Seattle’s New $15 Minimum Wage

Seattle made national news by becoming the first major city in the United States to pass a $15 minimum wage law.  The law eventually increases the minimum wage in the City of Seattle to $15 per hour.  The ordinance can be found at: http://www.seattle.gov/council/issues/minimumwage/attachments/Ord_124490.pdf.

The City of Seattle law applies to all employers who have at least one employee who works within the city limits for two hours or more during a two-week period.  How quickly an Employer is required to pay the $15 minimum wage depends on their number of employees and whether they provide qualifying health insurance or other benefits.

Employers with more than 500 employees in the United States are considered Schedule 1 Employers.  The minimum wage rate for Schedule 1 Employers will increase to $11 starting April 1, 2015.  The minimum wage will then increase to $13 on January 1, 2016, and eventually to $15 by January 1, 2017.  A Schedule 1 Employer that provides qualifying medical benefits is permitted a slightly lower reduced minimum wage until January 1, 2018, when the Employer’s minimum wage must be at least $15per hour.

Employers with 500 or fewer employees in the United States are Schedule 2 Employers.  The new City of Seattle law creates a different requirement for these Employers.  Schedule 2 Employers must not only meet the minimum wage, but also “minimum compensation.”  The minimum wage rate for Schedule 2 Employers increases to $10 on April 1, 2015, and incrementally increases each year eventually reaching $17.25 per hour by January 1, 2024.  Along with meeting the minimum wage rate, the Schedule 2 Employers must also meet the “minimum compensation” standards set by the new law.  A Schedule 2 Employer may include commissions, piece rate pay, bonuses, tips, and money paid to an employee’s medical benefits in its calculation of “minimum compensation.”  The medical benefits provided must meet a minimum level of coverage as determined by the City.

This new legislation from the City of Seattle will have a significant and lasting impact on business.  Employers need to start planning now to prepare for these increases in the cost of doing business in Seattle.

Erik M. Laiho is a Washington licensed attorney representing Management in labor and employment.  For more information contact Erik at elaiho@davisgrimmpayne.com, or (206) 447-0182.

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