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July 6, 2015

Maryland’s Minimum Wage Increase Effective July 1

By:  Edmund O’Meally, Esquire                        eomeally@pklaw.com
 
As of July 1, Maryland’s minimum wage has increased to $8.25 per hour.  The raise is a result of legislation that was passed in May of 2014 that calls for the minimum wage to ultimately be raised to $10.10 by July of 2018.  The raise, which has already been phased from $7.25 to $8.25 is slated to increase by $.50 effective July 1, 2016 and $9.25 on July 1, 2017.   Maryland was the second state to raise their rate to $10.10, currently the highest rate in the country. 
 
Of potentially greater importance to employers is the U.S. Department of Labor’s (“DOL”) proposal to increase the eligibility for overtime pay to a large group of currently exempt salaried workers.  Under current DOL regulations, executive, administrative, and professional employees who earn a salary of at least $455 per week ($23,660 per year) are exempt from overtime.  Under the new DOL proposal, the salary threshold will be increased to about $970 a week ($50,440 a year) in 2016 with automatic escalations in future years.  This proposed increase could have huge ramifications for employers’ bottom lines and the costs for their services.  If adopted, the proposed regulations will cause some employers to increase the size of their workforce in an effort to reduce the hours worked by existing employees while causing other employers to increase the salary rates of all employees.  Other employers may attempt to use independent contractors; however, that approach raises questions of employee misclassification and both wage and hour and tax implications.  It is important to note that the overtime exemption levels are set by regulation rather than by statute and that President Obama supports these measures.
 
For issues relating to overtime pay and exemptions of salaried employees or other wage and hour issues contact one of PK Law’s Labor and Employment Attorneys or information@pklaw.com