Agenda Item 23 B
May 21, 2015
Introduction
MEMORANDUM
May 19,2015
TO:
County Council
FROM:
Robert H. Drummer, Senior Legislative Attorney
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SUBJECT:
Introduction:
Expedited Bill 24-15, Human Rights - Minimum Wage - Tipped
Employee - Amendments
Expedited Bill 24-15, Human Rights - Minimum Wage - Tipped Employee
Amendments, sponsored by Lead Sponsors Councilmembers Berliner, Katz, Council Vice
President Floreen, and Councilmember Rice is scheduled to be introduced on May 21, 2015. A
public hearing is tentatively scheduled for June 9 at 1:30 p.m.
Bill 24-15 would:
(1) modifY the amount of the tip credit an employer can use to calculate the minimum
wage for a tipped employee working in the County;
(2) require an employer of a tipped employee to submit quarterly wage reports;
(3) require the Executive to establish an online reporting system for quarterly wage
reports; and
(4) generally amend the law governing the minimum wage for a tipped employee working
in the County.
Background
In November 2013, the County enacted Bill 27-13, Human Rights and Civil Liberties­
County Minimum Wage - Dollar Amount, establishing the County minimum wage with phased
increases on October 1 of each year through 2017. Earlier this year the Council modified some of
the effective dates for the phased increases by enacting Bill 59-14, Human Rights and Civil
Liberties - County Minimum Wage - Effective Dates.
A tipped employee under Bill 27-13 must be paid the County minimum wage, but the
employer may subtract from the hourly wage paid a tip credit. The maximum tip credit is the
County minimum wage less 50% ofthe State minimum wage. For example, the County minimum
wage is $8.40 per hour. The State minimum wage is currently $8.00 per hour. Therefore, the
maximum tip credit is $8.40 less $4.00 (50% of$8.00) or $4.40. Therefore, an employer must pay
a tipped employee working in the County a base pay of $4.00 per hour. If the employee does not
earn enough in tips to cover the tip credit, the employer must make up the difference. However,
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the maximum tip credit will change as the County minimum wage and the State minimum wage
change over time. A chart showing the different wage rates and the tip credit over time is at ©5.
The County minimum wage less the tip credit (the County base pay for a tipped employee) is
always 50% of the State minimum wage, but it would change over time as the State minimum
wage rises. However, the State minimum wage less the State tip credit (the State base pay for a
tipped employee) remains at the current $3.63 per hour. Bill 24-15 would keep the County base
pay for a tipped employee at its current $4.00 per hour as the State minimum wage rises.
An
employer would still have to ensure that a tipped employee working in the County receives enough
tips to cover the tip credit.
The Bill would also require the Executive to establish an online reporting system and an
employer would have to file a quarterly report certifying that each tipped employee received the
minimum wage through the base pay plus tips.
This packet contains:
Expedited Bill 24-15
Legislative Request Report
Chart showing tipped employee wages
F:\LAw\BILLS\1524 Minimum Wage - Tipped Employee - Amendments\Intro Memo.Docx
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Expedited Bill No.
==24:!--1~5~
_ _ __
Conceming: Human Rights - Minimum
Wage -
Tipped Employee -
Amendments
Revised: May 19. 2015 Draft No.l
Introduced:
May 21.2015
Expires:
November 21.2016
Enacted: _ _ _ _ _ _ _ _ __
Ex~uwe:
_ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ __
Sunset Date:
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_ _ _ _ __
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY
COUNTY, MARYLAND
Lead Sponsors: Councilmembers Berliner, Katz, Council Vice President Floreen, and
Councilmember Rice
AN EXPEDITED ACT
to:
(1)
modify the amount of the tip credit an employer can use to calculate the minimum
wage for a tipped employee working
in
the County:
(2)
require an employer of a tipped employee to submit quarterly wage reports;
(3)
require the Executive to establish an online reporting system for quarterly wage
reports; and
(4)
generally amend the law governing the minimum wage for a tipped employee
working
in
the County.
By amending
Montgomery County Code
Chapter 27, Human Rights and Civil Liberties
Section 27-69
Boldface
Underlining
[Single boldface brackets)
Double underlining
[[Double boldface brackets))
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffocted by bill.
The County Council for Montgomery County, Maryland approves thefollowing Act;
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ExPEDITED BILL
No. 24-15
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Sec.
1.
Section 27-69 is amended as follows:
27-69.
(a)
Tipped Employees.
Definition.
As used in this Section,
tipped employee
means:
(1)
an employee who:
(A)
is engaged in an occupation in which the employee
customarily and regularly receives more than $30 each
month in tips;
(B)
has been informed by the employer about the provisions of
this Section; and
(C)
has kept all of the tips that the employee received.
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(2)
Notwithstanding paragraph
(1
)(C), this Section does not prohibit
the pooling of tips.
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(b)
Computation of wage.
Except as provided in subsection (c), an
employer may include, as part ofthe wage of a tipped employee:
(1)
an amount that the employer sets to represent the tips of the
employee; or
(2)
if the employee or representative of the employee satisfies the
Director that the employee received a lesser amount in tips, the
lesser amount.
(c)
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Limit.
The tip credit amount that the employer may include under
subsection (b) must not exceed the County minimum wage less [50% of
the minimum wage required for that employee under the State Act]
$4.00 per hour.
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Reports.
An
employer who employs
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tipped employee in the County
must submit
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quarterly wage report within 30 days after the end of each
quarter to the Director certifying that each tipped employee was paid the
minimum wage required
Qy
this Section.
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(i)
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EXPEDITED BILL
No. 24-15
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W
Online reporting system.
The Executive must establish an internet
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based reporting system for an employer of
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tipped employee to submit
the quarterly wage report required
Qy
subsection (Q1
Sec. 2.
Expedited Effective Date.
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The Council declares that this legislation is necessary for the immediate
protection ofthe public interest. This Act takes effect on July 1,2015.
Approved:
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George Leventhal, President, County Council
Date
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Approved:
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Isiah Leggett, County Executive
Date
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This
is
a correct copy o/Council action.
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Linda M. Lauer, Clerk of the Council
Date
{3\-f:\law\bills\1524 minimum wage - tipped employee - amendments\bill 2.docx
\........../
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LEGISLATIVE REQUEST REPORT
Expedited Bill 24-15
Human Rights
-
Minimum Wage Tipped Employee
-
Amendments
DESCRIPTION:
Bill 24-15 would:
(1)
modify the amount of the tip credit an employer can use to
calculate the minimum wage for a tipped employee working
in the County;
(2)
require an employer of a tipped employee to submit quarterly
wage reports; and
(3)
require the Executive to establish an online reporting system
for quarterly wage reports.
The changing base pay for a tipped employee
has
caused some
confusion among employers in the County.
Reduce confusion over the amount ofbase pay for a tipped employee.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION: Human
Rights, County Attorney
FISCAL IMPACT:
To be determined.
ECONOMIC
IMPACT:
EVALUATION:
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
N/A
Federal, State, and County
minimum
wages are different.
Robert H. Drummer, Senior Legislative Attorney
APPLICATION
WITHIN
MUNICIPALITIES:
No change.
PENALTIES:
No change.
F:\LAW\BILLS\1524 Minimum Wage - Tipped Employee - Amendments\LRR.Docx
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County and State Minimum Wage for Tipped Employees
County
minimum wage for tipped employees
=
County minimum wage minus County "tip credit."
County
tip credit must not exceed the County minimum wage minus 50% of the State minimum wage.
State
minimum wage for tipped employees
=
State minimum wage minus State "tip credit."
State
tip credit must not exceed State minimum wage minus $3.63.
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