What You Need to Know About Portland’s Pandemic Pay and Minimum Wage Hike
UPDATED NOVEMBER 6th, 2020
What You Should Know
As we noted in our previous Client Alert on November 4, in Tuesday’s election, voters in the City of Portland passed a referendum—Question A—that increases the city’s minimum wage for businesses in Portland. Since that time, there have been further developments regarding the likely effective date of the pandemic pay provision of that referendum which could require Portland businesses to pay a minimum wage of $18.00 per hour starting in December 2020. We are providing this update to inform you of those recent developments.
The referendum was put forth by an organized group known as People First Portland. The language of the referendum was not written by the City of Portland. At this time, the City is considering how to interpret the language of Question A. Specifically, the City is considering whether the pandemic pay provision takes effect in December or a later date.
We will keep you updated regarding whether the City of Portland interprets the law to take effect on December 5 or a later date, and also regarding any other developments.
As we learn more about what this ordinance will mean for Portland-based employers, we will update this guidance. Learn more about the Labor & Employment Practice Group, or contact us with questions.
 Our previous alert indicated December 3, not December 5, as the effective date. This has been adjusted following the certification of the election results.
In yesterday’s election, voters in the City of Portland passed a referendum to increase the city’s minimum wage that will apply to businesses and workers in Portland. The referendum increases the minimum wage to $15.00 per hour and requires so-called hazard pay at a rate of one and a half times the regular minimum wage for all periods in which there is an emergency declaration by the city or the State that applies to the geographic area where the workplace is located. Here we address some common questions that may arise as you consider what this means for your business.
What Does This Mean for my Business Today?
While the minimum wage increase will go into effect over time (see the next question, below), there are some changes that will take effect thirty (30) days after the election.
In particular, one aspect of Question A relates to so-called “hazard” or “pandemic” pay, which would go into effect on December 3, 2020, requiring a minimum hourly wage of at least $18.00 per hour for all work performed during the declared state of emergency. The referendum requires Portland workers to be paid at least 1.5 times the new City of Portland minimum wage for all periods of emergency as declared by the City, or by the State if the emergency applies geographically to the workplace.
As of the date of this writing, Governor Mills has most recently continued the state of emergency for the entire state of ME on October 29, through November 27, and it is expected to continue as cases rise.
Does the Pandemic Pay Increase Apply to All Workers?
No. With the changes to the ordinances through this referendum, there will be no changes to any employee who works from home, for work performed from home. If employees are working from home some of the time, but present at the worksite for other times, they must be paid the increase during periods of on-site work.
What if my Employees are “Exempt” as Defined in the Fair Labor Standards Act or Under ME Law?
If the employees are truly exempt, these increases will not apply to them. The Portland City Code adopts the definition of “employees” in Section 663(3) of Title 26 under state law. Those exemptions include the most common exemptions for the following (non-exhaustive list):
- Salaried employees who work in a bona fide executive, administrative or professional capacity and whose regular compensation, when converted to an annual rate, exceeds 3,000 times the State’s minimum hourly wage or the annualized rate established by the United States
- Department of Labor under the federal Fair Labor Standards Act; (as of this writing, the higher of the two is the state level, which is $36,000 per year);
- Taxicab drivers;
- Counselors or junior counselors for licensed camps;
- Certain sales employees who earn commissions (only if the hours and place of employment are not controlled by the employer);
- Certain employees in the fishing industry; or
- In-home workers or dependent-members of the employers family.
We strongly encourage you to revisit your classification status to ensure that you are properly classifying workers either as employees (as opposed to independent contractors) and as exempt (as opposed to non-exempt workers).
A common misunderstanding is that salaried workers are exempt either under local, state, or federal law. This is not true. Exemption status depends not only on whether an employee is salaried but also on the employee’s job duties, which warrants a careful review with counsel, as you may have some salaried, non-exempt employees
Will I be Required to Pay $15.00 Per Hour to my Employees Immediately?
No. The minimum wage increase does not begin to take effect until January 1, 2022, and will increase in $1.00 increments as follows:
- Beginning on January 1, 2022, the minimum wage will be raised to $13.00 per hour;
- Beginning on January 1, 2023, the minimum wage will be raised to $14.00 per hour; and
- Beginning on January 1, 2024, the minimum wage will be raised to $15.00 per hour.
Thereafter, the minimum wage will increase annually on January 1st (in line with the state law), but it is pegged to the Consumer Price Index for all urban consumers (“CPI-U”) for the northeast region, unless the state minimum wage is higher, and then it will be the higher of the two amounts.
How Does the Minimum Wage Increase Affect Tipped Workers?
In the immediate future, your tipped employees will not be affected. For employers who take the tip credit and allow tipped employees to be paid minimum wage through the payment of tips, up to a certain amount, the referendum adds a provision stating that the tip credit can be no more than 50% of the City of Portland minimum wage amount established by the ordinance.
The 50% threshold is the same as the state law, which requires that the tip credit be no more than 50% of the ME minimum hourly wage, which at present is $12.00 per hour (so the tip credit is, at most, $6.00). When the City of Portland minimum wage increases in 2022 and yearly thereafter, the tip credit will change as well.
What Happens if I am Unable to Comply?
The existing ordinance, which was amended by the referendum includes the ability for aggrieved employees to sue for any back wages that should be due plus any penalties (of at least $100 per day), plus attorney’s fees. Unlike state and federal law, the ordinance does not include a so-called treble damages provisions (requiring payment by violators of 3 times the amount of unpaid wages), but it is possible that the state law requiring “timely” payment of wages could be invoked to require treble damages for any unpaid wages under the Portland ordinance. Attorney’s fees can also be quite sizeable and may exceed total wage costs. Thus, the consequences for non-compliance could be severe.
Employers should review their classification decisions with counsel and ensure that they understand what changes will be required as of December 3. As we learn more about what this ordinance will mean for Portland-based employees, we will update this guidance.
Learn more about the Labor & Employment Practice Group, or contact us with questions.