When the voters of Washington State passed Initiative 1433 by an overwhelming 57% majority, I do not for a minute think they were trying to create an administrative nightmare for small business owners. They were just voting to raise the minimum wage and to give workers some paid sick leave. Who wants their barista sneezing on their latte foam?
The basics are pretty straightforward:
Minimum wage increased to $11.00 per hour as of January 1, 2017. It increases annually to $11.50 in 2018, $12.00 in 2019, and $13.50 in 2020. After that, the minimum wage will be calculated annually by the Department of Labor and Industries using a formula tied to the rate of inflation. (Naturally, if the local rate is higher, which it currently is in Seattle, Tacoma and the City of SeaTac, then employees must be paid the higher rate.)
Employees must be paid all tips, gratuities, and service charges.
Starting January 1, 2018 employees will accrue sick leave at the rate of 1 hour for each 40 hours worked. Employees shall be paid sick leave at their normal pay rate. Sick leave can be used 90 days after the employee starts work. Up to 40 hours of unused sick leave can be carried over to the next year.
The devil, as always, is in the details.
The Department of Labor and Industries has been tasked with interpreting what the law as written actually means, and how it will be enforced. Some gray areas currently under discussion include when employees are allowed to use their sick leave, and what constitutes a “service charge.” Here is how the law (RCW 49.46.160) defines a service charge:
“Service charge” means a separately designated amount collected by employers from customers that is for services provided by employees, or is described in such a way that customers might reasonably believe that the amounts are for such services. Service charges include but are not limited to charges designated on receipts as a “service charge,” “gratuity,” “delivery charge,” or “porterage charge.” Service charges are in addition to hourly wages paid or payable to the employee or employees serving the customer.
The spirit of this section is clear: Employees should receive the money that customers believe they are paying to the employees. When you tip your restaurant server, your hotel porter, or your driver, you expect that money to go to the person who provided the service.
But it gets tricky when you consider charges like plate splitting fees in a restaurant. According to L&I’s interpretation of the law, this fee must be paid to the employee who provided the service. But this person is generally not the server. It’s the cook in the kitchen. It does not take much imagination to visualize a bookkeeping nightmare in the making.
When it comes to sick leave, the spirit of the law is again clear: Employees should be able to stay home and still get paid when they are sick or when a family member is sick. Many small business owners who are already squeezed understandably view this new law as one more cost stripping already thin profits. And they foresee the staffing problems that can occur when an irresponsible employee takes advantage of the law and decides to be “sick” on a Monday morning when the sun is out. Parts of the law (RCW 49.46.210) that intend to address this are vague. For example, the law states:
An employer may require employees to give reasonable notice of an absence from work, so long as such notice does not interfere with an employee’s lawful use of paid sick leave.
What the heck does this mean? What is “reasonable notice?” If you are running a coffee shop that opens at 5:00 AM and your barista calls you at 4:00 AM to say she woke up with a sore throat, is this “reasonable notice”? Employers will need to be sure that “reasonable notice” is defined, so employees understand their responsibility, and the employer is protected against charges of “discrimination or retaliation” if he decides to withhold sick pay or fire an employee.
And then there is this verbiage:
This section does not require an employer to provide financial or other reimbursement for accrued and unused paid sick leave to any employee upon the employee’s termination, resignation, retirement, or other separation from employment. When there is a separation from employment and the employee is rehired within twelve months of separation by the same employer, whether at the same or a different business location of the employer, previously accrued unused paid sick leave shall be reinstated and the previous period of employment shall be counted for purposes of determining the employee’s eligibility to use paid sick leave under subsection (1)(d) of this section.
In other words, if an employee stop working for you for any reason you don’t have to pay out their accrued sick leave. But if the employee comes back to work, he or she starts with the same amount of sick leave hours as when he or she left. So you have to keep track.
Department of Labor and Industries is currently holding public comment hearings, and interested employers can stay up to date on this issue and others regarding wage and hour rules by joining the L&I ListServe.