Gov. Christie Vetoes $15 Minimum Wage; U.S. Dept. Of Labor Backs Service
September 9, 2016
Governor Vetoes $15 Minimum Wage Legislation
Gov. Christie vetoed Legislation to increase New Jersey’s minimum wage, sponsored by legislative leaders Senate President Steve Sweeney (D-West Deptford) and Assembly Speaker Vincent Prieto (D-Secaucus). The legislation would have raised New Jersey’s minimum wage to $15 an hour by 2021 with annual increases based on the Consumer Price Index (CPI). In announcing his veto, the Governor argued that the state had already passed a wage hike by ballot in 2013 that increased the minimum wage from $7.25 to $8.25 per hour with annual adjustments tied to the CPI and it is currently $8.38 per hour. He also argued that the increase to $15.00 would hurt small business, raise prices for consumers, drive companies out of state by placing NJ at an unfair competitive disadvantage and generally hurt employment opportunities.
The Senate and Assembly Sponsors have announced they will seek a constitutional amendment to raise the minimum wage through a referendum on the ballot in November 2017.
U.S. Dept. Of Labor Backs Service Advisors Against Dealers in Overtime Fight
On September 1st, the U.S. Department of Labor filed a friend of the court brief in the Ninth Circuit Court of Appeals seeking to reverse a lower court ruling that dealership employees that discuss service or repair work with retail consumers should not be eligible for overtime. On June 20, 2016, the U.S. Supreme Court vacated a Ninth circuit ruling that found car dealership service advisors are eligible to receive overtime compensation. The Supreme Court ordered the Ninth Circuit to reconsider the matter without relying on regulations adopted in The Supreme Court decision was a significant victory for dealers because many pay service advisors on commission without overtime eligibility and have done so for decades.
The federal law that sets minimum wages and extra pay for overtime had since 1978 exempted “any salesman” who was “primarily engaged in selling or servicing automobiles” because they were paid commissions on their sales, not for the hours they worked. The exemption covered service advisors at car dealerships nationwide who advise customers who need work on their vehicles. In 2011 the Dept. of Labor announced a new rule that limited the exemption to salespeople, parts department workers and mechanics but not specifically service advisors.
Service advisors at a California Mercedes-Benz dealership sued for overtime pay and their case was dismissed based on the earlier exemption. The Advisors won before the Ninth Circuit court, which relied on the Labor Department’s new policy before the supreme court vacated that decision.
Changes to Overtime Eligibility Coming In December
What changed: Effective December 1, 2016, under the Fair Labor Standards Act, the threshold for who qualifies for overtime pay when working 40 hours per week will essentially double from $23,660.00 to $47,476.00. That means salaried workers earning less than $47,476.00 will soon be eligible for overtime pay no matter what type of work they engage in. The threshold for “Highly Compensated Employees” also raises from $100,000-$134,004. The thresholds will update every three years to keep pace with inflation beginning in 2020. Generally, a business is covered by the wage and hour laws that govern overtime pay if it has $500,000 or more in annual sales or engages in interstate commerce. There are some exceptions to overtime laws for certain employees such as those in management that oversee more than two employees.
What can your business do to prepare for the changes: Many businesses expect to convert salaried workers to hourly employees but in those cases will need to closely monitor employees’ hours. Other businesses plan to maintain the status of salaried employees and simply pay time and a half when employees work overtime, other businesses plan to raise wages so they are above the $47,476.00 limit., not have employees work overtime, hire more employees at lower wages, hire outside vendors or a combination of some of the above.
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For more information about the NJIADA, contact Paula Frendel at njiada.pfrendel@gmail.com. For more information about any of the issues above, or any other legal issues impacting your dealership, contact Tony Bush at (609) 989‐5056 or abush@eckertseamans.com.
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