labor lawAdivision of labor law center

The Nebraska minimum wage will increase from $6.55 to $7.25 per hour on July 24, 2009. This is the same day as an increase to the federal minimum wage under the FLSA.

The federal Fair Labor Standards Act (FLSA) applies to employers who engage in interstate commerce, or who earn at least $500,000 per year. FLSA may also individual workers who are engaged in interstate commerce, even when the federal law does not apply to the entire business.

Federal, state and local government agencies are covered under FLSA, as are schools, hospitals and health care facilities. The U. S. Department of Labor’s Wage and Hour Division, www.dol.gov, enforces the FLSA.

In this struggling economy, an increase in the minimum wage could be a hardship to employers. The increase in 2009 is the last scheduled increase for at least a year. At present there is no federal minimum wage increase scheduled for 2010.

Many employers in Nebraska are covered by the FLSA. Those that do not fall under federal jurisdiction are covered by the Nebraska state minimum wage laws.

The Nebraska minimum wage mirrors the federal minimum. (more…)

Employers may need to implement new payroll procedures due to a recent 8^th U.S. Circuit Court of Appeals ruling on overtime.

In a Nebraska lawsuit against Famous Dave’s restaurant chain, the appeal court upheld the lower court ruling that the employer should have known that employees were working a more than one Famous Dave’s location.

The restaurant chain is based in Minnesota and has both franchise and company-owened locations throughout the Midwest.

The court found that most Omaha restaurants had policies prohibiting employees from working at more than one location. When an employee had permission to work at several locations, the employer had a system in place to combine the employees hours to calculate overtime.

However, Famous Dave’s  had no policy prohibiting employees from working at more than one location. A number of employees did work at two or more locations. Their hours were not combined to calculate overtime, (more…)

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 Nebraska overtime laws.

Noting that the settlement includes both the $33 million and interest to the Wal-Mart employees, Victoria A. Lipnic, Assistant Secretary of Labor for Employment Standards, said the company “has taken corrective action to prevent this from happening again.” The agreement covers pay for the employees during the period from February 1, 2002 to January 19, 2007.

The law requires that most employees be paid “time-and-a-half,” or 1.5 times their pay, for any time worked over 40 hours a week. That was not the issue in the Wal-Mart case. The issue was how Wal-Mart calculated the employees’ pay. The retail giant used the employees’ “base rate,” not their “average hourly compensation.”

The average compensation includes premiums and incentives, and so is a larger figure. For example, if the employee’s base rate is $6 an hour and his or her average hourly compensation is $7 an hour, the law requires that the overtime be calculated as 1.5 times the $7 an hour. Wal-Mart was using the base rate of $6 an hour instead.

The incentive behind the settlement may have been provided by a court judgment supporting the agreement. The Labor Department filed a complaint in U.S. District Court against Wal-Mart alleging violations of the FLSA overtime regulations and state minimum wage laws. The court issued a consent judgment ordering Wal-Mart to pay the back wages, and it directed the retailer against future violations. The consent decree includes not only payment of the back wages, but has Wal-Mart agreeing to pay interest on the amount.

 The Labor Department said the nationwide retailer had violated the Fair Labor Standards Act, or FLSA, when it calculated the overtime on base rate rather than average hourly compensation. It also violated states’ minimum wage laws, according to the Labor Department.

The bottom line with the proposed Nebraska minimum wage bill is that even if it gets passed one day soon, the state’s employers might end up soon paying whatever the federal minimum wage is again soon. Remember, that is how the current Nebraska minimum wage law works—it basically says that employers in the state of Nebraska have to pay their lowest paid workers at least whatever the federal minimum wage is.

The new Nebraska minimum wage law, if passed, would increase the state minimum wage from $5.15 per hour to $6.26 per hour, over the course of three 37 cent increases over the course of three years. That would end up in the year 2009, if you do the math, after which the state would increase the minimum wage after that by the rate of inflation.

However, let’s say the federal minimum wage law gets passed soon this year. If you follow my logic here, then the federal minimum wage, before the end of 2007, will become $5.85 per hour—which would be higher than the new Nebraska minimum wage. Then many Nebraska minimum wage payers would end up paying the federal minimum wage.

Come 2008, when the federal minimum wage would go up to $6.50 per hour, that would also be higher than the new Nebraska minimum wage that year, and again, most employers in the state would be required to pay the higher federal minimum wage. The next year, in 2009, the same would be true—the Nebraska minimum wage would be $6.26 per hour and the federal minimum wage would be $7.25 per hour. The federal minimum wage would apply again for many employers in the state. So de facto, for most employers, their minimum wage would revert back to being the federal minimum wage.

We continue our look at Nebraska’s neighbors to get a better sense of why the state legislators in the Nebraska Senate have considered a $6.26 ceiling, arrived at over the course of the three years, as their new proposed Nebraska minimum wage. We move on to Illinois, which just passed a minimum wage that covers all employers with four or more employers.

The Illinois minimum wage is currently set at $6.50 per hour, but the newest minimum wage increase will occur in a few months on July 1, when the Illinois minimum wage will then go up to $7.50 per hour. Then on July 1, 2010, the Illinois minimum wage will increase again to the rate of $8.25 per hour. We know the situation in Missouri, another Nebraska neighbor, pretty well, where the voters last fall approved of a minimum wage increase to $6.50 per hour, which went into effect this past January 1.

South Dakota has a proposed minimum wage law in its legislature too. We shall talk about it later in more detail when we get around to reviewing the situation in that state, but in brief, the new law would increase the state minimum wage if and when the federal minimum wage goes into effect. The South Dakota minimum wage increases would also follow the same pattern of increases and timing of the federal minimum wage, ending up at $7.25 per hour after three changes over the next two or so years.

So as you can see, the proposed Nebraska minimum wage would put that state sort of in the middle of the pack of its neighbors when it comes to the minimum wage, whereas the moment, the state is kind of at the lower end of the spectrum when it comes to its state minimum wage.