After years of litigation, the ordinance enacted on August 28, 2015 raising the minimum wage for employees working within the physical boundaries of the City of St. Louis finally went into effect on May 5, 2017. As such, beginning on May 5, 2017, the minimum wage for employees working in the City of St. Louis increased from $7.70 per hour to $10 per hour. The enactment of this ordinance was heralded by many as a victory for working families, but the thrill of this victory may soon turn into the agony of defeat.
On Friday May 12, 2017, the Missouri legislature approved a bill that nullifies the minimum wage increase. This bill is now on the desk of Governor Eric Greitens. The it becomes law employers may reduce the wage paid to employees working in the City of St. Louis below the $10 per hour mandated by the St. Louis City ordinance beginning August 28, 2017.
While lowering wages will return labor costs to what they were prior to the City of St. Louis’s minimum wage law, it is important to understand that employees who are currently being paid $10 per hour will have developed an expectation that they will continue to be paid $10 per hour. Reducing the wages of these employees in any amount will likely be viewed as taking something away from them, which will likely lead to low morale, poor work quality, and efforts to unionize. In addition, if employers decide to reduce an employee’s wages, employers must comply with Section 290.100 RSMo, which requires employees be given 30 days’ written (or posted) notice of any reduction in their wages.
On the other hand, employers can continue to pay wages above the minimum wage after August 28, 2017 and suffer the resulting higher labor costs. While many businesses may want the increased costs to be passed on to customers and consumers, there is no guarantee that the marketplace will accept such a distribution of costs.
One other option is to continue paying $10 per hour to current employees. Employees hired after the date the minimum wage is reduced (August 28, 2017) could be paid $7.70 per hour. This approach, however, also creates issues in the workplace because employers will be paying two different rates for the same, minimum wage jobs. The employees receiving the lower minimum wage will likely have lower morale and a heightened interest in becoming represented by a union.
As you can see, employers have a difficult decision ahead of them. The St. Louis employment attorneys at McMahon Berger have been representing employers in the City of St. Louis in labor and employment matters for over sixty years, and are available to discuss specific issues an employer may face if they decide to reduce an employee’s wages. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.