Legal Blog

Minimum Wage Increase Conundrums For Maryland Employers

In the last General Assembly Maryland joined many other states in increasing its minimum wage above federal levels. The State hike in hourly wages will be made gradually slowly edging up to $8 an hour on January 1, 2015 and $8.25 on July 1, 2015.   After that point, the rate is increased in 50 cent increments for 2016 and 2017. If not changed or surpassed by federal law before then, it will be set at $10.10 on July 1, 2018. Montgomery County also approved a hike in minimum wages which applies to workers and work performed in Montgomery County.  Higher than the State wage, it increases the minimum wage in annual steps to $8.40 on October 1, 2014, $9.55 in 2015, $10.75 in 2016 and $11.50 in 2017.  Prince George’s County passed a similar measure which almost mirrors Montgomery County’s law.  Like Montgomery County, only employers in Prince George’s County are subject to paying the wage. Beginning on October 1, those employees affected must be paid the higher wage for which they are eligible.  If an employer has multiple locations, the wages will be set differently for workers depending on where they work.  The tricky part will be for employees who work both in the counties and outside of them.  For now, the difference is really only .40/hour and probably not significant enough to merit a challenge to paying the higher wage.  From a practical standpoint, it may be easier to pay the higher wage for the few number of employees affected.  Although over time that disparity will grow, more time will also elapse providing for legal challenges and County interpretations of the local laws to employees with divided workdays. Until that clarity develops, several payment options face employers with no clear legal direction. Some employers may choose to pay employees two different wages depending on where the worker performs the work.  Another interpretation may be that the employer must pay the higher wage to County residents who work in the affected counties and not others.  Another interpretation which may be adopted is a tool used by the Federal Department of Labor which focuses on the predominant efforts of the employee as a test.  This generally means more than 50%.  If the employee is spending more than 50% of their time working in Montgomery or Prince George’s County, they are paid the higher wage for all hours worked. There is still debate whether legal challenges will arise to the Counties’ laws.  The Counties’ legislation suggests the State would enforce them, however, the State does not enforce County laws and it appears that efforts to force this on the State have failed.  In addition, there are legal arguments that unless the laws are applied to businesses wholly within Montgomery or Prince George’s County, they may not be considered a lawful local law and may violate state law.  No published decision has come forth yet attacking them on this ground. As a side note, these laws also raise the specter of employees who are now closer to only being paid minimum wage.  There will likely be concern among those employees who feel the stigma of being paid only slightly above minimum wage. If you have questions about these laws or other employment issues,  contact us here