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HR AlertsSeveral States to Raise Minimum Wage

Recently, California and New York implemented statewide plans to incrementally raise the minimum wage to $15 an hour.

Oregon will also see an incremental minimum wage increase, with the highest rate reaching $14.75 an hour (varies by location).

Based on this trend, we can expect other states and likely more cities to propose their own minimum wage increases soon.

Several cities and states throughout the U.S. have raised their minimum wage recently.

New York and California, however, are the first states to pass legislation that will result in a statewide minimum wage of $15 per hour.

The Push for $15 Minimum Wage:

The push for a $15 minimum wage has been around for several years. Demonstrations in favor of it began in November of 2012, when fast-food workers in New York City walked off their jobs in protest of their low wages.

While 29 states and the District of Columbia have minimum wages above the federal requirement, and several have passed significant increases in the last year or two, the federal minimum wage of $7.25 hasn’t been increased since 2009.

Since then, it has lost close to ten percent of its purchasing power due to inflation, according to the Pew Research Center.

Analysts, such as the National Employment Law Project, say that the rate of $15 per hour is slightly above the cost of living in many cities and note that four in ten employees in the U.S. make under that amount.

No city or state currently has a $15 minimum wage for all employees, although the states of California and New York will be working towards that number.

Some cities and states that have passed incremental increases to reach a $15 minimum wage will only apply them to certain kinds of workers.

Massachusetts, for example, has a planned statewide increase to $15, but only for home health care workers.

Cities with a planned $15 minimum wage for all non-exempt employees include Seattle (by 2017 for businesses with at least 500 U.S. employees and by 2021 for others), San Francisco (by 2018), the District of Columbia, and Los Angeles (both by 2020).

Concerns for Business Owners:

The largest concern for business owners is that they will be unable to afford the increase.

Some owners say they may have to downsize their workforce in order to pay the required rate and still cover other costs, and that the loss of employees may bring a loss in revenue.

Critics of minimum wage increases point to studies that show a connection between an increase to the minimum wage and a rise in unemployment.

Supporters point to studies that indicate raising the minimum wage to $15 an hour nationally would result in nearly half a trillion dollars being pumped into the economy, giving millions of Americans more purchasing power and stimulating hiring in the process.

What Comes Next:

In the short term, additional states might consider raising the minimum wage for certain workers or for all non-exempt employees.

And as efforts to raise the federal minimum wage above $7.25 have so far failed, a national increase to $15 is for now almost certainly out of the question for the time being.

In the long run, the political pressure behind the $15 minimum wage will likely increase as the cost of living continues to rise and more cities and states set $15 an hour as the new minimal standard.

HR Alerts

FLSA White Collar Exemptions Could Arrive Soon

The proposed changes to the white collar exemptions of the Fair Labor Standards Act (FLSA) are looming large in the minds of many employers. The new rules, which will likely affect almost five million employees, could be published as early as this month.

These rules, proposed in June 2015, could more than double the salary threshold for workers otherwise eligible for a white collar exemption from minimum wage and overtime requirements under the FLSA.

(Click here for more info.)

If the final rules adopt the salary level of the proposed rules ($50,440 per year), almost five million employees who are currently exempt from minimum wage and overtime requirements will have to be reclassified as non-exempt, or hourly, employees.

The rules also propose having the white collar salary level (and the highly compensated employee compensation rate) automatically increase each year.

These would be tied either to a cost of living index or to a set percentile of earnings across all salaried workers.

It is likely that employers will have 60 days to comply with the final rules once published.

Note: Nobody can know exactly what the final rules will look like or whether The Department of Labor (DOL) made changes to the proposed rules that were published last year after receiving nearly 300,000 comments. The minimum salary level could be lower – or higher – when published.

Recommendation:

We strongly recommended preparing now (if you haven’t already done so).

Identify which currently exempt employees could be affected, decide what compensation strategy to use for those employees, and plan for implementation.

HR Alerts

Supreme Court Ruling Broadens Political Expression Protection for Public Employees

On April 26, the Supreme Court ruled in favor of a public employee who was demoted due to a misconception about his political leanings. This adds another layer of constitutional protection to employees’ right to political expression to include perceived acts.

The employee was demoted from detective to patrol officer by the city of Paterson, N.J. after he was seen carrying a political sign for a mayoral candidate the chief of police opposed.

The employee was not actually a supporter of said candidate, but was merely carrying the sign for his bedridden mother. He sued, claiming his First Amendment right to free speech was violated.

The lower courts ruled against him, saying his free speech rights were not violated because his supervisor’s decision was based on a perceived, and not actual, exercise of free speech (aka the employee didn’t actually support the candidate.)

The Supreme Court disagreed, however, ruling in the employee’s favor in a 6-2 decision.

They said the supervisor’s motive is the primary factor. Whether or not the employee actually supports the candidate is irrelevant; the constitutional violation made by the employer is the same whether the demotion was based on a misconception or an actual fact, the court ruled.

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