Category Archives: Minimum wage

Post-Election Employment Implications in Illinois, Indiana, Missouri and Wisconsin

Contributed by Steven Jados, Rebecca Dobbs Bush, Suzanne Newcomb, and Brian Wacker November 7, 2018

47062864 - man putting a ballot into a voting box - usaWith the dust mostly settled after election night, we can now look at the impact the election will have on employment laws in Illinois, Indiana, Missouri and Wisconsin, and at the federal level.

Illinois: The major story in Illinois is the election of J.B. Pritzker as governor.  In short, his election is likely to usher in greater infrastructure spending—including an increase in prevailing wage jobs—and more aggressive enforcement efforts by state agencies charged with regulating employers and protecting employees. Beyond that, minimum wage increases, expansions to employee protections under the Illinois Human Rights Act, and more legislation favorable to employees are likely to receive strong consideration in the General Assembly in the near future.

Indiana: We do not expect to see any significant state-level changes in Indiana. Republicans maintained their supermajority in both chambers of the Indiana Statehouse and swept every statewide race on the ballot. Republican Eric Holcomb (elected to his first four year term in 2016) will continue as Indiana’s Governor.

Missouri: In Missouri, the elected status quo kept. Governor Mike Parsons, serving out former Governor Eric Greitens’ term, was not on the ballot. In the Legislature, Republicans maintained their supermajority status in both the Missouri State Senate and House of Representatives. In the Senate, the Republicans maintained their 24 to 10 seat lead over Democrats with no seats changing hands. In the House, preliminary results show that each party flipped three seats from the other, maintaining the Republicans’ dominant 116 to 47 seat advantage.

Missouri voters did, however, approve Proposition B, a minimum wage increase measure by a 62% to 38% margin. The measure increases the state’s current $7.85 minimum wage incrementally over the next five years to: $8.60 in 2019, $9.45 in 2020, $10.30 in 2021, $11.15 in 2022 and $12.00 in 2023. After 2023, the minimum wage will automatically increase or decrease based on Consumer Price Index for Urban Wage Earners and Clerical Workers. The measure also increases the penalty for employers paying employees less than minimum wages. Affected workers can now recover the full amount of the wage rate and an additional amount equal to twice the unpaid wages as liquidated damages.

Wisconsin: In 2011, Governor Walker drew national attention to Wisconsin when he revealed his plan to eradicate collective bargaining for most public workers. Since 2013, the governor and the legislature in Wisconsin have been dominated by Republicans. Scott Walker’s loss to Tony Evers, marks the end of that complete control. And based upon a law signed last year by Governor Walker, the margin of loss, while extremely narrow, is not narrow enough to demand a recount.

Evers campaigned on promises to cut income taxes by 10 percent for people making less than $100,000 and for families making less than $150,000. Evers has also stated that it is his goal to eliminate the limitations on unions (known as Act 10). However, with the legislature remaining primarily Republican, such a goal will likely remain out of reach.

Change does not happen overnight and a Republican legislature will slow any initiatives of Democrat, Tony Evers. However, the loss of a 5 year complete Republican majority of government will certainly have an effect on Wisconsin businesses.

Federal: At the federal level, little is likely to change over the next two years with respect to the Executive and Legislative branches of government. As long as Republicans remain in the White House, the composition and direction of the National Labor Relations Board (NLRB) is unlikely to shift dramatically from its current course. The Equal Employment Opportunity Commission (EEOC), Department of Labor (DOL), and other agencies charged with regulation and enforcement of employment-related laws are also likely to continue to operate much as they have for the last two years—albeit with less-aggressive enforcement initiatives directed at businesses and, perhaps, smaller budgets. The prospect of significant employment-related legislation—whether protective of employees or businesses—seems quite unlikely for the foreseeable future given that Democrats control the U.S. House of Representatives, and Republicans control the Senate. However, there is some talk that family paid medical leave and an infrastructure bill may receive bipartisan support. We shall see. Of course, Republicans are likely to continue to use their Senate majority to fill judicial vacancies with conservative judges.

