WASHINGTON — While no dry cleaner goes into business for the joy of maintaining payroll reports and ensuring their business is compliant with federal, state and local wage and hour laws, the reality is that owners need to pay attention to this detail of their business, including staying current with changing regulations.
This was the message of Bradford Kelley and Mike Paglialonga of Littler Mendelson P.C., a national law firm that specializes in labor and employment law. The pair recently spoke in the presentation “Wage and Hour Compliance for Small Business,” hosted by the National Federation of Independent Business (NFIB).
Employers and the FLSA
Their presentation centered around the Fair Labor Standards Act, also known as the FLSA, which was passed in 1938 during the Franklin D. Roosevelt administration, and it addresses the federal minimum wage, overtime, record-keeping obligations and other facets of business.
“The federal law came into effect toward what we consider the tail end of the Great Depression,” Paglialonga says. “This is a New Deal program that set a national standard for minimum wage.”
One important thing to keep in mind is that, while there are federal guidelines and laws set, these are not the final word that employers have to keep in mind.
“The national standard does not operate in a way that prevents or preempts states and localities from adopting higher standards — it's quite the opposite,” Paglialonga says. “The law leaves it as a state or locality issue if there are higher standards that are more protective for employees — in that way, it sets a floor and not a ceiling.”
This particular becomes a factor if a business operates in more than one state or municipality.
“When we talk about these issues, we pay a lot of attention to where the employees are working and what law they are subject to,” Paglialonga says. “We say ‘where they're working’ because many employment laws we talk about are based on where the employment is performed, not necessarily where a company is headquartered or incorporated.”
What is the Minimum Wage?
Minimum Wage, one of the topics addressed by the FLSA, is set on the federal level, currently at $7.25 an hour.
This, as most employers know, isn’t the final word on that subject.
“Federal minimum wage is quite a bit lower than the minimum wage in a lot of states around the country,” Paglialonga says. “In some cases, it’s actually more than double what the federal minimum wage is.”
This usually depends on the cost-of-living factors in different areas of the United States. States with higher minimum wage rates include:
- Washington State: $16.38
- California: $16.00; $20.00 for Fast Food
- Connecticut: $15.69
- New York (Upstate): $15.00
In addition, some cities set an even higher rate than the state they are in. Some examples include:
- Tukwila, WA: $20.29
- Seattle, WA: $19.97
- Mountain View, CA: $18.75
- San Francisco: $18.07
- Washington, DC: $17.00
- New York City $16.00
While employers violating these rules may face federal investigations and fines, enforcement at the state level can be more aggressive, Paglialonga says. “In New York, the state would go back six years for investigations — it's a longer statute and much higher consequences.”
Little Things Add Up
While small violations of wage and hour rules might fall under the radar of business owners, Paglialonga urges them to pay attention.
“Federal law allows a single employee to get an attorney and attempt to sue on behalf of all other similarly situated employees for these actions,” he says. “A lot of these claims we're talking about might seem like small potatoes — it's only $8 here and there, or we're only talking about two or three hours. But when you combine them, even for a small- or middle-sized business where you have 20, 30 or 50 employees brought in, the damages really add up, and the amounts get to be rather high.”
Paglialonga has seen this in the cases his firm is handling. “The influx of class and collective actions over the last 15 and 20 years has been very difficult for businesses to deal with,” he says, “and it's happening to smaller and smaller businesses, unfortunately.”
Business owners need to know the basics about minimum wage laws, Paglialonga says, both for now and for their future plans.
“Knowing what your local and state requirements are is critical,” he says, “but also if you are expanding into different areas, perhaps opening a second location, it's important to see what that regulatory environment you're entering is, because the cost can be very real and very high.”
Come back on Tuesday, where we’ll continue this series by examining overtime law, including who’s eligible, who’s not and how the rules are changing.
Have a question or comment? E-mail our editor Dave Davis at [email protected].
