Schedule 1 or Schedule 2 employers. Which one are you?

Schedule 1 or Schedule 2 employers. Which one are you?
A critical part of implementing the Seattle Minimum wage ordinance is understanding if you are Schedule 1 or 2 employer (big or small). If you employ 501 or more employees in the U.S., regardless of where in the country they work, you are a Schedule 1. If you employ 500 or fewer employees in the U.S. you are Schedule 2. For a detailed explanation you can see page 3 of the Minimum Wage Ordinance Guide (MWG).

In order to be the most accurate in calculating your employees, you should average the number of employees paid during each calendar week during the prior year. This includes full-time, part-time, temporary, seasonal, jointly-employed employees, and all employees of a franchise.

For most businesses this is pretty straightforward, but for franchisees and joint employers, this can get a little tricky. You can read a detailed explanation in the MWG pages 3 and 4.

Franchisees must include all employees who work for other franchisees of the franchisor. For example, if you own a Subway – you must count all the employees that work for Subway under other franchisors. You would be considered a Schedule 1.

Seemingly separate entities may be considered as one employer under the “joint employer rule” and be considered a Schedule 1. These are a few examples of how that happens:

  • Your business obtains a temporary worker through a staffing agency;
  • Your business contracts with a janitorial service to clean your establishment;
  • Your business contracts with a landscaping / gardening service to come to your premises and tend to your landscaping.

Knowing which type of employer you are allows you to determine the benefits or requirements of your business. For example, from 2016-2018, Schedule 1 employers receive a credit for their minimum wage requirements for payments towards an employee’s medical benefits. You can see dollar amounts and effective dates for that here.

To read exactly how minimum wage applies differently to each type of employer and how to calculate it Schedule 1 employers (big) should read page 11 of the MWG and Schedule 2 employers (small) should read page 16 of the MWG.

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