Significant changes may be on the horizon for US employers as the Obama Administration continues to push for an increase to the federal minimum wage—one of the primary policy objectives announced by the Administration during the president’s second term.

Introduced on March 5, 2013 by Senator Tom Harkin, S.460 (the “Fair Minimum Wage Act of 2013”) has begun to make headlines as it is currently before the Senate Health, Education, Labor and Pensions Committee.

Similar measures have also been introduced in the US House of Representatives (H.R. 1010 and H.R. 3746).

The House of Representatives previously voted down an amendment tracking the language of H.R. 1010 on March 15, 2013.  Although some questions remain regarding whether the Senate majority can rally enough votes to pass such measures, a Senate vote may come as soon as this week.

The practical effect of the laws is to raise the federal minimum wage in the short-term, and thereafter to give the Department of Labor more autonomy in regulating the federal minimum wage.

After three planned minimum wage increases over the next two years, the Secretary of Labor then reviews the federal minimum wage on an annual basis to make necessary increases taking into account inflation.

The Senate Bill tracks President Obama’s recent call for an increase of the federal minimum wage to $10.10 per hour (H.R. 3746 calls for an increase to $11.00 per hour), and does so within the first two years following enactment, subject thereafter to the determinations by the Secretary of Labor.

However, in the lead-up to a potential vote on S.460, Senate members have indicated they might consider a smaller minimum wage increase if the bill lacks enough votes to pass in the Senate.

The Act also impacts income for tipped employees, typically defined as employees who “customarily and regularly” receive more than $30.00 per month in tips.  Ultimately, the text of the Act increases the federal minimum wage for tipped employees to not less than seventy percent of other FLSA employees.

The measures present an immediate potential impact to the food service industry.  While the National Restaurant Association states the current median income for restaurant servers is between $16.00 and $22.00 per hour, the Bureau of Labor Statistics says that figure is closer to $9.00 per hour as of May 2013—the most recent data available.

Leave a Reply

Your email address will not be published. Required fields are marked *