Although gridlock is likely in the federal government, we expect plenty of employment-law related activity at the state level, particularly in Illinois, and we will continue to apprise you of new developments as they arise.

 

REMINDER: Cook County and Chicago Minimum Wage Increased on July 1, 2018…And So Did the Required Poster!

Contributed by Mike Wong, July 27, 2018

WageOn July 1, 2018, the Chicago Minimum Wage and Cook County Minimum Wages increased as follows:

  • Chicago Minimum Wage increased to $12.00 per hour for non-tipped employees and $6.25 for tipped employees (Chicago Municipal Code §1-24).
  • Cook County’s new minimum wage is $11.00 per hour for non-tipped and $5.10 for tipped employees.

IMPORTANT: Even if you are in a municipality that opted out of the Cook County or Chicago minimum wage or paid sick leave ordinances initially, remember to stay up to date as sometimes things can change.  For example, after opting out of the Cook County Minimum Wage ordinance in 2017, the Wilmette Village Board recently voted to opt in to the Cook County Minimum Wage starting October 1, 2018.  The village of Northbrook opted out of the Cook County Minimum Wage and Paid Sick Leave ordinance, but is now reconsidering the decision to opt out of the Paid Sick Leave ordinance.

IMPORTANT NOTICE REQUIREMENTS: With the increase of the minimum wage, the required posters have been updated to reflect the increase.  Employers that are subject to the Cook County or Chicago minimum wage should review and make sure that they have the current required poster posted.  The new poster for the Chicago Minimum Wage ordinance can be found on the City of Chicago website and are in English, Spanish, Polish and Mandarin. The Cook County minimum wage ordinance poster can be found on the Cook County website and is only in English.

 

Salary History Inquiry Bill Down But Far From Out

Contributed by Noah A. Frank, September 19, 2017

wage

On June 28, 2017, HB 2462, an amendment to the Illinois Equal Pay Act, passed both chambers of Illinois General Assembly. The bill would have made an employer’s inquiry into an applicants’ wage, benefits, and other compensation history an unlawful form of discrimination. Even worse for Illinois employers, the bill would allow for compensatory damages, special damages of up to $10,000, injunctive relief, and attorney fees through a private cause of action with a five (5) year statute of limitations.

On August 25, 2017, Governor Rauner vetoed the bill with a special message to the legislature that, while the gender wage gap must be eliminated, Illinois’ new law should be modeled after Massachusetts’s “best-in-the-country” law on the topic, and that he would support a bill that more closely resembled Massachusetts’ law.

The bill, which passed 91 to 24 in the House, and 35 to 18 in the Senate, could be reintroduced as new or amended legislation following the Governor’s statement, or the General Assembly could override the veto (71 votes are needed in the House, and 36 in the Senate, so this is possible) with the current language.

Why is this important?

With the Trump Administration, we have seen an increase in local regulation of labor and employment law. This means that employers located in multiple states, counties, and cities must carefully pay attention to the various laws impacting their workforces. Examples of this type of “piecemeal legislation” we have already seen in Illinois and across the country include local ordinances impacting minimum wage, paid sick leave, and other mandated leaves. Additionally, laws that go into effect in other jurisdictions may foreshadow changes at home as well (e.g., Illinois’s governor pointing towards Massachusetts’s exemplary statue).

Had it become law, this amendment would have effective required employers to keep applications and interview records (even for those they did not hire) for five years to comply with the statute of limitations for an unlawful wage inquiry (the Illinois Equal Pay Act already imposes a five year status of limitations for other discriminatory pay practices). By contrast, under Federal law, application records must be kept for only one year from the date of making the record or the personnel action involved (2 years for educational institutions and state and local governments).

What do you do now?

While the law has not gone into effect as of the date of this blog, it is likely that some form of the salary history amendment will ultimately become law in Illinois. Businesses should carefully review their job applications, interview questions, and related policies to avoid inquiries that may lead to challenges in the hiring process.

Additionally, record retention (and destruction!) policies should be reviewed for compliance with these and other statutes – as well as to ensure data integrity and security.

