You don't need to be an Earth, Wind, and Fire fan to realize September had all the elements necessary to make for a memorable month of developments concerning the minimum wage, tips, and overtime.

White Collar Pay Rule Revision (Take 2): The U.S. Department of Labor's (DOL) Wage & Hour Division unveiled its long-awaited final rule on the overtime “white collar” exemptions under the federal Fair Labor Standards Act (FLSA). The final rule increases the minimum salary or fee employers must pay exempt executive, administrative, and/or professional employees from $455 to $684 per week ($35,568 annualized), excluding board, lodging, or other facilities, and increases from $100,000 to $107,432 the total annual compensation required for employees to qualify under the highly compensated employee exemption.¹ 

New Sheriff in Town: By a 53-44 vote, the U.S. Senate confirmed Eugene Scalia as the next DOL Secretary. He will replace Acting Secretary Patrick Pizzella, who replaced Alexander Acosta.

New Opinion Letter: The DOL released opinion letter FLSA2019-13 concerning the FLSA's 7(i) overtime exception. Under 7(i), overtime provisions do not apply to a retail or service establishment employee whose regular rate of pay exceeds 1.5 times the federal minimum wage, and where more than half the employee’s compensation for a representative period (not less than 1 month) represents commissions on goods or services. The opinion letter addresses what “not less than one month” means.

Hot Tip (Rule): News reports suggest the DOL's proposed rules concerning tipped employees cleared review by the White House Office of Management and Budget (OMB).

October 1, 2019 State Minimum Wage Increases: In Connecticut, the minimum wage will increase from $10.10 to $11.00 per hour. For tipped employees, the minimum cash wage will remain $6.38 per hour for hotel or restaurant industry employees, and $8.23 per hour for bartenders, but the maximum tip credit will increase from $3.72 to 4.62 per hour, and from $1.87 to $2.77 per hour, respectively. Connecticut's October 1, 2019 rate will only last 11 months, with the next increase occurring on September 1, 2020. In Delaware, the minimum wage will increase from $8.75 to $9.25 per hour. For tipped employees, the minimum cash wage will remain $2.23 per hour, but the maximum tip credit will increase from $6.52 to $7.02 per hour.

Legislative & Regulatory Updates: In Congress, Representative Brian Fitzpatrick (R–PA) introduced H.R. 4443, which seeks to amend the FLSA to increase the federal minimum wage, minimum cash wage for tipped employees, and the training wage. In Connecticut, Governor Ned Lamont (D) sent a letter to state legislators, urging them "to act quickly to adopt legislation in a special session to address a recent spate of lawsuits brought against restaurants for violations of state regulations governing the wages owed restaurant workers who perform both service and non-service duties during a particular shift." In Wisconsin, SB 426 proposes to incentivize employers to pay tipped employees the full minimum wage by allowing employers of tipped employees to keep state sales taxes collected during any sales tax reporting period if during that period their records establish that at least 5% of the wages they pay to tipped employees is derived from tips and tipped employees are paid no less than the minimum wage, excluding tips.

2020 Adjusted Minimum Wage Announcements: States and localities began announcing what their consumer-price-index-adjusted minimum wage rates will be on January 1, 2020.

• Alaska: The minimum wage will increase from $9.89 to $10.19 per hour. Alaska prohibits tip credits, so tipped employees must be paid the full minimum wage.
• Ohio: The minimum wage will increase from $8.55 to $8.70 per hour. For tipped employees, the minimum cash wage will increase from $4.30 to $4.35 per hour, and the maximum tip credit will increase from $4.25 to $4.35 per hour. Additionally, the minimum annual gross sales threshold to be a covered employer will increase from $314,000 to $319,000.
• Redwood City, CA: The minimum wage will increase from $13.50 to $15.38 per hour. The notable increase occurs because in 2020 the rate is $15.00 plus a CPI adjustment. California prohibits tip credits, so tipped employees must be paid the full minimum wage.
• San Diego, CA: The minimum wage will increase from $12.00 to $13.00 per hour.
• San Jose, CA: The minimum wage will increase from $15.00 to $15.25 per hour.
• San Mateo, CA: Currently, a $15.00 per hour minimum wage applies generally, and a $13.50 per hour rate applies to certain non-profits. However, in 2020 a $15.38 per hour rate will apply to all businesses.

Ballot Boxing: In Idaho, signatures are being collected to place on a future ballot a measure to increase the state minimum wage from $7.25 to $12.00 per hour. At the November 5, 2019 election, residents of Rancho Palos Verdes, in Southern California, will vote on Measure B. If enacted, Measure B would require large hospitality employers – hotel, golf course, or amusement park employers with 50 or more employees – to pay covered employees a $15.00 per hour minimum wage that will be annually adjusted.

Local Matters: Northern California's San Francisco Bay Area remains a hotbed of activity. Menlo Park and South San Francisco enacted new ordinances that, effective January 1, 2020, require employers to pay covered employees a $15.00 per hour minimum wage. Unlike many minimum wage ordinances (MWO), South San Francisco does not provide a potential exception for employees covered by a collective bargaining agreement that explicitly waives the law's requirements. The city councils in Novato and East Palo Alto held hearings concerning proposed MWOs. Additionally, the Santa Rosa City Council published its agenda for October 1, which includes a proposed MWO.

In Colorado, Denver's mayor and a city councilperson are proposing a MWO that would set an initial minimum wage rate of $13.80 per hour on January 1, 2020, and $15.87 per hour the following January, with annual adjustments in future years. According to the mayor's press release, in November the city council should address the proposal. Summit County's Board of County Commissioners will not put before voters an advisory question concerning whether to adopt an MWO; instead, it formed a minimum wage work group to study and determine whether such an ordinance would benefit the local community.

The Chicago, Illinois City Council's Committee on Workforce Development held a hearing on proposed amendments that accelerate the city's minimum wage schedule. Currently, the minimum wage is $13.00 per hour and will next be annually adjusted on July 1, 2020. As currently written, proposed amendments would increase the citywide minimum wage to $14.00 on July 1, 2020, and to $15.00 per hour on July 1, 2021, with annual adjustments resuming in July 2022. Additionally, the proposal seeks to phase out, then eliminate, the tip credit.

In Seattle, Washington, Mayor Jenny Durkan (D) announced her new "Fare Share" proposal to mandate that, beginning July 2020, rideshare drivers be paid a minimum wage in addition to compensation for benefits and expenses.

We will continue to monitor and report on minimum wage and overtime developments as they occur.