Business Startup

What Your Business Should Know About the New $15/hour Seattle Minimum Wage

Earlier this month, the City of Seattle passed an ordinance that established a $15 minimum wage for employees working in Seattle. In this post, we’ll breakdown the details of the new local law, so you have a basic understanding of how it will affect your business. Seattle Minimum Wage

When does the new law take effect?

The ordinance will take effect on April 1, 2015.

How does it affect your Seattle business?

The ordinance provides generally that Seattle businesses must provide their workers with a minimum wage of $15 per hour. In terms of implementation, the ordinance treats certain employers differently, with “Schedule 1 Employer” and “Schedule 2 Employer” designations. Schedule 1 Employers are those who employ more than 500 employees. Schedule 2 Employers are those who employ 500 or fewer employees.

The ordinance does not require businesses to pay a $15 wage right away. Instead, the new wage increase is phased in over time—allowing more time for smaller businesses to adjust to the required wage increase.

If you are a business that employs more than 500 people in the United States, then you must pay each employee working in Seattle an hourly minimum wage of:

–          $11.00 by April 1, 2015

–          $13.00 by January 1, 2016

–          $15.00 by January 1, 2017

But if you provide medical plan payments towards a plan that is equivalent to a Silver plan or higher as defined in 42 U.S.C. § 18022 (Affordable Care Act), you get an extra year and must pay each employee working in Seattle an hourly minimum wage of:

–          $11.00 by April 1, 2015

–          $12.50 by January 1, 2016

–          $13.50 by January 1, 2017

–          $15.00 by January 1, 2018

If you are a business that employs 500 or fewer people in the country, then you must satisfy two requirements: 1) pay a minimum wage; and 2) pay a minimum compensation. This is the city’s way to take into account tips that employees receive. A Schedule 2 Employer (<500 employees) must pay each employee working in Seattle an hourly minimum wage of:

–          $10.00 by April 1, 2015

–          $10.50 by January 1, 2016

–          $11.00 by January 1, 2017

–          $11.50 by January 1, 2018

–          $12.00 by January 1, 2019

–          $13.50 by January 1, 2020

–          $15.00 by January 1, 2021

–          $15.75 by January 1, 2022

–          $16.50 by January 1, 2023

–          $17.25 by January 1, 2024

Schedule 2 Employers must also pay a minimum compensation, which can be met through paying wages, tips, and money paid to a medical benefits plan. A Schedule 2 Employer must pay each employee working in Seattle an hourly minimum compensation of:

–          $11.00 by April 1, 2015

–          $12.00 by January 1, 2016

–          $13.00 by January 1, 2017

–          $14.00 by January 1, 2018

–          $15.00 by January 1, 2019

–          $15.75 by January 1, 2020

Employers whose businesses are not located in Seattle might still be subject to the $15 Minimum Wage.

How does it affect your non-Seattle business?

Businesses outside of Seattle will have to pay an employee wages according to the Seattle ordinance if the employee works in Seattle on an occasional basis and for at least two hours in Seattle within a two-week period. However, this does not include time spent travelling through Seattle or time spent in Seattle for non-employment related activities.

The new law is being challenged in Federal Court

Washington DC based group the International Franchise Association filed suit in U.S. District Court in Seattle claiming that the ordinance unfairly discriminates against franchisees.

Seattle Minimum Wage

Under the new law, franchisees are considered Schedule 1 Employers if they are part of a network of franchises that employ an aggregate of 500 or  more employees in the United States. Essentially, local franchises of larger organizations are treated as large employers, despite potentially having a locally owned “footprint” of only a few local employees. The IFA asserts that by treating franchises as big businesses, this law arbitrarily discriminates against franchisees. The lawsuit is asking the judge to grant an injunction to stop the ordinance from taking effect on April 1, 2015. Stay tuned for updates.

If you’d like to learn more about the Seattle minimum wage ordinance or how labor laws affect your business, please comment below or contact us.

Photo: Seth Sawyers | Flickr
Photo: Thomas Quine | Flickr

        


Charlene Angeles

Charlene makes time to enjoy the outdoors and has explored Washington's Big Four Ice Caves.


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