The Maryland General Assembly has passed a new Minimum Wage law (the “MW” in this article), which when signed by the Governor, which is a foregone conclusion, will go into effect on January 1, 2015 (House Bill (HB) 295/Senate Bill (SB) 331).
Here are some interesting changes to the Labor and Employment Article of the Annotated Code of Maryland (§3-403 and following) relating to the new law:
Some deletions from the statute:
- Exemptions from the law were removed for those at least 62 years old employed no more than 25 hours a week as well as employees of drive-in theaters so those employees are now covered under the law.
- Of course, the pre-HB 295 MW of $6.15 per hour is removed.
Changes to the law, other than deletions:
- The exemption for an establishment that “sells food and drink for consumption on the premises” (not just restaurateurs) is raised from $250,000 to $400,000, or less, in annual gross income.
- The term “employer” now includes “a governmental unit”.
- The law implements the increased state MW as a “phase-in”:
- From January 1, 2015 to July 1, 2015: $8.00 per hour;
- From July 1, 2015 to July 1, 2016: $8.25 per hour;
- From July 1, 2016 to July 1, 2017: $8.75 per hour;
- From July 1, 2017 to July 1, 2018: $9.25 per hour; and
- From July 1, 2018 and thereafter: $10.10 per hour.
- An employer may pay 85% of the state MW or $7.25 an hour to an employee who is under the age of 20 years, but only for the first six months of employment provided that the employer is “an amusement or recreational establishment, including a swimming pool,” and if “the employer operates for no more than 7 months in a calendar year or “for any 6 months during the preceding calendar year, has average receipts in excess of that do not exceed one–third of the average receipts for the other 6 months.”
- If the employer is found to have violated the MW statute the employee may recover the difference between the MW and what was paid and an additional sum equal to the difference between the MW and what was paid as liquidated damages unless the employer acted in good faith and reasonably believed itself to be in compliance with the law.
- Under existing law an employer may “set” an amount which represents “the tips of the employee” as a “tip credit” against the MW, for those working for “tips”. The new law sets a maximum “tip credit” equal to the MW amount less $3.63 (half the current federal minimum wage). (According to the fiscal note to the legislation: “Under the bill, an employer who employs a worker who receives tips may claim a tip credit of the State minimum wage, less $3.63. Thus, the tip credit increases as the minimum wage increases, and the wage paid by employers to tipped employees remains $3.63, as long as their wages plus tips equal the minimum wage.”)
- The statute mandates that the Governor appropriate an increase of 3.5% in the State budget year over year through fiscal year 2019 for caregivers to the “developmentally disabled”.
It is important to bear in mind that for those employees subject to both the federal and state MW, those employees must be paid the greater of the two minimum wage amounts. The current federal minimum wage is set at $7.25 per hour, but there is federal executive and legislative branch movement to increase that amount to $10.10 an hour.
The attorneys at PK Law can guide you in applying the new law to your business, assist you with a full wage and hour audit or, if necessary, defend you and your business in a wage and hour action. For more information contact Leslie Stellman, Edmund O’Meally, Mark Maneche or Greg Weiner.