Illinois Legislature Approves Bill to Raise Minimum Wage to $15.00, Sends to Governor for Signature

(Update from an earlier post)

The Illinois legislature has now passed the “Lifting Up Illinois Working Families Act,” under which the state’s minimum wage will increase to $15.00 per hour over the next six years. Governor J.B. Pritzker has stated that he intends to sign the bill into law prior to his first budget speech on February 20th.

Under the new law, the hourly minimum wage will increase to $9.25 on January 1, 2020; to $10.00 on July 1, 2020; to $11.00 on January 1, 2021; and an additional $1.00 per hour each January 1st thereafter, until reaching $15.00 on January 1, 2025. Employers may pay a slightly lower wage rate to employees under the age of 18, provided they work less than 650 hours a year. The law also provides a tax credit to those employers with less than 50 full-time-equivalent employees.

In addition to increasing the minimum wage, the law increases the remedies available to employees who are paid less than minimum wage. Employees will now be able to recover triple the amount of the underpayment; reasonable attorney’s fees and costs; and an additional payment (effectively, interest) of 5% of the amount of the underpayment for each month it remains unpaid. In addition, an employer that violates the minimum wage provisions will have to pay a statutory penalty of $1,500 to the Illinois Department of Labor Wage Theft Enforcement Fund, as well as a penalty of $100 per affected employee if it fails to maintain proper payroll records.

If you have any questions about the Illinois minimum wage law, or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Second Circuit Shears Cosmetology Student’s Claims in Intern-or-Employee Case

Concluding that a student at a for-profit cosmetology academy was the “primary beneficiary” of the hours he spent training at the academy’s salon, the Second Circuit Court of Appeals has upheld the district’s court’s determination that the student was an intern, and not an not employee entitled to minimum wage or overtime under the FLSA or the New York Labor Law. Velarde v. GW GJ, Inc., 2019 U.S. App. LEXIS 3536 (2d Cir. Feb. 5, 2019). The Second Circuit has jurisdiction over New York, Connecticut and Vermont.

In 2011, the plaintiff enrolled in the Academy, a for-profit cosmetology training school operating in Erie County, New York. That same year, he completed the training program, a 1000-hour course of study approved by the state. The Academy program included about 300 hours of classroom instruction and 700 hours of supervised practical experience in the school’s student salon, where members of the public can receive discounted cosmetology services while the students refine their skills. Several years after completing the program and obtaining his cosmetology license, the plaintiff sued the Academy, claiming that it violated the FLSA and state law by failing to pay him for the work that he did in the salon while enrolled as a student.

Upholding the district court’s grant of judgment on the pleading to the defendants, the Second Circuit reviewed the “totality of the circumstances” of the plaintiff’s training program, in light of the multi-factor analysis it set forth in Glatt v. Fox Searchlight Pictures, Inc., 811 F.3d 528 (2d Cir. 2016). Those non-exhaustive factors include:

(1)        the extent to which the intern and employer clearly understand that there is no expectation of compensation;

(2)        the extent to which the internship provides training similar to that given in an education environment, including clinical or other hands-on training;

(3)        the extent to which the internship is tied to the intern’s formal education program through integrated coursework or credit;

(4)        the extent to which the internship accommodates the intern’s academic calendar;

(5)        the extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning;

(6)        the extent to which the intern’s work complements, rather than displaces, that of paid employees; and

(7)        the extent to which the intern and employer understand that there is no entitlement to employment following the internship.

The Second Circuit noted that some of these factors were less applicable in the vocational training context than in other internship programs (for example, the absence of an expectation of future employment with the institution). Nevertheless, the Court of Appeals readily concluded that the plaintiff was the primary beneficiary of the school’s program, including the time spent at the salon honing his practical skills, given that without such a program, the plaintiff would not satisfy the state’s requirements to obtain his cosmetology license. The mere fact that the Academy derived some benefit from the practical training (i.e. any profits it received from the salon services provided to the public) did not necessarily mean that the school was the primary beneficiary.

