Articles Posted in Minimum Wage Reforms

By Owen H. Laird, Esq.

As you may know, many municipalities and local governments have enacted minimum wage increases over the past few years as part of a “fight for $15” campaign. New York City, Los Angeles, and Seattle are a few of the cities that are implementing increases in the minimum wage, ultimately raising it to $15 an hour for most workers. Illinois is in the process of passing a wage bill that would increase the minimum wage statewide.  Proponents of these bills and laws generally take the position that raising the minimum wage will result in higher wages and better working conditions for employees. Two recent studies attempted to assess the economic effects of Seattle’s wage laws and came to strikingly different conclusions.

In January 2016, Seattle increased its minimum wage for large companies to $13 per hour, as part of a series of increases that would ultimately move the minimum wage in the city from $9 per hour in 2014 to $15 in the future.  Two studies—one by UC Berkeley’s Institute for Research on Labor and Employment, the other by economists from the University of Washington—reached opposite conclusions on the impact the increases have had on workers in Seattle, with the Berkeley study finding that workers earned more money and the University of Washington study finding that they earned less.

Owen H. Laird, Esq.

Protesters across the United States engaged in coordinated demonstrations yesterday, demanding an increase in the minimum wage to $15 an hour. Activists took to the streets in New York City, Los Angeles, Boston, Chicago, and many other U.S. cities on the four-year anniversary of the launch of the “Fight for 15” campaign, initially begun by the Service Employees International Union in 2012.

The efforts of the Fight for 15 movement have resulted in increases in the minimum wage in various municipalities for some workers. For example, in New York, where the Fight for 15 campaign began, the New York Department of Labor has implemented a series of annual increases to raise the minimum wage. These increases mean that fast food workers in New York City will earn a minimum wage of $15 an hour by 2019, and fast food workers across New York State will earn $15 an hour by 2021.

Yarelyn Mena and Edgar M. Rivera, Esq.

In a 2014 case, Martin v. The United States, the United States Court of Federal Claims held that an employer’s late payment of wages violates the Fair Labor Standards Act (“FLSA”) and may trigger liquidated ”double payment” damages. The case arose out of the 2013 government shutdown (October 1, 2013 to October 16, 2013) which resulted in the untimely payment of wages to government workers.

Towards the end of 2013, Congress failed to issue funds for government workers, forcing the federal government into a partial shutdown. The shutdown took place in the first two weeks of October 2013, in the middle of a pay period, which resulted in plaintiffs unpaid government employees being paid only for work from September 22 to September 30, and not the first five days in October. Two weeks after their scheduled payday the plaintiffs received pay for those five days. They argued that the federal government’s failure to pay them for hours worked resulted in (i) underpayment that constituted a minimum wage violation, (ii) failure to pay non-exempt employees for overtime hours worked, and (iii) failure to pay even exempt employees for overtime hours worked.

Lucie Rivière

On November 10, 2015, Governor Andrew M. Cuomo announced that he would raise the minimum wage to $15 for all employees of the State of New York, making New York the first state to enact a $15 public sector minimum wage.

In April 2015, hundreds of fast-food workers and labor allies protested in the streets, demanding wage increases, the organizers behind the fast-food strikes explicitly called for an industry wage of $15 an hour in New York City. Following these events, Governor Cuomo worked to increase the minimum wage for not only fast food workers but also for all state workers. In a New York Times op-ed published on May 6, 2015, Governor Cuomo complained “nowhere is the income gap more extreme and obnoxious than in the fast-food industry. The average fast-food C.E.O. made $23.8 million in 2013. Meanwhile, entry-level food-service workers in New York State earn, on average, $16,920 per year, which at a 40-hour a week amounts $8.50 an hour.”

Yarelyn Mena

On April 10, 2014, New York Attorney General Eric Schneiderman issued warning letters to thirteen New York retail chains, including Gap Inc. and Target Corp., notifying each that their “on-call” scheduling practices may violate New York law. On-call scheduling, a phenomenon chiefly in the retail industry, allows employers to cancel employees’ scheduled shifts and demand they pick up unscheduled shifts with little notice.

New York law requires employees who report to work before their scheduled shift, “be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage.” On-call scheduling lets employers quickly staff their stores on busy days, and send employees home early on slow days, thus, saving money on payroll at the expense of employee convenience. Employers often send employees home on slow days without proper compensation. On-call scheduling is not only a detriment to employee’s salaries, but also to their well-being; employees, especially those who must plan child care or other family accommodations around their work shifts, are greatly inconvenienced by erratic scheduling.

Yarelyn Mena and Owen H. Laird, Esq.

As President Barack Obama’s tenure nears an end, he and his administration have been pushing for far-reaching changes in employment laws that may benefit thousands of workers across the country.

At the beginning of his presidency, many workers—both Democrats and Republicans—did not support the President because he took and supported actions that appeared to be against workers’ interests.  For example, the President moved slowly to fill important employment agency positions, such as the National Labor Relations Board (NLRB), which resulted in the delay of Democratic appointees and caused proceedings at the NLRB to come to a halt.  Labor unions also were unhappy that the President failed to side with union members when legislation threatened to allow employers to hold secret ballot elections concerning leadership voting methods.