Finally, seek the advice of experienced employment counsel for best practices in light of national trends to remain proactive with an ounce of prevention

IMPORTANT DOL UPDATE: The Final Rule on Doubling White Collar Salaries Is Shot Down By Texas Judge

Contributed by Heather Bailey, September 6, 2017

31096470 - concept of time with businessman that hold an alarm clock

Concept of time with businessman holding a clock

Previously, we reported to you on the U.S. Department of Labor’s (“DOL”) Final Rule that raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (“FLSA”) “white-collar” exemptions (executive, professional and administrative classification) from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) as of December 1, 2016 (see our prior articles: U.S. DOL Publishes Final Overtime Rule and; Are you ready for December 1st? The FLSA Salary Changes Are Almost Here).

The Obama administration’s goal with this Final Rule, announced on 5/23/2016, was to give approximately 4 million workers the ability to earn overtime pay, instead of getting paid a fixed salary since many employers would not be able to afford to pay their otherwise exempt employees $47,476 annually. Implementation of this new rule had been temporarily stalled in a federal court in Texas just prior to it going into effect this past December 1st (see our prior articles: Court Enjoins DOL Overtime Rule and; Business Realities Under the Halted DOL Final Overtime Rule).

However, on August 31, 2017, Judge Amos L. Mazzant of the United States District Court, Eastern District of Texas answered many business owners’ prayers by ruling the DOL indeed exceeded its authority by more than doubling the minimum salary threshold for exempting white-collar employees (see the full case here).

The judge did not say the DOL could not raise the minimum salary at all. Rather, relying heavily on Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), the judge stated that by more than doubling the current minimum threshold, the DOL effectively eliminated the need for looking to the employees’ actual duties and responsibilities—which was the essence of Congress’s intent when it created the FLSA white collar exemptions. The judge looked to the plain meaning of what it means to work in an executive, administrative and professional capacity concluding the primary focus was not the salary minimum but instead the actual duties and responsibilities.

What are the ramifications? The Department of Justice voluntarily dismissed its appeal of Judge Mazzant’s earlier preliminary injunction ruling putting the Final Rule on hold, so it seems unlikely it will appeal this ruling. However, this decision could catapult the Trump administration to issue a new rule providing for a more moderate increase in the minimum salary threshold – one that does not vitiate the primary focus of the “white collar” overtime exemptions: the employees’ actual duties and responsibilities.

Practice Tips:

  • The good news for now is that employers can continue to follow the previous DOL regulations for white collar exemptions (i.e., duties test and salary test).
  • If you did not do so previously, analyze your exempt positions to confirm they meet the duties test and are truly exempt positions. For example, is your manager truly a manager or is she really a lead worker? Is this manager hiring, firing and disciplining two or more employees?  Is your payroll clerk clearly just doing data entry or is he exercising independent discretion and judgment?  If the position does not meet the duties test, you transitioning the position to make it overtime eligible.
  • Ensure management is trained to enforce policies related to overtime pay such as those relating to working time, time clock procedures, meal and rest breaks, working off the clock issues, etc.
  • Did you already make changes to your employees’ pay or duties based upon the final rule going into effect on December 1, 2016?  While there are ways to change those decisions (i.e., you can change an employee’s pay moving forward for work not yet performed), you need to keep in mind morale issues for employees whose compensation may decrease either by way of a salary reduction or loss of overtime pay.  In these situations, it is highly recommended that you work with your counsel on determining the best practices for your business and your workforce.

With the judge’s ruling, many business owners will be able to find some comfort in being able to keep their exempt employees on a reasonable salary without having to break the bank.

REMINDER – Chicago Minimum Wage Increases Again and Cook County Minimum Wage Begins Starting July 1st 2017

Contributed by James F. Hendricks, Jr., June 23, 2017

On July 1, 2017, Chicago’s Minimum Wage increases to $11.00 per hour for non-tipped employees and $6.10 for tipped employees (Chicago Municipal Code §1-24). Cook County’s new minimum wage is $10.00 per hour for non-tipped and $4.95 for tipped employees.

