A change in Iowa’s Wage Payment Collection Law took effect recently. The change amended the existing Iowa payment law. The new law requires that employers have a written request from an employee before wages can be sent by mail. The law applies to paychecks, but not to paystub information.
The previous law permitted employers to mail paychecks when an employee made a verbal request, or at the employer’s discretion. While requiring written permission is a best practice in the HR field, Iowa is one of the few states to make that policy law.
Even employers who have routinely paid workers by mail must now have written authorization to do so.
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Governor Chet Culver signed legislation into law on January 25, 2007 to raise the Iowa state minimum wage. The bump occurred in two steps. The first increase went into effect on April 1, 2007, raising the minimum from $5.15 per hour to $6.20 per hour. On January 1, 2008, the second increase took place, raising the minimum wage another $1.05 from $6.20 to $7.25 per hour.
The rate for workers who earn tips went up as well, to $4.35 per hour. In addition, several “named enterprises” are now covered by the Iowa state minimum wage. Several industries are included in this group, such as all public agencies, residential facilities for the ill, elderly or handicapped. Facilities for gifted children, schools and preschools are also included in this group and must pay the state minimum wage.
Public transportation employees who work in a venue subject to local and state regulations are entitled to the state minimum. Laundry, dry cleaning and construction employees also must receive the state minimum wage.
Some businesses with revenue less than $300,000 per year are exempt from the state minimum wage law. If those companies engage in interstate commerce, though, the federal minimum wage of $5.85 per hour applies.
Daycare center employees are usually covered by the minimum wage law, even if the yearly revenue is less than $300,000. If the daycare center is an in-home facility it could be exempt. In-home centers that employ only immediate family members or those with fewer than 6 children are exempt from the state minimum wage law.
These changes in the minimum wage law, both state and federal, require Iowa businesses to update their labor law posters. Employing a labor law poster service is one way a company can keep up with the changes. These services automatically send out updated posters whenever the law changes.
In all, fourteen states increased the minimum wage with the new year.
Vermont, Missouri and New Mexico are among the fourteen states to raise its state minimum wage as of January 1, 2008. The increases in these fourteen states, however, are just the beginning of a year full of changes.
The past year has been a busy one for minimum wage changes, with a number of changes on both the federal and state levels.
On May 24, 2007, President George W. Bush signed the Fair Minimum Wage Act of 2007 into law. This law set up increases in the federal minimum wage as a three-step system. On July 24, 2008, the second step of the Fair Minimum Wage Act’s system goes into effect. The federal minimum wage will go up from $5.85 to $6.55 per hour.
Texas, Oklahoma, Utah and several other states connect the increases in their state minimum wage rates to when the federal minimum wage goes up. So, when the federal minimum wage increases on July 24, 2008, the minimum wage rates in these states will be increased, too.
Minimum wage in the District of Columbia is also tied to the federal minimum wage. The D.C. law, however, requires its minimum to be at least $1.00 more than the federal rate. On July 24, 2008, therefore, D.C.’s minimum wage rate will become $7.55 per hour, exactly $1.00 greater than the federal minimum of $6.55 per hour.
On January 1, 2008, the Iowa minimum wage will increase by $1.05 from $6.20 to $7.25 per hour. This is the largest single increase in the nation during the past year, and will put Iowa’s minimum wage among a handful of states with the highest minimum wage.
In 9 months, the Iowa minimum wage has increased a total of $2.10 per hour.
On January 25, 2007, Governor Chet Culver signed legislation increasing the Iowa minimum wage in a two-step procedure. On April 1, 2007, the Iowa minimum wage increased by $1.05 from $5.15 per hour to $6.20 per hour. The January 2008 increase is the final step in that two-tiered increase.
Under the new minimum wage, tipped employees are entitled to $4.35 per hour. The state minimum wage does not apply to some businesses with revenue under $300,000 per year. However, if those businesses participate in interstate commerce, the federal minimum wage of $5.85 per hour applies.
The Iowa minimum wage statute also specifies that the new minimum wage applies to a number of “named enterprises” regardless of the volume of revenue. These include all public agencies, hospitals and residential care facilities for the sick, elderly or handicapped. In addition, all preschools, schools and facilities for gifted children must pay the state minimum wage. Any public transportation worker in a system subject to state or local regulation must be paid the minimum wage. Several other industries are specifically included in the state minimum wage law, including construction, laundry and dry cleaning, are required to pay the state minimum wage to all employees.
In general, daycare facilities are included in the minimum wage law, even if they do not have $300,000 in annual revenue. However, some in-home daycare centers are exempt from the state minimum wage law. This includes facilities with less than 6 children, and those where only immediate family members are employed.
