July 2009 is an important month for employees and employers alike in South Dakota.
On July 24, 2009, the South Dakota minimum wage will increase from $6.55 per hour to $7.25 per hour. When the federal minimum increases, over a dozen states will increase their minimum wage to match the federal.
The South Dakota minimum wage increase mirrors the federal minimum wage increase.
The majority of the employers in the United States are covered by the federal minimum wage law, the FLSA or Fair Labor Standards Act. That law covers employers who earn $500,000 or more annually, and companies that engage in interstate commerce.
The law also applies to individual employees who engage in interstate commerce. For example, a receptionist who answers out-of-state phone calls is considered to be engaged in interstate commerce and would be covered by the federal minimum wage. (more…)
The minimum wage in South Dakota is now $6.55 per hour. On July 24, 2008 when the federal minimum wage increased from $5.85 per hour. Under state law, the South Dakota minimum wage also increases to reflect the change in the federal minimum wage.
The Fair Minimum Wage Act of 2007increased the federal minimum wage from $5.15 per hour to $7.25 per hour. However, the increase didn’t go into effect all at once. Under the federal law, the minimum wage increases in three 70 cent steps. The first step went into effect 60 days after the President signed the bill into law, on July 24, 2007. The other two increases occur on the same dates in 2008 and 2009.
Federal and South Dakota overtime laws have been the subject of a recent court ruling which orders the nation’s largest retail employer to pay back wages plus interest to employees who received less overtime pay than the law allows. The payout totals more than $33 million and affects more than 86,680 employees.
In a recent announcement, the US Department of Labor (DOL) said Wal-Mart Stores, Inc. (Wal-Mart), failed to maintain compliance with laws pertaining to calculating South Dakota minimum wage overtime payments. Wal-Mart used base rates of pay to compute overtime wages for employees who were regularly receiving incentives and over premium payments in addition to base pay.
To illustrate this point, consider an employee who earns a base pay rate of $6.00 per hour but who also receives incentive and premium payments on a regular basis. In this example, the employee is regularly paid an all-inclusive rate of $7.00 instead of the $6.00 base. To remain in compliance with federal and state laws, the employee’s overtime rate of pay must be calculated using the $7.00 per hour rate, not $6.00.
Both the South Dakota overtime law and the federal law consider a standard work week to be 40 hours. Any work done in excess of 40 hours for the week is considered overtime and the rate of pay is increased to 1.5 times the standard pay rate.
The DOL complaint was filed in US District Court, where it was promptly approved. Compensation for unpaid back wages must be paid, along with interest on these unpaid wages, as a deterrent to future violations of these laws.
“This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers, and the company has taken corrective action to prevent this from happening again,” said Victoria A. Lipnic, DOL’s Assistant Secretary of Labor for Employment Standards.
The court order requires payment of miscalculated overtime wages for the period beginning on February 1, 2002, and continuing until January 19, 2007.
But whatever happens with the Democrats and the Republicans in faraway Washington DC will greatly impact how you employers do things in South Dakota. Those of you liable for the Fair Labor Standards Act will obviously need to begin learning the new three part increase system that the federal minimum wage will experience in the next couple years, culminating in the final federal minimum wage of $7.25 per hour. And all employers in the state of South Dakota will be required to update their federal minimum wage labor law poster.
But those of you in South Dakota that are currently not liable to follow the Fair Labor Standards Act will be required to—what? And I think that is the most important issue with the effects of the federal minimum wage change to all employers in the state of South Dakota. What will they have to pay when the federal minimum wage increase goes into effect? Will they still be liable to pay the current South Dakota minimum wage of $5.15 per hour, or will the state experience some sort of law change that makes the state continue to follow whatever the federal minimum wage does? Or does the state of South Dakota already have some form of provision in its minimum wage labor law that dictates that the state will change its minimum wage to match any increase in the federal minimum wage?
These are all good and important questions, and I can hear you asking yourself: but isn’t that why I read this blog? To get answers to these question? And answers you shall have. Let me check with my sources and get back to you folks, pronto. In the meantime, South Dakota employers, keep your eyes peeled on Capitol Hill to see what the national politicians end up doing.
The second main category of employers liable for the Fair Labor Standards Act is those that have interstate operations. And here is an important distinction that I don’t know I’ve stressed enough in the past. An employer is liable for this category of the Fair Labor Standards Act on an employee by employee basis. So if they have one employee who does some form of interstate activity, and no others, that employer would be liable to follow the Fair Labor Standards Act for that one employee.
But how does this all matter with the new federal minimum wage changes anyway? All this talk about the Fair Labor Standards Act might not be so fair if you’re a South Dakota employer who already knows all about it. Well, listen up, Mr. Smarty Pants, if you know all about the Fair Labor Standards Act, and you already know whether or not you are liable to follow it in paying your employers, then you know that it could become an even more important distinction when and if the federal minimum wage changes in the next few weeks or months.
As I was mentioning earlier in the week, the Democrats in Washington DC have not shown their hand yet in what they will do with the federal minimum wage bill in their control now that the president vetoed the bill that they sent to him attached to the supplemental spending bill. We had discussed that they might send the president the federal minimum wage bill again attached to the revised version of the supplemental spending bill, or they might send it to him separate and on its own. The reason they might not do the latter, however, is because the president could then veto the federal minimum wage bill on its own and that might end its chances of getting passed soon as is.