Background: City’s New Minimum Wage Law Withstood Legal Challenge and Avoided Action from Missouri General Assembly to Become Law
The City of St. Louis’ new, higher minimum wage of $10 per hour takes effect today, May 5, 2017. Back in 2015 when the City took up the minimum wage legislation, few would have predicted that the City’s efforts to raise its minimum wage would become law. Almost immediately after its passage in 2015, the City’s minimum wage law was challenged by a lawsuit filed by employer groups, a lawsuit that was rejected by the Missouri Supreme Court in February but which only became final on Thursday, May 4, when a St. Louis City trial court lifted its injunction preventing enforcement of the City’s minimum wage law. The same day that the trial court injunction was lifted, new St. Louis Mayor Lyda Krewson announced that the City’s higher minimum wage would become effective the following day, May 5.
Shortly after the Missouri Supreme Court’s rejection of the challenge lawsuit in late February 2017, the Missouri House of Representatives passed a bill that would have pre-empted the City’s higher minimum wage from taking effect by preventing local governments from enacting minimum wages higher than the state minimum wage. However, the legislation unexpectedly stalled in the Missouri Senate, which has spent the 2017 engaged on other matters. The result of the legislative inaction on the issue means that for now, the City’s current minimum wage is $10 per hour and will increase to $11 per hour on January 1, 2018.
Coverage of the City’s New Minimum Wage Law
Not every employer in the City of St. Louis is required to pay the higher minimum wage law, as exemptions include:
• Businesses with less than $500,000 per year in gross revenue;
• Businesses with fewer than 15 employees;
• Units of local government, the state government, and U.S. Government;
The City’s new minimum wage contains some additional nuances that could lead to similar employers having different minimum wage requirements. For instance, the exemption for “units of local government” would seem to exempt St. Louis Public Schools from the new minimum wage law; however, charter schools in the City of St. Louis, although “independent public” schools under Missouri law, are not considered units of local government and thus would be subject to the new, higher minimum wage.
Additionally, for franchise owners in the City of St. Louis, the City’s ordinance provides that “all employees of franchises associated with the same franchisor or network of franchises, wherever located, shall be counted in the aggregate in determining whether the Employer is eligible” for the exclusion for having fewer than 15 employees. Thus, the City’s law would seem as a practical matter to take away the small employer exclusion for locally-owned franchisees who are part of a larger franchised system.
Steps An Employer Should Take Now: Wage Increases as Necessary and Notice and Posting Requirements
Wage increases as necessary: Effective May 5, 2017, an employer subject to the new minimum wage law should pay a minimum wage of at least $10 per hour. As of January 1, 2018, the minimum hourly wage will increase to $11 per hour.
City required notice of minimum wage and rights: Employers are required to post a notice advising employees of the current minimum wage and their rights under the ordinance. The notice must be posted “in a conspicuous place at each facility where any Employee works that is located within the geographic boundaries of the City…” A copy of the City’s notice is available on its web site at https://www.stlouis-mo.gov/government/departments/human-services/minimum-wage/upload/Minimum-Wage-Poster-5-5-17.pdf.
City required notice of minimum wage and rights: Additionally, employers must provide “with the first paycheck subject to this ordinance” a notice similar to the posted notice advising the employee of the current minimum wage and employee rights under the ordinance. The ordinance does not limit this required payroll notice to employees impacted by the change, so the safest course for a covered employer would be to provide the notice to all employees. Similarly, the ordinance is silent on an employer’s requirements where employees receive pay by direct deposit without a traditional paystub. However, an employer would likely achieve compliance with this requirement by providing the “payroll” notice by whatever means it would normally provide similar notices to employees (e.g., via email, etc.). A copy of the City’s notice is available at https://www.stlouis-mo.gov/government/departments/human-services/minimum-wage/upload/Minimum-Wage-Payroll-Notice-May-5-2017.pdf.
Tueth Keeney employment and labor law attorneys will continue to monitor this issue and report additional developments here on this blog. In the meantime, feel free to contact your Tueth Keeney attorney for further practical advice on how to comply with the City’s new minimum wage.