Minimum Wage

Street sign that says “Minimum Wage Increase Ahead”

IMPORTANT NOTICE REQUIREMENTS: All employers that maintain a business facility within the geographic boundaries of  Chicago AND/OR are subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago are covered by Chicago’s Minimum Wage Ordinance and MUST do the following starting July 1st:

  1. Display applicable poster(s) by July 1st
  2. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck issued after July 1st to each employee that is subject to the Ordinance (i.e. works at least 2 hours in Chicago, or at some point may work at least 2 hours in Chicago)

From our prior Chicago Minimum Wage Ordinance post, here are points that you need to know about the Chicago Minimum Wage Ordinance:

  1. Covered Employers: Any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons that has at least one employee and (1) maintains a business facility within the geographic boundaries of Chicago AND/OR (2) is subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago. Cook County: Work in the county, including compensated (sales, delivery, etc.)
  2. Covered Employees: Any employee who works for at least 2 hours in any two-week period within Chicago’s geographic boundaries, including driving through Chicago during work (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered).
  3. Hours subject to Chicago’s Minimum Wage: Chicago’s Minimum Wage only has to be paid for hours worked by the employee when he or she is physically present within the geographic boundaries of Chicago. This includes time spent driving during working hours, but does not include time commuting between home and work.
  4. Non-Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for non-tipped employees starting July 1, 2017 will be $11.00/hour; and increasing on July 1, 2018 to $12.00/hour; July 1, 2019 to $13.00/hour; and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. Penalties & Damages: A fine of $500.00 to $1,000.00 per day for each offense that is not corrected. Potential license suspension or revocations and an order to pay restitution to underpaid employees. Additionally, employees can pursue a private cause of action to recover THREE times the underpayment, attorney fees and costs.
  6. Union/CBA Issues: There is no grandfathering for current “in-force” collective bargaining agreements. This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.

2017 Compliance Check Up

Contributed by Sara Zorich, January 19, 2017

We are now almost three weeks into the New Year and while it might be tempting to ease into 2017, the time is now to ensure that the required compliance updates have been made to your payroll and Form I-9 procedure to comply with the 2017 changes.

Minimum Wage

The following 21 states have updates to their minimum wage that affect your payroll for 2017:

  1. Alaska (Effective 1/1/17) – minimum wage increases from $9.75 to $9.80.
  2. Arizona (Effective 1/1/17) – minimum wage increases from $8.05 to $10.00.
  3. Arkansas (Effective 1/1/17) – minimum wage increases from $8.00 to $8.50.
  4. California (Effective 1/1/17) – minimum wage increases from $10.00 to $10.50.
  5. Colorado (Effective 1/1/17) – minimum wage increases from $8.31 to $9.30.
  6. Connecticut (Effective 1/1/17) – minimum wage increases from $9.60 to $10.10.
  7. Florida (Effective 1/1/17) – minimum wage increases from $8.05 to $8.10.
  8. Hawaii (Effective 1/1/17) – minimum wage increases from $8.50 to $9.25.
  9. Maine (Effective 1/1/17) – minimum wage increases from $7.50 to $9.00.
  10. Massachusetts (Effective 1/1/17) – minimum wage increases from $10.00 to $11.00.
  11. Maryland (Effective July 1, 2017) – minimum wage increases from $8.75 to $9.25.
  12. Michigan (Effective 1/1/17) – minimum wage increases from $8.50 to $8.90.
  13. Missouri (Effective 1/1/17) – minimum wage increases from $7.65 to $7.70.
  14. Montana (Effective 1/1/17) – minimum wage increases from $8.05 to $8.15.
  15. New Jersey (Effective 1/1/17) – minimum wage increases from $8.38 to $8.44.
  16. New York (Effective 12/31/16) –minimum wage increases from $9 to $9.70.
  17. Ohio (Effective 1/1/17) – minimum wage increases from $8.10 to $8.15.
  18. Oregon (Effective July 1, 2017) – statewide minimum wage increases from $9.75 to $10.25 (Portland Metro minimum wage increase from $9.75 to $11.25).
  19. South Dakota (Effective 1/1/17) – minimum wage increases from $8.55 to $8.65.
  20. Vermont (Effective 1/1/17) – minimum wage increases from $9.60 to $10.00.
  21. Washington (Effective 1/1/17) –minimum wage increase from $9.47 to $11.00.