In reaching its decision, the Second Circuit cited a very similar opinion from the Seventh Circuit, discussed here, in which that Court of Appeals likewise concluded that cosmetology students were interns and not employees. While the Second Circuit and other courts have noted that such intern-or-employee lawsuits must be assessed on a case-by-case basis, Velarde nevertheless provides practical guidance to businesses constructing both vocational training programs and general internship programs. Employers establishing such programs should benchmark them against Velarde and other appellate guidance.

If you have any questions about internships or other wage and hour issues, please contact the Jackson Lewis attorney with whom you work.

Illinois Legislature Fast-Tracks Bill to Raise Minimum Wage to $15.00

Following up on its recently-elected governor’s campaign pledge, the Illinois legislature has fast-tracked the “Lifting Up Illinois Working Families Act,” under which the state’s minimum wage will increase to $15.00 per hour over the next six years. First introduced on February 6th, the bill already has been passed by the state senate and likely is to be passed quickly by the state house of representatives as well. Governor J.B. Pritzker has stated that he would like to sign the bill into law prior to his first budget speech on February 20th.

Under the bill, the hourly minimum wage will increase to $9.25 on January 1, 2020; to $10.00 on July 1, 2020; to $11.00 on January 1, 2021; and an additional $1.00 per hour each January 1st thereafter, until reaching $15.00 on January 1, 2025.  Absent further revision by the house of representatives, the law will permit employers to pay a slightly lower wage rate to employees under the age of 18, provided they work less than 650 hours a year. The law also will provide a tax credit to those employers with less than 50 full-time-equivalent employees.

In addition to increasing the minimum wage, the law will increase the remedies available to employees who are paid less than minimum wage. Employees will now be able to recover triple the amount of the underpayment; reasonable attorney’s fees and costs; and an additional payment (effectively, interest) of 5% of the amount of the underpayment for each month it remains unpaid. In addition, employers will have to pay a statutory penalty of $1,500 to the Illinois Department of Labor Wage Theft Enforcement Fund and, on top of already-existing statutory penalties, the law will now impose a penalty, of $100 per each affected employee, on an employer who fails to maintain proper payroll records. That penalty likewise will be paid to the Wage Theft Enforcement Fund.

If, as expected, the bill becomes law, Illinois will become the third largest state (employee-wise) to have passed a $15 minimum wage bill, surpassing New Jersey (which itself enacted a similar law earlier this week) and behind only California and New York in this respect. Notably, two localities within Illinois already have minimum wage rates higher than the state rate: Chicago, at $12.00 an hour ($13.00 beginning in July) and Cook County, at $11.00 an hour. These local rates would be superseded if and when exceeded by the state rate.

Jackson Lewis will continue to monitor the bill’s development and will report any changes to its expected passage. If you have any questions about the impending Illinois minimum wage law, or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Miami Minimum Wage Ordinance Remains Invalid after Review Denied by Florida Supreme Court

A 2016 Miami ordinance, intended to increase the City’s minimum wage to more than $13.00 an hour by 2021, remains invalid after the state’s highest court denied review of a lower appellate court decision.

In 2003, the Florida legislature enacted a statute establishing the federal minimum wage as the minimum wage for the state of Florida and prohibiting local governments from passing ordinances that would seek to raise the minimum wage above the federal rate. The following year, Florida voters passed an initiative to amend the Florida Constitution to establish a statewide minimum wage higher than the federal minimum. Based on its interpretation of the amendment, the City of Miami believed that it now had the authority to establish a higher minimum wage than was provided under state law and, in 2016, enacted such an ordinance.

