Exemptions from Local Minimum Wage Spikes and Paid Sick Leave Mandates | Practical Law

Exemptions from Local Minimum Wage Spikes and Paid Sick Leave Mandates | Practical Law

A Legal Update about exemptions from local paid sick leave and minimum wage laws.This Legal Update highlights resources helpful for multi-jurisdictional employers and notes some actions employers across the US should consider in light of these exemptions.

Exemptions from Local Minimum Wage Spikes and Paid Sick Leave Mandates

Practical Law Legal Update 7-618-4706 (Approx. 6 pages)

Exemptions from Local Minimum Wage Spikes and Paid Sick Leave Mandates

by Practical Law Labor & Employment
Published on 01 Sep 2015 • USA (National/Federal)
A Legal Update about exemptions from local paid sick leave and minimum wage laws.This Legal Update highlights resources helpful for multi-jurisdictional employers and notes some actions employers across the US should consider in light of these exemptions.
The White House's website recently publicized that:
  • Since January 2014, 17 cities and counties have implemented paid sick leave policies.
  • Since the President first called for an increase in the minimum wage in his 2013 State of the Union Address, 17 states and the District of Columbia have increased their minimum wage.
  • More than 65 mayors signed a letter from the US Conference of Mayors Cities of Opportunity Task Force calling for a raise in the minimum wage.
  • Still more states, cities and counties have pending minimum wage and paid sick leave legislation.
Employers around the US must be aware of the new laws and ordinances so they can:
  • Determine which operations and employees are covered by the laws and ordinances.
  • Adjust budgets for the anticipated increased labor costs.
  • Revise policies and pay scales at least for the covered operations and employees.
Practical Law Labor & Employment has published resources to help employers navigate the complicated maze of state and local minimum wage and paid sick leave laws, including:
Practical Law will continue to track state and major local developments in these areas.

Little Known or Publicized Exemptions from the Local Paid Sick Leave Laws

Buried in the new paid sick leave laws, ordinances and related regulations are little known or publicized exemptions. These exemptions appear in the third column of the Practice Note, Paid Sick Leave State and Local Laws Chart: Overview, "Effective Date, Employer Coverage and Exemptions." As this Chart illustrates, a majority of the new paid sick leave laws exempt, to varying degrees and with varying specificity, employees covered by a collective bargaining agreement (CBA).
With little fanfare, at least six municipal minimum wage ordinances (or their regulations) include similar CBA exemptions, including those in Chicago, Illinois, Long Beach, San Francisco and San Jose, California and Seattle and Tacoma, Washington.
The CBA exemptions were incorporated into the laws, ordinances and related regulations for one or more of these reasons:
  • To avoid challenges that the laws are preempted by federal labor laws including the National Labor Relations Act (NLRA).
  • To ensure that the local laws do not invalidate collectively bargained wages and benefits or the CBAs codifying them.
  • To leave it to the discretion of parties engaged in collective bargaining to agree on comprehensive packages of wages and benefits, and not preclude unions from agreeing to waive rights to local statutory minimum wage and leave benefits in exchange or CBA terms that might be more valuable to their constituents.
CBA exemptions do not immunize these laws from litigation challenging them as preempted by federal law (for example, see Legal Update, Ford & Harrison: Washington High Court Finds SeaTac Ordinance Increasing Minimum Wage to $15 Enforceable at Airport). Employers should continue to monitor Practical Law for Legal Updates about decisions from similar cases.

Practical Takeaways

Regardless of the intentions behind the CBA exemptions, these exemptions create in their jurisdiction:
  • The prospect of unionized employers securing through collective bargaining wage and paid sick leave costs that are lower than those of their local non-unionized competitors.
  • More bargaining chips for unions and opportunities for creative collective bargaining proposals.
These CBA exemptions should not inspire employers to take rash and unlawful actions to circumvent local wage and paid leave mandates, such as:
  • Creating a company union with which to bargain.
  • Recognizing a union that a majority of its employees does not support.
  • Unilaterally imposing proposed waivers of employees' statutory rights to the minimum wage and paid sick leave after negotiating to impasse (see McClatchy Newspapers, Inc., 307 N.L.R.B. 773, 780 (1992)).
However, the CBA exemptions should cause some non-unionized employers to consider:
  • Investigating:
    • whether any local CBA exemptions apply to their business;
    • what steps they should take to negotiate a CBA that meets an exemption, if any; and
    • the laws governing collective bargaining.
  • Reevaluating the costs and benefits of voluntarily recognizing a union that a majority of their employees support.
Employers with unionized workforces should consider investigating whether any local CBA exemptions:
  • Apply to their businesses.
  • Apply to their existing CBAs.
  • Apply to a new, successor or automatically renewed CBAs if the parties complete a new agreement or renew their CBAs by a specific date.
  • Require them to negotiate special clauses into their CBAs to qualify for the CBA exemptions.
Employers with CBAs in jurisdictions with new paid sick leave laws or minimum wages also generally should investigate whether their CBAs may be potentially be invalid under the new laws and consider whether to take action:

Your Resources and Solutions for Collective Bargaining

To learn about and get prepared for private sector collective bargaining under federal law, see the resources in the Collective Bargaining Basics Toolkit.

Generate Custom CBA Provision Comparison Reports with the What's Market Collective Bargaining Agreement Database

To see how parties have drafted various CBA provisions, explore the What's Market Collective Bargaining Agreement Database. To quickly generate a report comparing any of the 60 points Practical Law has analyzed in any of the CBAs in the What's Market Collective Bargaining Agreement Database, such as wage rate provisions:
  • Select which CBAs you would like to compare.
  • Click the "Compare" button.
  • Check the box next to "26. Wage rates" and "59. Links." (You could also select and compare any of the other 58 points of analysis completed for every CBA in the database.)
  • Click the "Compare" button.
  • If desired, change:
    • the layout of the Practical Law What's Market - Deal Comparison report by clicking the "Change layout" link; or
    • the CBA provisions you wish to compare by clicking the "Change comparison" link.
  • Export your customized Practical Law What's Market - Deal Comparison report to:
    • Word; or
    • Excel.
  • Save or print your customized report.