News

Maryland Legislature passes bill to raise minimum wage to $10.10 by July 1, 2018

by David M. Stevens

On the final day of its legislative session, the Maryland General Assembly passed a bill to dramatically raise the state’s minimum wage. The bill, which was supported by Governor Martin O’Malley and is expected to be signed into law, calls for a staggered increase in the minimum wage over a period of four years, with the final increase due to set the minimum wage at $10.10 effective July 1, 2018.

Employers will first feel the effect of the minimum wage increase on January 1, 2015, and the minimum wage will increase a total of five times under the following schedule:

January 1, 2015                   $8

July 1, 2015                          $8.25

July 1, 2016                          $8.75

July 1, 2017                          $9.25

July 1, 2018                          $10.10

The new legislation, which amends Maryland’s Wage and Hour Law, includes a provision allowing certain employers to pay employees under 20 years of age less than the minimum wage during the first six months of employment, provided the wage paid is at least 85 percent of the state minimum wage then in effect.

The law also contains a provision that holds at $3.63 per hour the required cash wage for employees paid based on the tip credit.

In addition to the minimum wage increase, the new law will amend several of the Wage and Hour Law’s coverage provisions. Notable changes include increasing the minimum annual revenue a restaurant must generate to be subject to the state minimum wage and overtime requirements from $250,000 to $400,000.

Finally, the new legislation bolsters the economic incentive for employees and their counsel to pursue claims under the Wage and Hour Law by increasing the recovery available to employees who establish a violation of the minimum wage or overtime provisions. Currently, the Wage and Hour Law provides for recovery only of the unpaid minimum wage or overtime amount and grants courts the discretion to direct the employer to pay the attorneys’ fees incurred by a successful employee in pursuing her claim.

The new amendments to the Wage and Hour Law provide for an automatic award of attorneys’ fees in the event an employee establishes a violation and further provide for an award of liquidated damages equal to the unpaid wage amount unless the employer can show that it believed in good faith that all amounts due under the Wage and Hour Law had been paid.

These changes have the effect of bringing the enforcement mechanism under the Wage and Hour Law largely in line with that of the federal Fair Labor Standards Act, thereby making the Maryland statute a more attractive vehicle for employees seeking to pursue minimum wage and overtime claims.

David M. Stevens is an associate with Whiteford, Taylor & Preston L.L.P. and a contributor to Maryland Employment Law Letter. You can reach him at dstevens@wtplaw.com.