

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