D.C. and Maryland Set to Increase Minimum Wage on July 1, 2016

As ostack of moneyf July 1, both Maryland’s and the District of Columbia will increase the minimum wage.  Maryland’s minimum wage will increase to $8.75 per hour while the District of Columbia’s will increase to $11.50 per hour.  Employers should be prepared to implement these changes on July 1 to avoid wage complaints and make the appropriate changes to their business models to remain competitive.

Maryland

The raise in the Maryland minimum wage is a result of legislation that was passed in May of 2014.  The Maryland Minimum Wage Act of 2014 calls for the minimum wage to ultimately be raised to $10.10 per hour by July of 2018.  The raise that will go into effect in less than two weeks is a .50 cent increase from the current $8.25 minimum wage.  Although the minimum wage is set to increase, there is no increase in the amount employers are required to pay tipped employees.  Therefore, employees receiving over $30 per month in tips only need to be paid $3.63 per hour, and the remainder may be supplemented by the tip credit.

Employers in Montgomery County and Prince George’s County, Maryland, the two counties neighboring the Washington, D.C. area, should also take note that the counties Continue reading

President Obama Announces New Wage Insurance Program That Could Potentially Increase Employer Costs

As a way to incentivize individuals who are unemployed to return to work and create additional opportunities for these individuals, President Obama recently outlined a new wage insurance plan that would provide supplemental payments to employees who lose their jobs and subsequently obtain lower-paid positions.

Obama signing lawUnder President Obama’s plan, a worker laid off from a job he held for at least three years would be eligible for state-based wage insurance if (i) his new job paid less than his old job; and (2) the new job paid less than $50,000.  This insurance benefit would replace half an employee’s wages, up to $10,000 over two years.

Fortunately for employers, it does not appear that they would have to pay into this wage insurance plan.  Rather, this wage insurance would be federally funded and fully paid for in the budget, even though it would be administered through state unemployment insurance programs.  However, the White House did not say how much the plan would cost.  One possible way to cover the cost would be to slightly increase employers’ unemployment insurance tax.  Thus, if this plan comes into fruition, it is likely that employer costs will rise in at least some capacity. Continue reading