By Owen H. Laird

Earlier this month, the California Labor Commissioner ruled that an Uber driver is not an independent contractor but an employee. Uber—a popular driver sourcing company formally known as Uber Technologies Inc.—classifies its drivers as independent contractors and not employees, allowing Uber to avoid reimbursing its drivers for costs and expenses, compensating its drivers for overtime worked, and paying a variety of payroll and employment taxes.

To determine if a worker is an employer or independent contractor, California law considers several factors, including the control the employer has over its workers, the degree to which the work is part of the employer’s regular business, and the kind and degree of specialization the occupation requires. The Commissioner’s analysis of the relationship between Uber and its drivers found that Uber controlled the operation as a whole, vetted drivers, and maintained the necessary technology to conduct the business. The Commission also found that the drivers were an integral part of the Uber’s business and their work did not require specialized skills. Those facts supported the conclusion that the drivers were employees, not independent contractors.

On December 22, 2014, the U.S. Court for the District of Columbia decided to prevent the implementation of a new Department of Labor (DOL) policy, which would have become effective at the beginning of this year. The Court found that the DOL lacks the authority to change its regulation of home care providers employed by third-party agencies, making those workers no longer exempt from the minimum wage and overtime rules of the Fair Labor Standards Act.

Plaintiffs in Home Care Association of America et al. v. Weil et al. are agencies representing the interests of companies providing in-home health care services, who would have had to begin paying minimum wage and overtime pay to almost 1.9 million home care providers who had been classified as exempt from those requirements for the last forty years. Defendants are executives of the U.S. Department of Labor Wage and Hour Division (WHD). Privately-contracted domestic workers would have remained exempt, but all of those employed by third-party entities–now the vast majority–would have become protected under the FLSA. Needless to say, this change would have represented a new financial burden for the companies in question, so a broad challenge from the industry was predictable.

The home care industry had scored a major victory on these issues in 2007, when the Supreme Court ruled in Long Island Care at Home v. Coke that providers of “companionship services” employed by third-party agencies fell under the exemption; that is, they need not be paid minimum wage for all hours worked, and need not be paid one-and-one-half times their regular pay for hours worked above forty in a given week. These rules apply unless (i) the employee in question performs medical services that would typically be performed by trained personnel such as nurses, or (ii) they spend more than 20% of their work time doing general household work. The exemption was clearly intended to apply to employees whose principal responsibilities included basic monitoring and care of the patient.

After years of inaction by the U.S. congress, raising the minimum wage turns out to be a popular policy at the state level–even in heavily Republican states.

Arkansas increased its statewide minimum wage from $6.00 to $7.50 per hour starting January 1, 2015, then $8.00 starting January 1, 2014, then $8.50 starting January 1, 2016.

The minimum wage in Nebraska was raised from $7.25 to $8.00 per hour on January1, 2015, then to $9.00 on January 1, 2016.

By now most workers understand that American employers regularly minimize their labor costs by classifying as many of their workers as possible as “executives,” “managers,” or “administrators,” paying them a low yearly salary, and requiring them to work long hours for no extra pay. Occasionally some employees in this position convince a jury that their employer misclassified them as managers and put them on salary specifically in order to avoid the requirements of the Fair Labor Standards Act. But each successful lawsuit is a rare exception, which is more than outweighed by the millions that companies save in this way.

In March of 2014, President Obama issued a memorandum declaring that “white collar” exemptions to the Fair Labor Standards Act’s minimum wage and overtime pay requirements are outdated and do not offer enough protection to working Americans. The federal rule was originally designed to limit overtime for highly paid employees, the President notes, but now covers workers earning as little as $23,000 a year. “It doesn’t make sense,” the President said, “that in some cases this rule actually makes it possible for salaried workers to be paid less than the minimum wage.” In this Memorandum the President directed the Department of Labor “to propose revisions to modernize and streamline the existing overtime regulations,” with the aim of decreasing the number of people who qualify for these FLSA exemptions and increasing the pay of those who do qualify.

The process of changing specifying regulations is inevitably arduous, and always vulnerable to the criticism that it is undemocratic. But now Tom Harkin and a handful of other U.S. Senators have introduced legislation–named the “Restoring Overtime Pay for Working Americans Act”–which would bypass these regulatory processes and simply write the President’s suggested changes into the FLSA itself. If adopted, the law would make several changes: 1) it would raise the threshold below which low-paid salary workers must be paid overtime for hours worked in excess of forty per week, from $455 to $1,090 per week, then indexed to inflation. This threshold amount had not been changed since 1975; 2) it would raise the threshold for “highly-compensated” employees from $100,000 to $125,000 per year; 3) it would restore the “primary duty” test for determining qualification for the executive exemption, removed from the regulations in 2004, which specifies that exempt workers must spend more than fifty percent of their time performing exempt job duties; and 4) it would impose a $1,100 penalty on employers that fail to keep complete records of hours and wages.