Over the past several years we’ve seen nationwide efforts, often precipitated by unions, to increase the minimum wage at the local level to $15 as a means of addressing economic inequality. The movement, called the “Fight for $15,” has seen some success in several states as well as in numerous cities. Seattle, New York, San Francisco, San Jose and others in the Silicon Valley of California have adopted a $15 minimum wage, usually to be reached by incremental increases over a period of years. Interestingly, some of these cities are now seeking to accelerate the progression and go to $15 immediately, like Emeryville, Calif., which recently took its minimum wage to $15.20.
The National Bureau of Economic Research concluded that the $15 mandate has, as some predicted, resulted in job losses and reduced work hours in Seattle. Fearing similar results, the state of Missouri recently rolled back a plan to gradually increase the minimum wage. Yet efforts at the local level to require substantial increases in the minimum wage continue across the country, albeit at a slower pace. These efforts predate the current presidential administration, which has very publicly promised to slow down the pace of federal regulation. It’s therefore difficult to ascribe any single cause for the increased local action. However, at present, it continues to move forward and is even likely to accelerate.
The battle over the minimum wage will continue at the state and local level as some states seek to raise wages while others eliminate wage increases that are enacted by the local city governments. Some states like Iowa, Missouri, and Kentucky have rolled back or prohibited local governments from raising the minimum wage in their locale. Other states are seeking to rapidly raise the minimum wage to $15. Perhaps most striking are the comments from California Gov. Jerry Brown upon signing bill to hike the minimum wage.
“Economically, minimum wages may not make sense…. Morally and socially and politically, they (minimum wages) make every sense because it binds the community together and makes sure that parents can take care of their kids in a much more satisfactory way,” he said.
Moreover, many states that raise the state minimum wage suffer backlash from rural areas that often cannot support a $15 minimum wage. Of the states that have sought to raise the minimum wage, only Oregon has attempted to solve this problem by enacting different wages for urban and non-urban areas. New York has set a schedule for how fast the minimum wage will rise to $15 in urban and non-urban areas, but eventually the entire state will have a minimum wage of $15 or higher. As states seek to raise the minimum wage, there’s likely to be increased tension between minimum wage supporters and opponents in urban and rural areas.
Fringe Benefits Also in Play
These local mandates by both states and cities haven’t been limited to minimum wage increases. Mandatory paid sick leave and paid family leave are also required in many communities and are under consideration in others. New Jersey and Rhode Island both have a paid family leave requirement. California has had a paid family leave requirement in effect for several years. Arizona implemented a mandatory paid sick leave policy for all employers as of July 1. New York also adopted a paid family leave somewhat similar to the unpaid federal Family and Medical Leave Act, to become effective for all employees as of Jan. 1, 2018. In both California and New York, the paid family leave is funded through employee payroll deductions and pays at a level somewhat similar to unemployment benefits. In addition to the paid time off for qualifying circumstances, the laws also obligate the employer to provide employees utilizing the leave mandatory reinstatement to their job upon return and continued health insurance coverage during the leave as if the employee were working. In the case of the new Arizona sick leave law, if any adverse action is taken against an employee after requesting or taking such leave, it will be considered presumptively retaliatory. If utilized by employees to their full extent, the operational consequences of these mandated benefits could be dramatic for some employers.
An Out-of-Norm Trend
These actions to mandate increased minimum wages and fringe benefits through state or local governmental action are part of a rapidly growing trend of workplace regulation through means other than federal legislative or agency action that’s been the norm for American business for decades. It requires a new approach on the part of employers and their representative associations. Active engagement with state and local officials, state legislatures, city councils and local business groups will be even more important than the national lobbying and political action efforts that have historically represented employers. Being aware and actively involved in addressing local initiatives or legislation should become a priority.
And we cannot say that such regulation is totally new. Some states, such as California and New York have long had significant employer obligations in the area of work hours, overtime and employee breaks. In fact, litigation of wage and hour claims under the highly technical California wage orders has virtually clogged that state’s court dockets. With statutes of limitations extending back as far as four years, these types of claims are quite attractive to plaintiffs’ lawyers and have resulted in millions of dollars in liability.
What Employers Can Do
What these developments mean for the average employer is that if they’re to protect themselves against potential claims, they must now not only be politically engaged, but also must stay abreast of workplace rules issued by every legal jurisdiction that exercises authority over them. Political action to make your views known may now be a necessity. Since this trend of more local rules isn’t likely to reverse, it would also be prudent to designate someone in your organization, such as human resources or a manager responsible for personnel matters, to closely monitor all local and state workplace regulations as well as any proposed legislation. In addition, review all current workplace policies to assure that you stay in compliance with these evolving laws. Employers have always been aware, at least in general, of their federal obligations to their employees, and must obviously continue to do so. However, we’re now dealing with a new dynamic of local regulation that will require even closer attention as it expands to even more aspects of the employment relationship.