HOUSE BILL REPORT

HB 709

BYRepresentatives Allen, Belcher, Hine, Miller, Brough, Cole, Fisher, Winsley, K. Wilson, Unsoeld,  Rust, Lux, Hankins, Brekke, Leonard, Niemi, H. Sommers, Nutley, Wang, Locke, Valle, Jacobsen, Fisch, Basich and Jesernig

Establishing a state minimum wage tied to the federal poverty level.

House Committe on Commerce & Labor

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (7)

     Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher R. King, O'Brien and Sayan.

Minority Report:     Do not pass.  (3)

     Signed by Representatives Patrick, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR MARCH 2, 1987

BACKGROUND:

The Washington Minimum Wage Act shares concurrent jurisdiction with federal minimum wage laws.  Where both federal and state law apply to the same employment, the employer must comply with the higher standard.  Washington state's minimum wage applies to certain employees who are at least eighteen years of age.  Workers who are excluded from the state minimum wage law include agricultural workers, workers engaged in domestic service in a private home, and newspaper carriers, among others.  Since 1977, the state minimum wage has been $2.30 an hour.

SUMMARY:

SUBSTITUTE BILL:  Beginning on January 1, 1988, the new state minimum wage would be derived from the following calculation made by the Department of Labor and Industries:  The annual dollar figure for the overall weighted average poverty threshold for a one parent family with two children, published in 1986 by the Bureau of the Census, United States Department of Commerce as $8534.00, multiplied by ninety percent and divided by 1936 hours ($3.96).  The department is directed to calculate the initial minimum wage by July 1, 1987, and take such steps as are necessary to notify employers and employees of the new minimum wage.  Thereafter, every third December, the department is required to recalculate a new suggested minimum wage by the same method to recommend to the legislature for adoption as the new state minimum wage, using the most recently published annual dollar figure for the overall weighted average poverty threshold for a one parent family with two children.  The department is directed to take such steps as are necessary after a change in the state minimum wage to notify employers and employees of the current minimum wage.

To determine whether the minimum wage requirements for tipped employees have been met, the amount paid by the employer is deemed to include tips reported to the employer for federal income tax purposes or allocated for tax purposes, but the amount of the increase due to tips may not exceed forty percent of the applicable minimum wage rate and may not exceed the amount actually received in tips.  The minimum wage calculation may also include the reasonable cost of meals furnished to the employee by the employer.

Special provisions relating to the minimum wage of employees of state and local governments, nursing homes, hospitals and restaurants are deleted.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The method of calculating the minimum wage based on a specified poverty level is retained. The requirement that the Department of Labor and Industries calculate a new minimum wage annually based on the most recently published poverty level figures is deleted.  The substitute bill establishes a new minimum wage beginning in 1988, using the annual poverty level dollar amount of $8543.00, published in 1986, to make the calculation ($3.96).  New provisions are added requiring the department to recalculate a suggested minimum wage every three years for recommendation to the legislature for adoption.

Provisions are added that allow part of an employee's tips and any meals furnished to an employee to be deemed wages for the purpose of calculating the minimum wage.

Fiscal Note:    Requested March 3, 1987.

House Committee ‑ Testified For:     Representative Allen, prime sponsor; Jeff Johnson, Washington State Labor Council; Carol Steckle, Fair Budget Action Committee; