State Law Round-Up: Developments in Wage and Hour (CO, MA, ME, WA), Non-Compete (WA), Commuter Benefits (NJ), Sexual Harassment (DE), and Sick Leave (Dallas and Minneapolis) Laws. (US)
It’s been an active few weeks since our last State Law Round-Up in mid-April 2019, with a number of bills being signed into new laws and case developments impacting employers in many US states over the past few weeks.
Colorado Failure to Pay Wages as Theft
Effective January 1, 2020, an employer’s failure to pay wages will be classified as criminal theft in Colorado. Under the new law, an employer commits wage theft when it willfully withholds compensation, falsely denies employees the amount of a wage claim, or underpays a wage claim in order to harass or defraud the individual owed the wage. The law classifies wage theft as a felony when the amount is greater than $2,000. Additionally, an employer who pays its employees less than minimum wage will be guilty of a misdemeanor. Finally, the law eliminates the carve out for employers who are unable to pay wages or compensation because of a Chapter 7 bankruptcy action or similar court proceeding.
Massachusetts Commissioned Employees
On May 8, 2019, the Massachusetts Supreme Judicial Court held that, under Massachusetts law, salespersons paid on a 100 percent commission or draw basis must be paid separate and additional overtime and Sunday pay, even if their compensation exceeds 1.5 times the Massachusetts minimum wage ($12.00 per hour) for such work. Further, the court held that employers cannot retroactively allocate payments meant for one purpose to a different purpose, such as renaming draw and commission payments as overtime or Sunday payments. In light of this decision, which will undoubtedly have a substantial impact on retailers and other commission-based businesses in the state, employers with commissioned employees should reexamine their pay practices to ensure compliance.
Maine and Washington Ban Salary History Inquiries
On April 12, 2019, the first female Governor of Maine, Janet Mills, signed An Act Regarding Pay Equality, aimed at narrowing the state’s gender pay gap. The law prohibits employers from asking prospective applicants about their compensation history until after the employer has extended an offer of employment that includes compensation terms. In addition, the law prevents employers from asking a candidate’s former employer about his or her compensation history. However, if the candidate voluntarily discloses his or her compensation history, the prospective employer may confirm that information. Further, any inquiries pursuant to any federal or state laws specifically requiring the disclosure of verification of compensation history are permitted. This law goes into effect on September 17, 2019.
On May 9, 2019, Washington Governor Jay Inslee singed the Washington Equal Pay and Opportunities Act. This pay equity law, which goes into effect on July 27, 2019, is similar in many respects to other states’ pay equity laws in that it prohibits Washington employers from inquiring into or using the wage and salary history of prospective employees. The law does however contain some exceptions and allows employers to confirm an applicant’s compensation history information if he or she voluntarily discloses it or after the employer has negotiated and made an offer of employment that includes compensation. The law additionally requires employers with 15 or more employees to provide pay scale information—upon request from an applicant (or an internal transfer) after an initial employment offer, consisting of the minimum compensation for the sought-after position.
Washington Severely Restricts Non-Competes
Also on May 9, 2019, Governor Inslee signed a new non-compete law prohibiting non-compete agreements for Washington employees who earn less than $100,000 annually and independent contractors paid less than $250,000 per year (these amounts will be adjusted annually for inflation). If a court finds that an agreement violates the new law, or has to modify any part of the agreement to make it “reasonable,” the employer must pay the employee the greater of $5,000 or his/her actual damages, plus the employee’s attorneys’ fees, expenses, and costs. Further, if an employer wants to keep a non-compete agreement in place after an employee is laid off, then the employer must pay the employee their base salary during the period of enforcement (minus any earnings the employee receives). Agreements requiring disputes be adjudicated outside of the State of Washington will be void. Notably, the new law specifically does not apply to non-solicitation or confidentiality agreements. The law goes into effect on January 1, 2020, and applies to all proceedings commenced on or after that date, regardless of when the cause of action arose. Thus, employers with employees in Washington will need to review existing agreements for compliance prior to the effective date.
New Jersey Pre-Tax Commuter Benefits
On March 1, 2019, New Jersey Governor Phil Murphy signed S.1567, which requires employers to offer pre-tax commuter benefits to employees. Under this new law, employees will be able to use pre-tax benefits to pay for the costs of “alternate means of commuting,” such as public transportation, car pools, bicycling, telecommuting, and walking. New York City and San Francisco have similar laws, but New Jersey is the first state to mandate pre-tax commuter benefits. This law is effective immediately, however the law will remain inoperative until the earlier of the effective date of the rules and regulations regarding the law, or March 1, 2020.
Delaware Sexual Harassment Training
Under a recent amendment to the Delaware Discrimination in Employment Act, Delaware employers with four or more employees must distribute the Delaware Sexual Harassment Notice to existing employees by July 1, 2019 or within six months of hire for employees hired thereafter. Further, Delaware employees with 50 or more employees must provide interactive training and education on the prevention of sexual harassment to all existing employees by January 1, 2020, and to all new employees within one year of the start of their employment.
The City of Minneapolis is seeking comments on proposed changes to its sick leave Rules and FAQs, in response to a recent Minnesota Court of Appeals decision. As we previously reported here, the Minneapolis City Council passed a sick and safe time ordinance in 2016. Due to the legal battle that ensued after the law was passed, the Rules and FAQs implementing the ordinance provide that the law does not apply to employers without a location in the city. On April 29, 2019, the Minnesota Court of Appeals upheld the ordinance; under that ruling the law can apply to employers located outside of the city. The proposed changes to the FAQs (changes here) and Rules (changes here) would provide that the law applies to all employers with employees working in the city. Comments may be submitted through June 7, 2019.
On April 24, 2019, the Dallas City Council voted to adopt a paid sick leave ordinance. Under the law, employees who work 80 hours or more per year in the city will accrue one hour of paid sick leave for every 30 hours worked. Accrual will be capped at 64 hours for employers of 15 or more employees and 48 hours for employers with 14 or fewer employees. The law is scheduled to go into effect on August 1, 2019 for employers with six or more employees performing 80 or more hours of work in Dallas per year. Employers with five or fewer such employees have until August 1, 2021 to comply. That said, the fate of the law is likely tied to that of the Austin and San Antonia sick leave laws. As we previously reported here and here, Austin and San Antonio have enacted similar paid sick leave laws, but Austin’s ordinance is currently on hold after a Texas appellate court held that it is unconstitutional, and San Antonio’s, although scheduled to go into effect August 1, will likely be delayed pending the appeal of that ruling. Additionally, the Texas legislature is considering a bill that would ban cities passing local ordinances mandating paid sick leave.