Seattle Modifies Enforcement Procedures & Penalties

Seattle Modifies Enforcement Procedures & Penalties https://wahospitality.org/wp-content/uploads/2015/03/seattle-416065_640-640x198.jpg

On December 17, 2015, Seattle Mayor Ed Murray signed into law a new ordinance modifying the enforcement procedures and penalties for the wage theft, minimum wage, paid sick and safe time, and job assistance ordinances (The Job Assistance Ordinance will now be referred to as the Fair Chance Employment Ordinance). Your local government affairs team worked in close collaboration with the Seattle Metropolitan Chamber of Commerce and other business community organizations to provide comments to the Office of Labor Standards (OLS), Mayor and his staff, and councilmembers during the drafting process of this new overhaul ordinance. The first draft of this ordinance was presented to stakeholders at the end of July and was originally scheduled to be delivered to the Seattle City Council at the beginning of August. Business community stakeholders raised many concerns with the initial draft and participated in multiple meetings with staff from OLS and the Mayor’s Office to outline concerns over the next several months. While not all concerns were addressed, progress was made to improve the final document.

Our position throughout the process was that we support holding bad actors accountable, but want to ensure the vast majority of employers doing the right thing are not subjected to unnecessary burden and potential liability for honest mistakes and the actions of others. Another key message was the need for additional outreach by OLS to employers to provide guidance on the complexities contained within each of the ordinances. We know employers who are informed and educated about the ordinances are complying. In the coming months OLS will be releasing an educational poster for all businesses to post on the new modifications. Your local government affairs team will be closely monitoring the drafting process for the new educational materials.

Our active participation did result in some important changes. The initial draft allowed an employee making a complaint to either join, or have a representative join, an OLS investigator in any on premise investigation. Obviously this raised significant concerns regarding access to payroll systems and employer records. This provision was removed. We were able to narrow what was originally an overly expansive definition of joint employer to instead align with state and federal laws. In the initial draft, all penalties were mandatory, even in the case of a first time violation. We worked to make sure the Director has discretion in determining penalty amounts and whether or not a penalty is even needed in the case of a first violation. We were able to achieve a phased in effective date of the private right of action (PRA) provisions (see explanation below) and maintain the 240 hours worked in Seattle for paid sick and safe leave to apply (initial proposal was to lower to 80 hours).  The hot goods provisions were removed after explaining how disruptive this could be to downstream users of goods who were in no position to know whether or not the goods were produced in compliance with the wage and hour ordinances. We also provided multiple language clarification suggestions throughout the document, which were adopted.

The new ordinance can be found here. A summary of changes prepared by OLS can be found here and here. It’s a 175 page ordinance, but some of the important provisions you should be aware of include:

  • The new ordinance takes effect January 16, 2016.
  • OLS continues to have enforcement authority over the wage theft, minimum wage, paid sick and safe time, and fair chance employment ordinances. The Director of OLS issues the final order and determines the appropriate penalty (within parameters established in the ordinance) for all administrative actions alleging violations of the labor ordinances.
  • An employee or group of employees may bring a lawsuit to enforce alleged violations of the wage theft, minimum wage, or paid sick and safe time violations. This is known as a private right of action (PRA).  The PRA provisions of the ordinance have two different effective dates. The PRA is applicable to employers with 50 or more employees April 1, 2016 and to employers of less than 50 employees on April 1, 2017.
  • Possible penalties for a first violation of the wage theft, minimum wage, or paid sick and safe time is up to three times the amount of the wages owed (often referred to as treble damages) plus 12% interest. In PRA cases, attorney fees and costs are also considered. Mandatory treble damages are applied in subsequent cases.
  • Civil penalties for violations of the wage theft, minimum wage, and paid sick and safe time can also include a discretionary penalty of up to $500/per aggrieved party for a first violation, a mandatory penalty up to $1,000/per aggrieved party for a second violation, and up to $5,000/per aggrieved party for a third violation (penalty amounts are inflationary rate adjusted).
  • Possible penalty of up to $500/per aggrieved party for a first violation of the Fair Chance Employment Ordinance. A mandatory penalty of up to $1000/aggrieved party for a second violation, $5,000/per aggrieved party for a third violation (penalty amounts are inflationary rate adjusted).
  • Employers must post workplace notice of an open investigation in a conspicuous and accessible place for employees to see, or provide notice in electronic format if there is no regular workplace or job site.
  • Increased protections for employees against retaliation for reporting a violation.  Any adverse action against an employee within 90 days will be presumed to be retaliation unless the employer can prove by clear and convincing evidence that there was an alternative reason for the action.  An adverse action is considered retaliation if it is a motivating factor. Failure to hire back a seasonal employee the next season will also be presumed retaliation if the employee raised a wage complaint.
  • Seattle will follow the state and federal rules regarding joint employer and applies the economic realities test, but the burden is on the employer to prove an independent contractor is actually an independent contractor.
  • OLS may conduct compliance investigations without a specific complaint.
  • Employers must maintain payroll records for a minimum of 3 years.
  • This is a 3 year statute of limitations on all alleged violations (the PRA statute of limitations is tolled during the OLS investigative period if this route is followed).
  • Beginning April 1, 2016 all employers must post a poster provided by OLS regarding the provisions of the new labor laws. Employers must provide all employees a written copy of the employer’s paid sick and safe leave policy. Employers must also be provide a written “notice of employment information” for all current and future employees (will be provided by OLS). OLS must provide all materials in multiple languages. Failure to post the poster can result in a $500 penalty.

For more information or questions, please contact our Local Government Affairs Coordinator Morgan Hickel at morganh@warestaurant.org. You may also contact the Seattle Office of Labor Standards at laborstandards@seattle.gov or 206-684-4500. OLS is the agency tasked with educating employers and employees about the Seattle labor law requirements.