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14 May 2016 • www.CPAPracticeAdvisor.com A YEAR IN THE LIFE: PAYROLL ACCOUNTANT A n increasing number of cities and states are beginning to agree, including California and New York, both of which recently passed $15 an hour minimum wage laws. However, the California Chamber of Commerce called the increase "a job killer." "Tis is too much too fast," said California Chamber President and CEO Allan Zaremberg. "It is unfortunate the Legislature didn't take advantage of the opportunity to address the issue in a more balanced manner." As more politicians and union- affiliated groups push for higher minimum wages, employers need to prepare now for the signifcant fnancial, compliance, and regulatory challenges these changes bring. A Rising Minimum Wage According to the National Conference of State Legislatures, 29 states and Washington, D.C., have minimum wages above the federal minimum wage of $7.25 per hour. When federal and state law have diferent minimum wage rates, the higher standard applies. So far, California and New York have enacted laws that will increase those states' minimum wages to the highest in the country. In April, California Gov. Jerry Brown signed the bill that increased the state's hourly minimum wage to $15 by 2022 for companies with more than 25 employees, and by 2023 for smaller businesses. Te increase will start in 2017, when the California minimum wage will rise from $10 an hour to $10.50. However, the state can stop the wage increases in the event of a recession or economic downturn. And California isn't alone. In New York, lawmakers approved a $15 an hour minimum wage. It will take efect in New York City by 2019 for compa- nies that have at least 11 workers, and in 2020 for others. Businesses in the suburbs have until 2022 to comply. In upstate New York, the minimum wage will increase to $12.50 an hour in fve years, and then continue rising until it hits $15. On April 4, New York Gov. Andrew M. Cuomo signed the minimum wage legislation, along with a 12-week paid family leave policy. "By moving to a $15 statewide minimum wage and enacting the strongest paid family leave policy in the nation, New York is showing the way forward on economic justice," Cuomo announced. "Tese policies will not only lif up the current gen- eration of low-wage workers and their families, but ensure fairness for future generations and enable them to climb the ladder of opportunity. I am proud to sign these programs into law, because they will ensure a stronger, fairer and brighter future for all New Yorkers." Tese new laws will have a broad impact. Last year, 53.6 million work- ers in the U.S. were paid less than $15 an hour, according to the Wall Street Journal. In New York State alone, the $15 minimum wage will increase the earnings of more than 2.3 million New Yorkers, Cuomo's ofce said. Tese laws follow on the heels of some activist and union-related movements, such as "Fight for $15," a group that is pushing for a national $15 an hour wage, along with unionization rights. Te group's moto is "1,000s of workers. 100s of cities. 1 movement. $15 and a union." But while some states are raising their minimum wages, others are push- ing back. For example, North Carolina recently passed a law that limited the ability of cities and towns to set mini- mum wages. In February, Alabama lawmakers passed a similar law to ban local governments from establishing local minimum wages. Tat was in response to a law in Birmingham that would have raised the minimum wage to $10.10 in the city. What Employers Need to Know Obviously, the biggest repercussions of the rising minimum wage will be fnancial, as companies struggle to remain competitive and proftable with skyrocketing worker costs. But there are other considerations as well, including regulator y, paper work, and compliance. Among the things companies need to know: • Understand the Changes Diferent states have diferent timelines for the increase in minimum wage. Even states that aren't aiming for $15 have made increases. According to the NCSL, R hode Island raised its minimum wage to $9.60 efective Jan. 1. Washington, D.C., will increase its minimum wage to $11.50 on July 1. And the minimum wage in Minnesota will increase to $9.50 on Aug. 1 for large employers, and $7.75 for small employers. Employers need to prepare now for actions that have been already legislated, or could be in the works. It's important to plan ahead, work with HR and legal counsel to understand what changes may be on the horizon, and proactively prepare for them. • Review Employee Classifcations W hile the minimum wage afects workers who are nonexempt from the Fair Labor Standards Act, new laws could also impact whether employees are classifed as exempt or nonexempt. Tat could have far-reaching fnancial and HR considerations. For example in California, in order to be exempt from overtime laws employees must earn a minimum monthly salary that is no less than twice the state minimum wage. Tat means employers in the Golden State need to be aware of how the mini- mum wage boost could impact whether employees are exempt or nonexempt. Furthermore, separate and apart from the increase in minimum wage, the Department of Labor is expected to release its Final Rule modifying the "white collar" exemptions. Tis rule will more than double the salary ofce, executive, and professional employees must be paid in order to be classifed as exempt employees. With the increased focus on wages across the country, now is a good time to conduct a thorough review of your employee classifcations and other wage and hour policies. • Posting Notice Requirements Employers who are required to post wage notice requirements will need to update their information if their states have increased minimum wages. Some states also require writen notice, which will need to be updated and disseminated. The Push for a $15 Minimum Wage By Richard D. Alaniz A $15 an hour minimum wage should be mandatory, according to Democratic presidential candidate Bernie Sanders. "Millions of Americans are working for totally inadequate wages," Sanders states on his website. "We must ensure that no full-time worker lives in poverty. Te current federal minimum wage is starvation pay and must become a living wage. We must increase it to $15 an hour over the next several years." Richard D. Alaniz is senior partner at Alaniz Schraeder Linker Farris Mayes, L.L.P., a national labor and employment frm based in Houston. He has been at the forefont of labor and employment law for over thirty years, including stints with the U.S. Department of Labor and the National Labor Relations Board. Rick is a prolifc writer on labor and employment law and conducts fequent seminars to client companies and trade associations across the country. Questions about this article, or requests to subscribe to receive Rick's monthly articles, can be addressed to Rick at (281) 833-2200 or ralaniz@alaniz-schraeder.com . CONTINUED ONLINE AT: www.CPAPracticeAdvisor. com/12203980