Certain employers are exempt from the state minimum wage laws, including those in agriculture, summer camps and a few others.
On January 1, 2008, several other states will raise their state minimum wage. For example, Arizona’s minimum wage will rise from $6.75 to $6.90 per hour, California’s from $7.50 to $8.00 and Florida will bump theirs 14 cents from $6.65 to $6.79.
In addition to those Arizona, California and Florida, at least another ten will post minimum wage increases. New Mexico employees will receive an increase of over a dollar an hour from $5.15 to $6.50. Workers in Delaware will earn an extra 50 cents an hour with a rise from $6.65 to $7.15 per hour.
A number of other states will follow with state minimum wage raises later in 2008. On July 1, 2008, Illinois minimum wage will jump from $7.50 to $7.75 per hour. West Virginia’s rate will jump from $6.55 to $7.25 per hour. Kentucky, Michigan and Pennsylvania will also raise their state minimum wage rates on July 1, 2008.
On July 24, 2008, the federal minimum wage of $6.55 per hour will go into effect. Texas, Nebraska, South Dakota, Oklahoma and a number of other states will increase their state minimum wages on that day. The minimum wage laws in these states are often connected to the federal law. Washington, D. C. sets its minimum wage at exactly one dollar above the federal wage. So, on July 24, 2008, D. C. employees will receive a minimum wage of $7.55.
As a result of these changes, employers will need to display updated 2008 labor law posters. Employers who need more information about how and when the posters will need to be updated can check www.laborlawcenter.com for current information on all 50 states.
Employer must post the updated labor law posters or face a fine for violating the law. All posters should be displayed where they are visible to all employees. Popular locations for the posters to be hung are the employee break room and at sites near the time clock.
Wal-Mart must pay $33 million in back wages to more than 86,600 employees after failing to compensate them enough for their overtime work over roughly five years.
Paying the back wages will put Wal-Mart stores, Inc., in compliance with both federal and Iowa overtime laws.
The U.S. Department of Labor says the retail giant calculated the employees’ overtime on their base pay alone, and not on their pay plus incentives and premium payments, which is called the “average hourly compensation.” Wal-Mart essentially violated the Fair Labor Standards Act (FLSA). The FLSA requires, first, that employees be paid 1.5 times their normal pay (called “time-and-a-half”) for any time worked over 40 hours. Second, overtime must be calculated against their “average hourly compensation,” not their base pay. In other words, if employees get $6 an hour base pay but incentives and premiums amount to an average hour pay of $7 an hour, then the overtime must be calculated according to the $7 an hour figure.
The country’s largest retailer agreed to pay all back ages for the violations between February 1, 2002 and January 19, 2007, and it has agreed to pay interest on the amount. According to the Labor Department, that should act as a deterrent.
“This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers,” said Assistant Secretary of Labor for Employment Standards Victoria A. Lipnic. She added that the company “has taken corrective action to prevent this from happening again.”
To back up the agreement, the Labor Department obtained a consent judgment against Wal-Mart ordering it to pay the back wages and forbidding it from similar violations in the future. The consent judgment was obtained by filing a complaint against Wal-Mart Stores, Inc., in U.S. District court. The court’s consent judgment required Wal-Mart to pay the back wages and interest on the $33 million.
In all, 86,680 employees throughout the U.S. were involved.
Wow, here is yet another subject that seems to be becoming a common denominator in our little blog here, a common thread if you will. And what is that subject—the tip credit, of course, my loyal readers. The tip credit is the device by which the state of Iowa allows its employers to pay less than the minimum wage to employees who earn a portion of their wages from the tips given to them by their customers.
In the state of Iowa, under the new Iowa minimum wage labor law, as detailed on the Iowa minimum wage labor law poster, the tip credit is 40 percent of the minimum wage. Wait, let me get my calculator out and I will tell you what that equals at the moment. That means that employers can claim up to as much as $2.48 in a tip credit per employee per hour.
Now let me go figure out what that means that employers have to pay their tipped employees as the minimum wage. Just give me a second here. That means at the moment, employers must pay their tipped employees at least $3.72 per hour. Now if the employee does not make up to $2.48 per hour in tips, then the employer technically would have to pay their employee more of a salary to make up the difference.
That percentage also means that when the Iowa minimum wage goes up again on January 1, 2008, to $7.25 per hour, then the Iowa tip credit will go up in cash value. On January 1, 2008—bear with me as I do the math on my calculator—the tip credit will go up to $2.90 per hour. The least employers can pay their tipped employers after January 1, 2008, would be $4.35 per hour.
Under the Iowa law, tipped employees are any that make more than $30 per month in tips at least.