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

DOL May Enforce Rules Extending Tip Pooling Restrictions

Since 2010, the law has been in flux as to whether certain restaurant employees may or may not be allowed to participate in tip pools, particularly in states located in the jurisdiction of the U.S. Court of Appeals for the Ninth Circuit (these states include Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington).  However, a recent ruling from the Ninth Circuit has clarified this issue, and it is now clear that restaurants and hotels cannot require servers to pool and/or share tips with non-tipped kitchen and other back of the house staff such as dishwashers, chefs or cooks who do not customarily and regularly receive tips, even if the restaurant does not utilize the tip credit.  To fully appreciate this decision, it is necessary to re-visit the recent history of uncertainty surrounding this rule.

Chef PictureThe primary issue is whether tip-credit restrictions can be imposed on employers who do not take a tip credit.  While employers can require servers to participate in a tip pool with others who customarily and regularly receive tips even if they take a tip credit,  the Fair Labor Standards Act (“FLSA”) is silent as to whether employers who do not take a tip credit can require servers to participate in a tip pool with kitchen employees.  Based on this premise, the Ninth Circuit held in 2010 in Cumbie v. Woody Woo, Inc., that an employer could require servers to pool tips to share with non-tipped kitchen and other back of the house staff who did not customarily and regularly receive tips, as long as (i) the servers were paid at least minimum wage; and (ii) the employer did not take a tip credit.  The Ninth Circuit concluded that nothing in the text of the FLSA restricted employee tip pooling arrangements when no tip credit was taken. Continue reading