• Two Maryland Counties Increase Minimum Wage; State Considering Same; Federal Contractors To Be Subject to $10.10 Minimum Wage Requirement
  • February 12, 2014
  • Law Firm: Shawe Rosenthal LLP - Baltimore Office
  • Montgomery County and Prince Georges County recently increased their minimum wage, and a statewide minimum wage increase is being pushed in the General Assembly. In addition, President Obama has announced a $10.10 minimum wage rate will apply to government contractors.

    The Counties’ Increase: Working in conjunction with each other (as well as the District of Columbia), the County Councils for Montgomery and Prince George’s Counties each passed legislation that will increase the minimum wage rate by 59% over the next four years, applicable to all public and private employers in these counties. On October 1, 2014, the minimum wage will increase from the current State rate of $7.25 to $8.40. On October 1, 2015, it will increase to $9.55. It will rise to $10.75 on October 1, 2016, and then to $11.50 on October 1, 2017. These rates apply to all employees who perform their work in these two counties, with an exception for those under the age of 19 working 20 hours or less per week. With regard to tipped employees, employers must pay a base rate equal to ½ the State minimum wage and are required to make up any difference if there is a shortfall in tips up to the county minimum wage.

    The Statewide Proposal: There currently are multiple bills, sponsored by various General Assembly members, seeking to increase the minimum wage. The one that has the most likelihood of passage is the one being pushed by Governor O’Malley’s administration. Under this proposed legislation, the minimum wage would increase to $8.20 on July 1, 2014, to $9.15 on July 1, 2015, and to $10.10 on July 1, 2016. Thereafter, rates would be established annually by the State Commissioner of Labor and Industry, based on increases in the Consumer Price Index. For tipped employees, the employer must pay a base rate equal to at least 70% (an increase from the current 50%) of the minimum wage, with the tip credit not to exceed 30% of the minimum wage rate. The bill also imposes liquidated damages and attorney’s fees on employers who fail to pay the required minimum wage. Business groups, including the Maryland Chamber of Commerce (for which our partner, Liz Torphy-Donzella, serves as General Counsel) are opposing the proposed minimum wage increase, and are seeking input from concerned members of the employer community.

    President Obama’s Executive Order for Government Contractors: In his State of the Union address, President Obama announced that he will be signing an Executive Order raising the minimum wage to $10.10 per hour for federal contractor employees. The increase will apply to new contracts entered into after the effective date of the Executive Order, which has not yet been announced.