Seattle Office for Civil Rights Issues Proposed Rules Regarding Minimum Wage Ordinance; Seeks Comments

The Seattle Office for Civil Rights has just released proposed administrative rules for the Minimum Wage Ordinance, which takes effect on April 1, 2015. The proposed rules are accessible here. Once finalized, the rules will guide how the Ordinance is interpreted and enforced.

The Seattle Office for Civil Rights is also developing a comprehensive FAQ sheet, and welcomes suggestions for additional topics. The current list of FAQ topics is available here.

Employers and members of the public will have until Friday, March 6, 2015 to submit comments on the proposed rules and FAQ sheet. The date for issuance of the final rules has not been determined.

The Seattle’s Minimum Wage Ordinance affects all employers who have employees that work in Seattle, whether regularly or occasionally. To ensure compliance, employers will need to conduct a detailed analysis of their payroll practices (at times, on an employee-by-employee basis), record keeping, and medical plans and/or tip arrangements, and make careful decisions where gray areas in the Ordinance exist. (Click here for a DWT webinar covering the Ordinance.)

We encourage you to provide your feedback and questions to the Seattle Office for Civil Rights:

• Email: ocr_minwagequestions@seattle.gov
• Phone: (206) 684-4536
• Mail:
  Seattle Office for Civil Rights
  Attn: Minimum Wage Rule Comment
  810 Third Ave., Suite 750
  Seattle, WA 98104-1627

The proposed rules contain additional guidance regarding the following noteworthy areas:

Employees Who Occasionally Work in Seattle (SHRR 90-040)
Employees who perform at least two hours of work in Seattle in a two- week pay period are covered by the Ordinance. They must receive the minimum compensation set forth in the Ordinance for those hours worked inside city limits during that pay period. The rRules elaborate on the exception for employees who are just “traveling through” Seattle without performing work; define the employer’s requirement to track hours occasionally worked in Seattle; and define when employers may delegate tracking of time to employees.

Although the Seattle Paid Sick and Safe Leave Ordinance also covers employees who occasionally perform work in Seattle, it is important for employers to be aware that the two ordinances have different coverage thresholds and different time tracking requirements.

Joint Employers (SHRR 90-100)
The Minimum Wage Rules provide more extensive guidance than the Paid Sick and Safe Leave rules regarding which entities shall be considered joint employers. In the context of the Seattle Minimum Wage, joint employer status impacts whether the employer is a Schedule 1 employer (more than 500 employees) or Schedule 2 employer (500 or fewer employees) for pay schedule purposes; the largest joint employer determines the Schedule size. Also, according to the proposed rules, joint employers will be jointly and severally liable for complying with the Ordinance (including both the compensation and recordkeeping requirements).

Definition of Franchise (SHRR 90-010)
The rules set forth three components that, if present in a written agreement, establish the existence of a franchise.  More importantly, the rules, like the Ordinance, contain a controversial definition stating that the Schedule size of a franchisee is determined by the aggregate total of all employees nationwide associated with the same franchisor.

Two or More Jobs for Same Employer (SHRR 90-080)
Small employers (500 employees or less) with tipped employees need to review this rule closely to determine any impact on their scheduling arrangements and recordkeeping practices:

“When an employee is performing work in both a tipped and non-tipped job for the same Schedule 2 employer, tips count toward hourly minimum compensation only for hours worked in the tipped job.”

This rule would create a recordkeeping and payroll challenge for employers whose employees float between tipped and non-tipped positions either during the same shift or day to day.

Integrated enterprises:
Despite a number of questions involving integrated enterprises, the proposed Minimum Wage rules provide no further guidance on this topic.

If you have questions about the proposed rules or complying with the Minimum Wage Ordinance, please contact Portia R. Moore (phone: 206.757.8089) or Paula C. Simon (phone: 206.757.8301).