Employment Law Alert – Maryland Increases Minimum Wage
June 5, 2014
Maryland Increases Minimum Wage
On May 5, 2014, Governor O’Malley signed the Maryland Minimum Wage Act of 2014. The law gradually increases Maryland’s minimum wage from $7.25 based on the following schedule:
January 1, 2015
$8.00 per hour
July 1, 2015
$8.25 per hour
July 1, 2016
$8.75 per hour
July 1, 2017
$9.25 per hour
July 1, 2018
$10.10 per hour
Although the original versions of the bill included additional inflation-based minimum wage increases, these automatic increases were excluded from the final law. Moreover, restaurants that have an annual gross income of $400,000 or less are not required to meet the new minimum wages. In addition, employees under the age of 20 are only required to be paid 85% of the new minimum wage.
It is important for employers to recognize that certain counties in Maryland, including Montgomery County and Prince George’s County, have implemented their own minimum wage increase for workers within those counties. Employers must ensure they are in compliance with both state and county wage laws.
New Model COBRA Notice Released by the Department of Labor
On May 2, 2014, the Department of Labor released new model COBRA notices to employees. The updated notices explain that terminated employees eligible for COBRA continuation coverage may choose to purchase coverage through the Affordable Care Act Health Insurance Marketplace in lieu of continuing participation in their former employer’s plan.
Supreme Court Allows Two Important Appellate Court FLSA Rulings to Stand
The Supreme Court recently declined to hear appeals from two circuit court rulings regarding the Fair Labor Standards Act. In one ruling issued in July, 2013, the Second Circuit affirmed a district court ruling that the owner of a grocery chain was individually liable for a $3.5 million settlement in an unpaid wages claim. The lower court found that the business owner qualified as an employer due to his active participation in operational management, his financial control over the company, and his ultimate responsibility for wages and supervision. The Supreme Court’s refusal to hear the appeal in that case means the Second Circuit’s ruling stands, and business owners must be aware of the potential for personal liability for unpaid wages under the FLSA.
In a second case, the Eighth Circuit rejected an employer’s argument that the FLSA does not apply to undocumented workers. The Eight Circuit held that immigration status is irrelevant in FLSA cases, and explained that “the FLSA does not allow employers to exploit any employee’s immigration status or to profit from hiring unauthorized aliens in violation of federal law.”
Virginia Federal Jury Concludes
Loan Officer was Exempt Employee
A federal jury in Virginia recently concluded that a loan officer was properly classified as an “exempt employee” under the Fair Labor Standards Act. The jury concluded that based on the loan officer’s duties and responsibilities, the employee fell within the “outside sales” exemption of the FLSA, which applies to employees who are (1) primarily engaged in sales, and (2) customarily and regularly engaged in sales or promotional work outside of the employer’s places of business. In the Virginia case, there was no dispute that the loan officer engaged in sales, only whether she was engaged in sales outside of the employer’s place of business. Relying on facts indicating that the loan officer spent several hours each week on outside sales and promotional activities, including attending open houses, meetings sponsored by a local business networking group, one-on-one meetings with real estate agents, and mortgage closings, the jury concluded the employee was properly classified as exempt.
It is imperative for employers to understand that the classification of employees under the FLSA is a fact-intensive analysis. Like the Virginia case, the analysis centers on each particular employee’s actual job responsibilities. Employers should seek experienced legal counsel before treating any of its employees as “exempt.”