UPDATE 5/5/17: House File 295, signed into law by Governor Branstad in 2017, prevents municipalities from adopting minimum wages different from the state standard. More information is available in this update.
Employers across the country are reluctantly evaluating how to proceed in light of the increase in the compensation requirements for exempt employees (which will be effective December 1, 2016). To add insult to injury, depending on your point of view and where your business is located, you may now have other local compensation requirements to consider as well.
Several counties in Iowa have increased the minimum wage and many others are considering joining this trend. Although the minimum wage increase is designed to foster positive results, such as helping families avoid poverty and economic hardship, this movement can be an administrative nightmare for larger Iowa employers that operate in numerous counties within Iowa or elsewhere, not to mention smaller Iowa employers located within these counties that are already struggling to make ends meet.
Here are more details regarding the minimum wage increases and their effective dates:
May 1, 2016 - $9.15
January 1, 2017 - $10.10
January 1, 2017 - $8.25
January 1, 2018 - $9.25
January 1, 2019 - $10.25
January 1, 2017 - $8.20
January 1, 2018 - $9.15
January 1, 2019 - $10.10
These three counties permit any municipality to opt out of these minimum wage increases by adopting a conflicting ordinance. Time will tell what cities will elect to do so. Unfortunately, this may make it even more difficult for employers to administer, as you will need to consult with the city ordinances in addition to the county rules to determine the applicable minimum wage.
Further, if a company has multiple locations, either within one county or across multiple counties, the employer will need to examine where its employees are performing work, in order to ensure that it is paying the appropriate minimum wage (i.e., an employee’s hourly rate may fluctuate each pay period depending on where the work is performed). Additionally, employers should assess where they are assigning employees and why in order to prevent a harassment claim (i.e., assigning all Hispanic employees, and not others, to a location with the reduced minimum wage without a legitimate business justification).
Future Automatic Adjustments
Two of the counties in Iowa which have already adopted new minimum wage laws, Johnson and Wapello, have tied the minimum wage to the Consumer Price Index for the Midwest Region (published by the Bureau of Labor Statistics with the U.S. Department of Labor). Beginning July 1, 2018, in Johnson County and July 1, 2019, in Wapello County, the minimum wage will be re-evaluated annually and increased if the Consumer Price Index has increased. Linn County, like the current state of Iowa minimum wage law, does not provide for automatic adjustments to the minimum hourly rate.
In order for employees to be eligible for the minimum wage increases in Johnson, Linn, and Wapello counties, employees must have completed 90 days of employment with their current employer. Like state law, employees are entitled to $6.35 per hour until they reach 90 days of employment. Additionally, in order for occasional employees to be eligible for the increased hourly wage, they must have worked at least two hours within a two week period.
These city ordinances are enforceable pursuant to Iowa Code Chapter 91A which provides that employers may be liable for liquidated damages, court costs, and attorney’s fees if they intentionally fail to pay an employee his or her wages. Also, a violation may be considered a county infraction resulting in a civil penalty of $750 for a single violation or a $1,000 fine for each repeat offense.
Cities and counties across the country--including Chicago, Los Angeles, and San Francisco--have adopted local minimum wage rules, arguably in an effort to force state and federal governments to increase the minimum wage. Polk County and other Iowa counties are considering implementing minimum wage ordinances as well. This puts a heavy burden on employers wherein they will have to comply with a number of different rules that vary within a single state instead of a single state or federal guideline. If you need assistance in managing these various rules, we are happy to help.