New Minimum-Wage Laws Apply to More Industries

Exempting certain types of workers from raises is becoming a thing of the past.
by | September 2016
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Many states and cities are not only raising the minimum wage, but raising it for more workers. Classes of employment that have typically been exempted from minimum-wage requirements, such as teenagers, farmworkers and restaurant servers who receive tips, are covered in most of the recent increases. “The overriding philosophy of anyone trying to raise the minimum wage is to set a floor for everyone, regardless of industry,” says David Cooper, an analyst with the Economic Policy Institute, a group backed by labor unions that supports a higher wage.

The restaurant industry, which is used to getting its way during wage-increase debates, has largely been shut out in recent negotiations. Under federal law, restaurant workers who receive tips have to be paid only $2.13 per hour, as opposed to the federal minimum wage of $7.25. But restaurant workers in California will be paid the full $15 per hour that was recently approved by lawmakers.

That has some California restaurateurs talking about doing away with tips -- a mini-trend right now in the industry. Instead, they would pay waiters and waitresses a flat wage, while collecting a service charge from customers that would be distributed to the kitchen help as well. But that approach hasn’t yet taken root in the state. Restaurant workers in California already enjoy a base minimum wage of $10 an hour, easily the highest in the nation for that employment category.

When New York state and Washington, D.C., passed $15 minimum-wage rates this year, lawmakers did maintain a different pay scale for restaurant workers. For the most part, however, minimum-wage exemptions are becoming a thing of the past. When Hawaii raised its wage in 2014, it preserved a tip credit for restaurants, but set the bar so high -- the credit kicks in only if workers earn $7 more than the minimum wage -- that there’s effectively no tip credit at all. Back in 2013, the federal Department of Labor said that home health-care workers are covered under the Fair Labor Standards Act, meaning they are due minimum-wage pay. That order was upheld by the courts last year.

These days, when states or cities decide low-income workers need to get a raise, they usually mean everybody. “In most of the big ones that have passed in the last couple of years,” says Cooper, “there haven’t been the same type of exemptions that we used to see in minimum-wage legislation.”