It’s been nine years since the minimum wage went up — here’s what employers need to know
The other day, I was watching a Julia Roberts classic I hadn’t seen in a while: “Erin Brockovich.” If you haven’t seen it, the storyline basically revolves around the real-life Erin Brockovich, the legal clerk who took on the Pacific Gas and Electric Company of California in 1993. I won’t ruin it for you in case you care to watch it yourself, but there is one part that struck me in my recent viewing, and it’s probably not what you’d think.
While it’s true the case Erin brings to court on behalf of the people of Hinkley is incredible, the thing that made my jaw drop was when Erin mentioned her hourly wage, which happened to be the federal (and California) minimum wage in 1993: $4.25.
Now, according to ThePeopleHistory.com, the cost of living was lower overall back then. A gallon of gas was $1.16. Movie tickets were $4.14. The average cost of a new car was just $12,750, compared to today’s $36,270. That means prices have doubled, or even tripled in some cases, over the last 25 years. It makes sense, then, that the minimum wage has also gone up, but could it be time for another adjustment?
An anniversary to celebrate?
July 24 marks the ninth anniversary since the minimum wage was raised to $7.25 an hour. In 2009, that increase generated mixed responses, much in the way conversations about raising the minimum wage go today. At the time, the nation was in the pits of an economic recession, prompting analysts, reporters, and politicians alike to speculate what the short-term and long-term effects might be, as a result of raising the minimum wage from $6.55 to $7.25.
Today, these same groups, along with average citizens, ask the same questions, even as states across the U.S. take action to raise their own minimum wage. Given my prowess as a writer and not as an economist, I can’t say whether or not the minimum wage should go up, or what it should be if it were raised. I can, however, point you to a few resources which may help you draw your own conclusions. These include the United States Census Bureau, which records data on everything from housing prices to household income, and the United States Department of Labor, which upholds the Fair Labor Standards Act (FLSA), including the laws regarding minimum wage.
Then there’s this article by SmallBizDaily that’ll tell you, like it or not, chances are good a significant increase to the federal minimum wage is in our near future.
Minimum wage and the FLSA
Numbers aside, paying workers the minimum wage involves more complex parts than many people realize. And those complexities can make for some pretty expensive consequences, should an employer fail to uphold the law.
Some common errors include failing to pay overtime, shorting wages, and, of course, violating minimum wage requirements. It’s an easy mistake to make, particularly when a job entails all kinds of unexpected nuances, such as
- Uniforms — Who’s responsible for cleaning them, repairing them, and paying for those services?
- Travel — What travel time should be compensated by the company, and when does a work trip become a personal trip?
- Resources — If an employee requests a special desk or keyboard, are those things paid for by the company or out of the employee’s pocket?
And these are just a few examples of where the line can get a little fuzzy.
The trouble for many employers is despite their best efforts, it’s easy to wind up in an FLSA lawsuit, whether their mistakes were intentional or not. Recently, the FLSA turned 80, prompting our team at TSheets to put the question to the experts: Is it time to rewrite the FLSA?
Don’t risk violating the minimum wage
Minimum wage violations can occur at all levels of pay, whether a worker is a tipped employee, paid by the piece, hourly, or salary. Employers must educate themselves, or at the very least, consult an employment expert, to make sure workers aren’t dipping below the minimum wage. Knowing how long employees are working — including salary employees — can help employers make better business decisions overall.