A recent case raises the topic of past overtime transgressions by companies. In the past, some companies have had the practice of hiring employees as management staff to avoid paying overtime. Howard Johnson’s, the hospitality giant, applied this practice in the early 1980’s. The company was found responsible for hiring people with the positions of “assistant managers” when they worked as dishwashers, waiters and waitresses. The managers were considered “salaried” and exempt from overtime pay. Many of them worked 80 hours or more per week, with no pay for the extra hours. Howard Johnson’s lost a class-action suit and eventually had to pay back wages to all the employees.
These practices are violations of federal and North Dakota minimum wage laws. They didn’t work in the 80’s and they don’t work today. That conclusion is reinforced by a recent case involving retail giant Wal-Mart Inc. The company recently agreed to compensate 87,000 employees throughout the country, including North Dakota. The amount of the total compensation is $33 million and it will be earmarked to pay back wages and interest.
It is widely accepted that “salaried” employees are managers who often work 10 or 12 hours a day, at the office, at home or on the weekends. That’s because they receive a good salary and other compensation, like commissions or bonuses. Many salaried managers are considered exempt from overtime payment.
However, many employers and employees alike are unaware that not all salaried employees are exempt from overtime. The guidelines of the US Department of Labor say that an overtime-exempt employee must have significant decision-making power. Usually this includes the authority to fire or hire 3 or more people on his or her staff. In addition, overtime exempt employees must earn at least $23,660 or more per year.
In the suit with Wal- Mart, the US Department of Labor ruled that some employees, whose positions were manager trainees, programmer trainees, and salaried interns, were entitled to overtime pay. In these cases, the employees were “non-exempt salaried” and have the right to be paid time-and-one-half after 40 hours. Under one test, a manager trainee must earn more than $23,660 per year to be considered “salaried-exempt.”
So the North Dakota minimum wage increase would basically work exactly as the proposed federal minimum wage increase. When the federal minimum wage increases to $5.85 per hour, as it would 60 days after it gets signed by President George W. Bush, the North Dakota minimum wage would increase to $5.85 per hour too. Then when the federal minimum wage, as it is proposed in both the House and the Senate, would go up a year later in 2008 to $6.50 per hour, so too would the North Dakota minimum wage. And then when the federal minimum wage goes up one more time in 2009, to $7.25 per hour, so too again would the North Dakota minimum wage.
I am not sure if the designers of this North Dakota minimum wage law had the idea that the federal minimum wage would not be going up this year, and that is why they attached their state minimum wage to the federal minimum wage. You can never be too sure of these things, but as you know, my loyal readers, I do not like to speculate or pick sides in a political spitting contest. So I will leave it at this: that the federal minimum wage has been on the verge of being changed all year since the Democrats took control in Washington DC, so most experts in the field of labor law have assumed that the new federal minimum wage was just a matter of time.
So when the governor of North Dakota signed that bill into law in early March, then you would assume that North Dakota wanted to merely stick with whatever the federal minimum wage did, no matter what that was. Either way, the North Dakota minimum wage under the new state law could be seeing a change soon.
Unlike some other states that we have looked at in this review, such as New York, the state of North Dakota has had some recent changes to the way that the state does minimum wage. After some deliberation and debate in the state’s legislature, the law makers of the state managed to pass a new law that would link the North Dakota minimum wage to the federal minimum wage, should the federal minimum wage change as anticipated.
Back when the North Dakota minimum wage change was passed in early March—March 5 to be exact is the date when the governor of the state signed the bill into law—the federal minimum wage increase did not look like it was going anywhere. The leaders in the House and the Senate in Washington DC did not seem to be able to come to terms with an agreed amount of tax breaks to give to small employers in order to offset the costs of the minimum wage increase. The Senate had a tax break bill of more than $8 billion, whereas the House’s tax break package was slightly more than $1 billion in tax breaks.
But oh, what a month can do for the minimum wage situation on the federal level. Just this past week, as I reported extensively here at the blog just this past couple of days, the leaders in the House and the Senate came to terms with a tax break package that will accompany the federal minimum wage increase. The final decided figure for the tax break is about $4.8 billion, a compromise figure somewhere in the middle of the other two original figures.
What does this news on the federal minimum wage deal mean for North Dakota employers? Well, since it is looking more likely that the federal minimum wage increase will go through, it looks like North Dakota will soon have a new minimum wage too.
It is a fact. It’s in the books. North Dakota has a new minimum wage in the state as of Monday, when Gov. John Hoeven signed the minimum wage bill into law. The law will raise the North Dakota minimum wage to $7.25 per hour, over the course of the next two years, much as the federal minimum wage law will do to the federal minimum wage. In fact, the North Dakota minimum wage law has a stipulation in it that it will automatically go into effect if the federal minimum wage is increased before it is.
Remember how the federal minimum wage will work if and when it is passed? After the president signs that into effect, the federal minimum wage would go up to be $5.85 per hour. After a year at this level, the federal minimum wage would go up to $6.55 per hour. Another year after that, employers on the federal level would see a minimum wage up to $7.25 per hour.
As we talked about in the recent past, this federal minimum wage bill is stuck in a compromise situation in the Senate and the House in Washington DC, meaning until the two bodies, and Democrats and Republicans, come up with a compromise, then the minimum wage is stalled on Capital Hill. No word yet as to what sort of time table we could be looking at.
In North Dakota, though, the new law is passed. Generally, that will mean that no employer for the most part—once the federal minimum wage is passed—will pay less than the federal minimum wage. Normally, smaller local employers—such as those pulling in less than $500,000 in revenues and working only within their state—would only have to pay the state minimum wage, which could be less than the federal wage.
The state legislator who is the force behind this new North Dakota minimum wage, Senator Bob Stenehjem, a Republican from Bismarck, also added into the bill an emergency provision it so that whenever the governor signs the bill, it will automatically kick into effect.
The new North Dakota minimum wage law would also include another provision that gives the North Dakota labor commissioner the option at any point to exclude certain employees from the need to make the minimum wage. Don’t think they will wield this provision just for any employees. In mind most are prison inmates who work inside the prison making license plates for instance.
As with most minimum wage laws out there, there was strong opposition to this North Dakota bill from certain employer groups, who claimed that the new minimum wage would hurt the business of small employers. But nevertheless, the House and the Senate in the North Dakota legislature passed the bill by large margins, according to my sources.
The final bill that came through to the governor’s desk has a three-part increase to the state minimum wage that will mirror the proposed federal minimum wage increase. This includes a first increase to $5.85 an hour as soon as the governor signs the bill. Then a year later, the North Dakota minimum wage will go up to $6.50 per hour. A year later, the North Dakota minimum wage will reach $7.25 per hour.
This minimum wage increase policy was picked on purpose to match what would be going on with the federal minimum wage increases, if that bill ultimately makes it through the Congress and reaches President Bush’s desk. The North Dakota Republicans also defeated other similar minimum wage proposals by the Democrats in the state, one of which would have raised the state minimum wage to $7.25 per hour this summer and also allowed for future changes for inflation.