City of Seattle releases final administrative rules, an FAQ and workplace poster as first wage increases go into effect on April 1 under Minimum Wage Ordinance.
(March 31, 2015) The new Seattle Office of Labor Standards (OLS) has released the final Administrative Rules for the City of Seattle’s complicated new Minimum Wage Ordinance just prior to the first wages increases going into effect on April 1. OLS has also released an expanded Frequently Asked Questions (FAQ) and a workplace poster, which complies with the notice and posting requirements of the ordinance.
Businesses in Seattle with more than 500 employees and franchisees, regardless of their size, must begin paying employees a minimum wage of $11 an hour on April 1. They will have three years to reach the $15 minimum wage if they do not provide health care coverage and seven years if they do. Businesses with 500 or fewer employees that pay a flat hourly rate and do not offer health insurance benefits must also start paying a minimum of $11 an hour on April 1 and reach $15 by January 1, 2019. There are separate phase-in schedules for small businesses that pay health benefits and/or report employee tips to the IRS.
The Seattle Hotel Association and the Seattle Restaurant Alliance with support from WLA and the Washington Restaurant Association were successful in their efforts during the rulemaking process to have service charges recognized as commissions. As defined in the rules, service charges paid to the employee may be considered commission and therefore counted as wages. However, the rules also stipulate that employers in the food/hospitality industry must disclose the amount of the service charge payable to the employee on the menu and on an itemized receipt.
The Final Administrative Rules released on March 27 provide clarification on the following topic areas:
SHRR 90-060 Minors Employers can pay 85% of the hourly rate required by the ordinance for employees under 16 years of age.
SHRR 90-070 Service Charges Service charges (e.g. automatic charges at restaurants or banquet facilities) are not tips, but can be considered commissions to meet Seattle minimum wage requirements above the state’s minimum wage. Employers in the food/hospitality industry must disclose the amount of the service charge payable to the employee on the menu and on an itemized receipt.
SHRR 90-080 Work Study Individuals performing under a work study agreement are not covered by the ordinance. The rules define work study as a job placement program that provides students in secondary and/or post-secondary educational institutions with employment opportunities for financial aid and/or vocational training.
SHRR 90-100 Joint employers The payment rate for employees that are jointly employed by one or more employers (e.g. temporary workers) will be determined by the employer with the most employees. For example, a temporary worker who is provided by a small staffing agency to a large employer must be paid at the Large Employer (Schedule 1) rate, even though the staffing agency is “small.”
Employers can also get clarification on the ordinance in an expanded FAQ and fact sheets available on OLS’s website. Also available is a workplace poster, which includes information employers must provide to employees. Although employers are required to provide the information in English, Spanish and any other language commonly spoken by employees at the particular workplace, OLS has not yet provided translations of the poster. It has announced that posters will be available in a variety of languages in the near future.
April 14 Presentation and Panel Discussion on Minimum Wage Requirements
There will be a presentation for employers on the Minimum Wage and Administrative Wage Theft Ordinances by Karina Bull, interim director for the Seattle Office of Labor Standards Tuesday, April 14, from 7:30 to 9:30 a.m. in the Bertha Landes Room at Seattle City Hall. The event will also inlcude a panel discussion with Evelyn Mendoza, human resources director at Uwajimaya; Molly Moon Neitzel, owner and CEO of Molly Moon’s Homemade Ice Cream; and Nicole Vallestero Keenan, policy director of Puget Sound Sage. Sponsors include WorkSource Seattle-King County Business Services Team, the Seattle Office of Economic Development, and the Seattle Office for Civil Rights. This event is free, but registration is required. Click here to register.
Lawsuit Against Discriminatory Treatment of Franchisee in Ordinance
On the legal front, the International Franchise Association (IFA) and five franchisees are suing the City of Seattle in federal court over the ordinance’s illegal discrimination against franchisees by improperly treating them as large, national companies regardless of their size. Although businesses with fewer than 500 employees have up to seven years to phase in the $15 hour wage, franchisees must follow the three-year, large business phase-in schedule even though they are independent small businesses. The IFA request for a preliminary injunction was recently denied by U.S. District Judge Richard A. Jones, and IFA and the five franchisees are now appealing the judge’s decision to the United States Court of Appeals for the Ninth Circuit. WLA has been a strong supporter of this legal challenge and will continue to keep its members apprised of its progress. Learn more here.