Employers should ensure that these required changes have been conveyed to your payroll manager and payroll provider and perform an audit to ensure that the change was made effective in your payroll system.

Form I-9

As we reported on November 17, 2016, U.S. Citizenship and Immigration Services (USCIS) released the new version of the Form I-9 on November 14, 2016. NO LATER THAN January 22, 2017, employers MUST use the revised form (dated 11/14/2016 N) for all new hires and any employee that requires reverification of employment eligibility.

Employers should review their Form I-9 practices, ensure they are complying by using the new form by the deadline, and train employees responsible for completing the form regarding the new form requirements.

Cook County Board Passes Minimum Wage Ordinance

Contributed by Noah A. Frank, Sara S. Zorich, and Michael D. Wong, November 1, 2016

On October 25, 2016, the Cook County Minimum Wage Ordinance (CCMWO) became immediately effective, on the heels of the county’s Paid Sick Leave Ordinance. The CCMWO provides the following significant requirements:

  1. minimum-wage-changesCovered Employees are those who work at least two (2) hours in any particular two (2) week period physically within the county’s geographic boundaries, including compensated travel time for business activities.
  2. Covered Employers include individuals who employ at least one Covered Employee AND (1) maintain a business facility within the county’s geographic boundaries and/or (2) are subject to one (or more) county business license. Home-rule municipalities may choose to opt-out of the Ordinance within their geographic boundaries. Municipalities and other federal, state, and local governmental employers (other than Cook County) are excluded from the Ordinance.
  3. The Cook County Minimum Wage increases on 7/1/2017 to $10.00, and then: $11.00 on 7/1/2018; $12.00 on 7/1/2019; and $13.00 on 7/1/2020. It increases annually thereafter by the CPI, up to 2.5%.
  4. Tipped Employees wages increase by the CPI (up to 2.5%) as of 7/1/2018, and annually thereafter. Employers must submit reports to the Director evidencing that no part of the tips were returned to the employer – establishing another, independent cause of action against employers who fail to properly maintain tips and tip pooling arrangements.
  5. There is no grandfathering, exemption, or safe harbor for currently “in force” CBAs! They will be subject to these new provisions upon their effective date. We anticipate that there will be substantial controversy over this in heavily unionized Cook County.
  6. Posting & Notice. Employers with a physical location in Cook County must post a notice (poster to be prepared by the Director) at each facility within the county, and must provide a notice to each covered employee with the first paycheck subject to the CCMWO and any newly hired employee.
  7. Retaliation and discrimination are prohibited, specifically including punitive schedule or work assignment changes to covered employees and harassment.
  8. Penalties include (i) fines of $500-$1000 per violation per day, enforced by the Cook County Commission on Human Rights; (ii) government contractor disqualification for five (5) years; and (iii) loss of property tax incentives for five (5) years.
  9. Private causes of action exist, with the ability to recover three (3) times the amount of any underpayment, costs, and reasonable attorney fees.

The Bottom Line:

Local minimum wage ordinances are popping up across the United States. As a result, employers must now, more than ever, pay attention to local laws which might also dictate where the company operates and conducts business.

For example, in addition to the CCMWO, employers must also comply with the Chicago Minimum Wage Ordinance for work performed within the City’s geographic boundaries (see our prior blog posts for more information). Note: the minimum wage increases under the Cook County and Chicago ordinances are NOT on the same schedule and thus employers must be aware of which law applies to the work being performed.

Today, in addition to planning for the impending US Department of Labor increase to the salary level for exempt employees (effective 12/1/16), employers with employees working in or traveling through Cook County should start planning for wage increases now, and review CBAs as well. Experienced labor and employment counsel are able to provide advice on best practices.