Representatives of a business federation brought suit, however, alleging that the local ordinance violated the 2003 state preemption statute. The Miami-Dade County Circuit Court agreed and declared that the Miami ordinance was unenforceable. The City appealed but the Third District Court of Appeals affirmed the lower court’s decision, holding that the constitutional amendment merely allowed the state to change the state minimum wage and said nothing about preempting the preexisting statutory prohibition on local municipalities enacting a different minimum wage. Absent such explicit language, the appellate court concluded, it was not going to assume that the purpose of the amendment was to supersede the earlier statutory prohibition on local minimum wage ordinances.

The City then sought review by the Florida Supreme Court and last year, in a 4-3 vote, the state’s high court agreed to do so, setting oral arguments for next month. In the interim, however, several justices retired under a state mandatory age law and Florida’s newly-elected governor appointed new justices. On February 5th, the Florida Supreme Court dismissed the petition for review on a 5-2 vote, with all of the new justices joining in the dismissal. Thus, Florida remains one of nearly twenty states that have enacted laws prohibiting municipalities or other local jurisdictions from implementing their own minimum wage rates.

If you have any question about this development or any other wage and hour issues, please contact the Jackson Lewis attorney(s) with whom you regularly work.

New Jersey Becomes Latest State to Enact a $15 Minimum Wage Law

With its governor’s signature yesterday, New Jersey became the latest – and the third largest – state to pass a $15.00 per hour minimum wage bill.  The only states with larger populations than New Jersey passing such $15 minimum wage bills are California and New York, which enacted similar laws in 2016 and 2017, respectively.

Under the New Jersey law, the state’s current minimum wage of $8.85 per hour will rise to $10.00 per hour on July 1, 2019; to $11.00 per hour on January 1, 2020; and an additional $1.00 per hour on January 1st of each successive year until reaching $15.00 per hour in 2024. Each year thereafter, based on state constitutional provisions, the minimum wage may increase further depending on the national Consumer Price Index. The New Jersey law does carve out a handful of exceptions, such as for seasonal employers and small employers (those with 5 or fewer employees), but most of those exceptions merely extend by a few years the schedule for implementing the $15 per hour minimum.

At the federal level, meanwhile, a bill to gradually increase the federal minimum wage to $15.00 per hour was introduced by Democratic leaders in the House of Representatives in early January. The current federal minimum wage has been $7.25 for nearly a decade. Backed by House Speaker Nancy Pelosi, Senate Minority Leader Charles Schumer, and Senator Bernie Sanders, among others, the bill has 181 co-sponsors in the House and 31 co-sponsors in the Senate.

Contrary to the minimum wage stagnancy at the federal level, the arrival of 2019 saw even more states and municipalities implementing higher minimum wage rates, including increases in Arkansas, Massachusetts and Missouri, and an upcoming increase in Michigan. In addition, through the first month of 2019, bills to raise the minimum wage to $15.00 an hour have been introduced in Virginia, Hawaii, New Mexico, and Maryland. The Virginia bill subsequently was defeated by a narrow, two-vote margin in the state senate.

Jackson Lewis will continue to monitor these and other wage and hour issues. If you have any questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Eleventh Circuit to Undertake Full-Court Review of Challenge to Alabama Law Prohibiting Local Minimum Wage Laws

The Eleventh Circuit Court of Appeals has agreed to undertake a full-court review to decide the validity of a 2015 Alabama law prohibiting cities or other local municipalities from adopting their own laws concerning minimum wages, leave benefits, collective bargaining and other employment-related issues. The law was enacted in response to an ordinance passed by the Birmingham City Council to increase the minimum wage for all employees within the City’s boundaries, from the current federal minimum of $7.25 to $10.10. While local jurisdictions in a number of states have enacted their own minimum wage ordinances in recent years, Alabama is one of nearly twenty states that have passed laws prohibiting such ordinances.

