The Maryland General Assembly has approved a bill that would raise the state’s minimum wage from $10.10 to $15 per hour.
Earlier this week, the House and Senate passed a compromised version of the resolution, moving it forward to Governor Larry Hogan’s desk. The bill is all but certain to become law. Although Gov. Hogan opposes a statewide increase, the Assembly has sufficient votes to override a potential veto.
Under the finalized version of the legislation, the minimum wage would increase to $11 in January 2020. It would then increase incrementally by $0.75 per year until reaching $14 in 2024 and finally bumping up to $15 in 2025.
Businesses with fewer than 15 employees would have more time to adapt to the changes. The proposed legislation gives such employers 1.5 more years to pay the full $15, with $0.60 annual increments and a final increase of $0.40 midway through 2026.
These timelines are not entirely fixed in place. If Maryland’s employment rate were to fall, the Board of Public Works (BPW) would have permission to halt a scheduled minimum wage increase once, for the duration of a year.
The bill would also prohibit employers from paying 85% of the state minimum wage to employees ages 18 to 20 years old. This is a significant change to current state law, which allows employees under 20 years of age to receive the sub-minimum rate. The sub-minimum rate would still apply to employee under 18 years of age.
Maryland employers should begin considering how they will meet their new wage requirements. As I wrote in a prior article, every business has its own way of adapting. Some companies may reduce overhead by cutting their employees’ hours, downsizing their workforces, or embracing automation. Others may choose to raise their prices and pass the cost on to consumers.
Another strategy involves outsourcing work to independent contractors rather than employees. This may help reduce a company’s tax liability while improving workforce flexibility. However, business owners should be aware of the important differences between the two designations and exercise caution to avoid a misclassification claim.
If you do business in Maryland, be sure to speak with your legal advisor. An attorney can help you quickly and cost-effectively plan ahead. For guidance about this or any labor and employment issue, don’t hesitate to contact me.
ABOUT RUSSELL BERGER
As an accomplished labor and employment attorney and Practice Group Director, Mr. Berger provides business counsel to employers on employee matters and is well-versed in litigating in both state and federal courts. Russell Berger is the trusted legal counsel every business owner needs to feel confident in their decision-making and secure with their assets. As a Practice Group Director at Offit Kurman, Mr. Berger has direct experience with managing other managers, which he draws from in advising his clients. He is a pragmatic problem-solver that works efficiently and tirelessly to present his clients the best possible solutions to their most complicated issues. He represents employers, businesses, and professionals in employment disputes across the nation.
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