C2 recently onboarded a small government contracting client with primary operations located in Washington, D.C. The client came to C2, in part, because they wanted to create more internal structure and support for their workforce now that they are growing at a fairly rapid pace. Before joining C2, the client’s focus was on filling contract seats. After all, for a small company, generating consistent revenue is critical. However, as they began to grow, the client realized that winning and fulfilling contract expectations was only part of their operational needs – they needed more robust HR expertise as well. One major goal for the client was understanding the evolving landscape of wage and hour laws in the District of Columbia. As we explained to our client, D.C. has been active in recent years in crafting employee-friendly wage and hour laws, and doing business there requires paying close attention to local wage and hour obligations.
A) The D.C. Minimum Wage Act
The federal minimum wage is currently $7.25. Effective July 1, 2016, Washington D.C. amended its Minimum Wage Act and increased the minimum wage to $11.50 an hour, and that amount will continue to incrementally increase based on an inflation index. The D.C. Minimum Wage Act applies to individuals employed in the district, including those individuals whose employer may be headquartered elsewhere. D.C.’s minimum wage (and other states with similar laws) trumps the federal minimum wage, even if you are a federal contractor working on a federal contract.
Individuals covered under The D.C. Minimum Wage Act include:
- Individuals that spend more than 50% of their working hours in the District; or
- their employment is based in the District, they regularly spend a substantial amount of their working time there and no more than 50% of their working time is spent in any other state.
- Day laborers are covered, whether paid by the hour, the day, or at a piece rate.
The D.C. Minimum Wage Act also governs when employees must receive their final paycheck. Many states (like neighboring Virginia and Maryland) require final paychecks to be issued on what would have been the employee’s next regularly scheduled payday. However, in most cases D.C. requires that employers pay wages that are due to a terminated employee no later than the working day following the date of termination. This short turnaround requires greater attention to detail – particularly since an employer’s failure to meet these deadlines may result in penalties equal to three times the amount of wages owed.
B) D.C. Record Keeping Requirements
D.C. employers are also required to maintain a variety of employee wage, hour and payroll records for a minimum of three years, including the following information:
- full name, occupation and social security number;
- address, including zip code;
- date of birth;
- employees’ regular hourly wages;
- hours worked each day and workweek;
- a daily record of start and finish times (including meal break times if the employee works a split shift);
- total daily or weekly straight-time earnings and excess overtime earnings for the week, or total earnings for non-overtime and overtime hours worked during the week;
- total gross and net wages paid each period, and any deductions and additions;
- date of payment and pay period covered; and
- application of tips to minimum wages for tipped employees.
C) D.C.’s Wage Theft Prevention Act
Effective in 2015, D.C. employers are now required at the time of hiring to give employees written notice of their wages – both in English and the employee’s primary language. The notice must include (a) the employer’s name, address, and telephone number; (b) the employee’s regular payday, rate of pay, and the basis of that rate; and (c) any other information “as the Mayor considers material and necessary.” The Mayor’s office has provided employers with a template of this notice which is available on the Department of Employment Services’ website. Employers who fail to provide this notice face a possible penalty of $500 per employee.
D) D.C.’s New Paid Parental Leave Law
On December 20, 2016, the D.C. Council passed a new paid leave system that applies to private sector employers. The Universal Paid Leave Act of 2016 will allow individuals who work in D.C. to take eight (8) weeks of qualifying parental leave, six (6) weeks of qualifying family leave, and two (2) weeks of qualifying medical leave. These benefits will be paid for by a 0.62% payroll tax on all D.C. employers. The funds collected from the tax will be housed in a special fund which is to be established by the Mayor. Employees who qualify for the various types of leave will receive up to 90% of their salary up to 1.5 times the minimum wage, and then 50% of their wage above that amount, with a maximum benefit of $1,000 per week. The mayor has yet to sign the new legislation; but since the D.C. Council passed it with a veto proof majority, it is all but certain to become a reality. However, there is not yet an effective date for this new legislation.
E) Takeaway for Employers
As far as our client is concerned, we were able to help them better understand the changing wage and hour requirements in D.C. and shore-up their internal processes for correctly applying these laws to their D.C. based employees. For other employers, it seems clear that D.C. will remain at the fore-front of employee-friendly wage and hour legislation, led by an overwhelmingly Democratic D.C. Council and Democratic mayor. Therefore, employers with D.C. employees should keep a close watch for further employee-friendly laws that are likely to materialize in the not-too-distant future.
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.