The lawsuit originally was filed by the NAACP and two Birmingham residents in 2016 against the Alabama Attorney General, the Governor of Alabama and the Mayor of Birmingham, alleging a variety of Constitutional violations and a violation of the Voting Rights Act, based on allegations that the state law’s passage was rooted in the state legislature’s racial bias against Birmingham’s black-majority city council and citizens. The case was dismissed by a federal district judge in 2017 but was revived in July 2018 by a three-judge panel of the Eleventh Circuit, concluding that the facts as alleged were sufficient to maintain the plaintiffs’ race discrimination claims. The state had argued successfully before the district court that because the law applied statewide, and not just in Birmingham, the fact that it would have affected more black employees in that city was an insufficient basis for the plaintiffs to maintain their disparate impact discrimination claims. Rejecting that argument, the Eleventh Circuit panel held that such “cherry-picked” statistics disregarded the specific allegations in the case, namely, that the law was aimed precisely at Birmingham and not the state as a whole.

Whether a majority of the full court will agree with the district court, the panel decision, or something in between, remains to be seen. If the law is upheld, the state likely will continue to prohibit cities and municipalities from adopting local laws providing higher minimum wages than permitted under state law.  Jackson Lewis will continue to monitor developments in this case.  If you have any questions regarding this or any other wage and hour issue, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Teamsters Challenges Federal Agency Decision on California Break Rules on Interstate Truck Drivers

The International Brotherhood of Teamsters, Local 2785 has filed a petition for review to the Ninth Circuit Court of Appeals on the Federal Motor Carrier Safety Administration’s (FMCSA) determination that California’s meal and rest break rules are preempted as applied to drivers of commercial motor vehicles (CMVs) subject to the FMCSA’s hours-of-service (HOS) regulations. This primarily involves interstate truck drivers and some intrastate drivers who meet certain criteria under the HOS regulations who drive CMVs. The Teamsters are seeking to reverse the Agency’s administrative determination.

Please find the full article on our California Workplace Law Blog here.

New Overtime Rule Soon to Make Its Appearance

The DOL’s new overtime rule, intended to replace the rule announced late in the Obama administration but subsequently declared invalid by a federal court, finally has made, or soon will make its way, to the Office of Information and Regulatory Affairs (OIRA), a division of the Office of Management and Budget (OMB), Bloomberg Law has reported. OIRA is responsible for reviewing significant regulations before publication to ensure agency compliance with the principles in Executive Order 12866, which include incorporating public comment, considering alternatives to the rulemaking, and analyzing both costs and benefits. OIRA can take up to 90 days to review a regulation, which can be extended, and there is no minimum period of review required. Last fall, the DOL’s Wage and Hour Division announced that a new notice of proposed rulemaking is scheduled to be released by March 2019. How, if at all, the continuing government shutdown will affect this schedule is unknown.

In May 2016, the DOL issued its long-awaited overtime rule and, in doing so, more than doubled the required salary for the “white collar” exemptions (those individuals employed in an executive, administrative, or professional capacity) from $23,660 to $47,476. That rule also raised the required salary level for the “highly compensated” exemption, from $100,000 to $134,004, and established rules for automatic increases to those levels every three years. The rule was set to take effect on December 1, 2016 but days before it was to become effective, a federal district court in Texas enjoined the rule nationwide and subsequently held that the rule was invalid. The DOL initially appealed these decisions but eventually withdrew its appeals, asserting early in the Trump administration that it intended instead to issue a revised rule. Based on previous comments from Secretary of Labor Alexander Acosta, the new proposed minimum salary level for the white collar exemptions is expected to be in the low $30,000 range – significantly lower than the minimum salary set forth in the now-defunct Obama-era rule.

Jackson Lewis will continue to monitor developments concerning the new overtime rule and will provide updates when available. In the meantime, if you have any questions about the forthcoming rule or any other wage and hour question, please contact the Jackson Lewis attorney(s) with whom you regularly

California Piece-Rate Law Upheld by Court of Appeal

Rejecting an argument that the use of the phrase “other nonproductive time” rendered the statute unconstitutionally vague, a California Court of Appeal recently upheld the state’s law regarding compensation of piece-rate workers. Nisei Farmers League v. California Labor & Workforce Dev. Agency, 2019 Cal. App. LEXIS 10 (Cal. Ct. App. Jan. 4, 2019). Therefore, the method of pay calculation that has been in place since 2013 remains the law.

