UPDATE: On May 28, 2019, this bill was signed into law.

On May 17, 2019, Connecticut lawmakers passed House Bill 5004, “An Act Increasing the Minimum Fair Wage,” which raises the state’s minimum wage, in increments, to $15 per hour by 2023.  Governor Ned Lamont has pledged to sign the bill. 

The current minimum wage is $10.10 per hour. Below is a summary of the minimum wage increases mandated by House Bill 5004:

Beginning on January 1, 2024, and every January 1 thereafter, the minimum wage will be adjusted by the percentage change in the Employment Cost Index for all civilian workers’ salaries and wages, over the 12-month period ending on June 30 of the preceding year, as calculated by the United States Department of Labor.

This legislation also requires the Labor Commissioner to make recommendations in writing to the governor on “whether any scheduled minimum wage increases should be suspended after two consecutive quarters of negative growth in the state’s real gross domestic product” as reported by the Bureau of Economic Analysis of the United States Department of Commerce.¹ The governor can then make his own recommendation to the legislature as to whether the minimum wage increases should be suspended.

Tip Credit

House Bill 5004 does not change the ability of employers in the hotel and restaurant industry to take a tip credit toward the minimum wage.  The tip credit allows these employers to pay their employees less than the minimum wage (the “employer share”) as long as the employees’ tips bring their hourly wage up to at least the minimum wage.  The employer share for bartenders is currently $8.23 per hour; the employer share for hotel and restaurant staff other than bartenders is currently $6.38 per hour. The legislation maintains these levels but also “requires the tip credit’s value to correspondingly increase to make up the difference between the employer’s share and the bill’s minimum wage increases. Thus, it allows employers to count these employees’ tips towards the difference between the employer’s share and the increasing minimum wage, as long as the tips make up the difference.”²

Training Wage

Currently, Connecticut law allows employers to pay beginners, learners and employees under the age of 18 (excluding emancipated minors) at least 85% of the minimum wage for the first 200 hours of their employment.  This bill eliminates the exception for beginners and learners so that now the training wage will apply only to employees under the age of 18 (excluding emancipated minors) as described further below.  All employees 18 years of age or older, including beginners and learners, would be paid the full minimum wage.

When the training wage is payable, this bill mandates that it be the greater of $10.10 or 85% of the minimum wage.  The current training wage is $8.59 (85% of $10.10).  Below is a summary of the training wage based on the increases to the minimum wage mandated under this bill:

This bill shortens the duration of time during which the training wage may be paid.  The bill allows for employers to pay the training wage to employees under the age 18 for the first 90 days of their employment, rather than the first 200 hours.  After 90 days, the employee has to be paid at least the full minimum wage.³

Beginning on October 1, 2020, this bill makes it illegal for an employer to take actions “to displace an employee, including, but not limited to, a partial displacement of an employee, such as reducing the employee's hours, wages or employment benefits, for purposes of hiring persons under the age of eighteen years at a rate below the minimum fair wage.”⁴  If the Labor Commissioner determines that a violation has occurred, he must “suspend the employer’s right to pay the reduced rate for employees for a period of time specified in regulations.”⁵  Because the current regulations do not include this penalty, the Labor Commission will likely have to adopt regulations to implement this provision.

Conclusion

Connecticut is now poised to be the seventh state to increase its minimum wage to $15 per hour.⁶ This is the first bill passed in Connecticut in what is expected to be an active session for labor and employment-related bills.  We are closely monitoring the legislative session and will publish additional information if notable labor and employment bills are enacted.  Please stay tuned for additional developments.