A recent federal case brings up the question: How can employers distinguish between a worker who is “exempt” or “non-exempt” from overtime? That’s a complicated issue, but there are several easy rules of thumb. One key is the salary. If the employee receives $455 or less per week, or $23,660 per year, he or she must receive overtime pay at 1.5 times the usual rate if he or she works more than 40 hours per week.
Recent violations of the federal and Hawaii minimum wage laws, alleged by the US Department of Labor, put pressure on Wal-Mart. The giant retailer voluntarily agreed to pay back wages for overtime to employees in Hawaii and other states across the country. The total amount of $33 million will benefit 87,000 workers.
In this case, the argument of the US Department of Labor was that manager trainees, programmer trainees and paid interns were required to work more than 40 hours a week. For example, the manager trainees, had little decision-making power and didn’t supervise any employees, but they worked overtime without additional pay. In some cases, the trainees were paid less than $23,660 per year. Under federal law these employees are “non-exempt salaried” and they must receive pay for their overtime work.
The agreement between the US Labor Department and Wal-Mart resolved specific violations, but it does not mean that Wal-Mart has eliminated all legal problems. Private legal action or other litigations are not included in the settlement.
Besides salary, other aspects to distinguish salaried exempt from non-exempt employees are the power of the employee to make decisions and to hire or fire members of his or her team. These items define if the employee is a manager or not. An employee with significant power to make decisions in a division, department or store is probably exempt from overtime. If he or she has the power to hire or fire 3 or more staff members, he or she may be considered an “exempt salaried” manager.
In the past, other companies applied similar practices to Wal-Mart’s. In a notorious example, in the 1950’s Howard’s Johnson’s hired a number of workers in their restaurants with the position of “assistant manager.” In reality, they were waitresses or dishwashers, who worked 80 hours or more per week.
Now that the Hawaii minimum wage is $7.25 per hour, will it make much a difference if the federal minimum wage bill gets passed a half of the world away in Washington DC. After all, at its highest, the new federal minimum wage as passed by the new Congress in Washington DC would make employers pay their employees at least $7.25 per hour, which is already at the level that Hawaiian employers are paying their employees.
To be honest, the Hawaii situation in Hawaii then looks much to be the same as the situation in Oregon, California, Connecticut and other places that we have looked at where the state minimum wage is already higher than the federal minimum wage will get under the new law being proposed in both the House and the Senate in Capitol Hill.
So in that case, the situation in Hawaii would not change for employers much. They would still have to pay the higher state minimum wage to their lowest paid workers, and there would be few exceptions to that rule. Some exceptions would include types of workers who are exempt from the federal Fair Labor Standards Act, such as professional, executive, or managerial types employees, who most likely are making more than the minimum wage already.
So employers, I would not expect to have to pay any more to your workers in Hawaii. However, you will need to get yourself a new updated federal minimum wage labor law poster if and when the Congress passes its federal minimum wage labor law. Keep your eyes posted on the debate a half a world away on the capital waiting for the springtime to come and brighten the place up, while you guys in Hawaii sit on the beach and sip your drinks with the umbrellas in them.
No news here at the Hawaii minimum wage front. I wish I could have gotten to fly to Honolulu and written on some big new development there in the labor law for employers who are paying their employees the minimum wage. I wish I could have just flown to Honolulu. But no such luck. The Hawaii minimum wage did change to $7.25 per hour this past January 1, 2007, because of a law passed in the regular session of the state legislature in 2005. That law is called Act 240.
Act 240 raised the minimum wage to $6.75 per hour in 2006, from its previous level of $6.25 per hour. And then it raised the Hawaii minimum wage again to $7.25, as I said, at the start of this year. The Act also has a qualification in it for the so called tip credit. We’ve been talking about this a lot lately. I actually was talking about just this morning with you folks.
Well the tip credit here—the amount of money that Hawaiian employers can withhold from the minimum wages of tipped employees—is 25 cents. That is a flat amount and is somewhat less than other states we have looked at that have a tip credit. The tip credit in Hawaii is not 25 percent. Make sure I got that right. It is 25 cents, as in a quarter.
An employee must be making at least that much in tips every hour in order for their employer to qualify for the tip credit. If an employee is working as a tipped employee, I would find it difficult to see how they could not be making a quarter in tips every hour. But I guess it could be possible. But either way, that tip credit does not change, and has not changed, when Hawaii’s minimum wage went up at the start of this year.
All hear this—employers in the beautiful state of Hawaii have had to face a new minimum wage as of January 1, 2007. The minimum wage in the Rainbow State was raised to $7.25 per hour as of the first of this year, as per Act 240 of the 2005 Regular Session. So employers, you are currently paying higher than the federal minimum wage.
Under the Hawaii minimum wage law, the state minimum wage applies to all employers in the state that otherwise would fall under the auspices of the Fair Labor Standards Act, which is the law for larger employers with more than $500,000 in revenue and interstate businesses, as well as schools, hospitals, and other such businesses. If a business falls under the FLSA, but the state minimum wage is higher than the federal minimum wage—which is the case now—then even these FLSA employers have to pay the higher, state minimum wage.
Such will be the case until at least 2009 too. Hawaii, from your surf boards and your beach blankets, you might have heard the news emanating from Washington DC about the debate over a federal minimum wage, and how in the course of the last few weeks, both the House and the Senate have passed similar but differing versions of a new minimum wage bill.
However, in both versions, the federal minimum wage will not be raised to $7.25 per hour until 2009 at least. The first federal minimum wage increase would occur 60 days after the President signs the bill into law, then the second minimum wage increase on the federal level would occur a year after that. And then not until another year after that would the federal minimum wage be increased again—to $7.25 per hour, the current Hawaii state minimum wage.
Many people wonder how the Hawaii minimum wage compares to the rate in other states. Traditionally, Hawaii and Alaska have had higher minimum wages than the contiguous 48 states. That makes sense, when you realize that the cost of living is higher. Recently, however, a number of states have increased their minimum wages.
While the Hawaii minimum wage is still higher than the rate in 42 states, it’s by no means the highest. In fact, if minimum wages were graded on a curve, Hawaii would receive a score of 86%.
The Hawaii minimum wage is $7.15 per hour. That’s more than many states. Michigan, for example, has a minimum wage of $6.95 per hour, while the minimum rate in Alaska, New Jersey and New York is $7.15 per hour. Still, a number of states have higher minimum wages.
At least 7 states have claimed to have the highest minimum wage, including Massachusetts, New York, California, Vermont, Connecticut, Oregon and Washington State. With the rash of increases in the minimum wages, there seems to be a competition for states to claim that they have the highest minimum wage, or will have the highest minimum wage in 2008 or 2009. As of today, the highest state minimum wage is in Washington State, where all workers are paid at least $7.93 per hour. In January 2008, the minimum wage in California and Massachusetts will increase to $8.00 per hour, under existing legislation.
Currently, a total of 29 U. S. states have minimum wages that are above the current federal minimum wage of $5.15. These range from the low in West Virginia at $5.85 per hour to the high in Washington at $7.93 per hour. A total of 15 states have minimum wages that are equal to the federal rate, at $5.15 per hour.