California law, as first set forth in two groundbreaking Court of Appeal cases in 2013 and subsequently codified by the California legislature in 2016, does not allow “nonproductive” work time to be lumped together with productive time when determining whether a piece-rate employee has been paid at least minimum wage. Thus, when a piece-rate employee is engaged in nonproductive work, that time must be separately compensated at a rate at least equal to minimum wage for all hours worked. California law differs from, and is more restrictive than, federal law in this respect. Under the FLSA’s piece-rate regulations, nonproductive time does not have to be separately compensated; as long as total pay divided by total hours worked for the week equals or exceeds the federal minimum wage, the law is satisfied. 29 C.F.R. §778.111.

As defined under the 2016 California statute (Labor Code Section 226.2), nonproductive time includes rest and recovery periods and “other nonproductive time,” the latter being defined as “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.” For example, the time spent waiting for the next assignment, by an auto mechanic who is paid based on each repair or maintenance job performed, would be considered “other nonproductive time.”

In Nisei, the plaintiff-appellees argued that the term “other nonproductive time” was unconstitutionally vague because the statute failed to define precisely what activities constituted such time. The Court of Appeal rejected this argument, noting that to be unconstitutionally void for vagueness, the statute must “either forbid[] or require[] the doing of an act in terms so vague that persons of common intelligence must necessarily guess as to its meaning and differ as to what is required.” Recognizing that demonstrating unconstitutional vagueness is an “exacting” standard, the Court of Appeal added that a statute will not be considered void solely because it contains some level of ambiguity. In this case, the Court of Appeal held that the definition set forth in the statute did not meet that exacting standard of vagueness, but instead “provides an adequately discernable standard that possesses a reasonable degree of specificity.”

Accordingly, California law regarding pay calculation for piece-rate workers, as it has existed for the past several years, remains binding on all employers in the State. If you have any questions about this statute or any other wage and hour question, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Arkansas, Missouri Voters Approve Minimum Wage Increases

By overwhelming majorities, voters in Arkansas and Missouri have approved incremental minimum wage increases over the next several years.

In Arkansas, Issue 5 (the Minimum Wage Increase Initiative (2018)) was approved by a margin of approximately 68% to 32%. With passage of the initiative, Arkansas’s current minimum wage of $8.50 per hour will increase to $9.25 per hour on January 1, 2019; to $10.00 per hour on January 1, 2020; and to $11.00 per hour on January 1, 2021. The minimum wage increase is estimated to affect about 300,000 employees.

Similarly, in neighboring Missouri, Proposition B (the $12 Minimum Wage Initiative (2018)) was approved by voters with a margin of approximately 62% to 38%. With its passage, the minimum wage in Missouri will increase from its current rate of $7.85 per hour to $8.60 per hour on January 1, 2019; to $9.45 per hour on January 1, 2020; to $10.30 per hour on January 1, 2021; to $11.15 per hour on January 1, 2022; and to $12.00 per hour on January 1, 2023. Thereafter, the minimum wage may increase or decrease each year based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). An estimated 677,000 employees will be affected.

In addition to increasing the minimum wage, Proposition B increased the available damages for an employer’s violation of the minimum wage statute, by allowing recovery of liquidated damages in an amount equal to twice the amount of actual damages. Moreover, the new law extended the statute of limitations for bringing a minimum wage claim, from two years to three. Notably, government employers are exempt from the minimum wage increases in Missouri.

For more information on either of these minimum wage initiatives or any other wage and hour issue, please contact the Jackson Lewis attorney(s) with whom you regularly work.

 

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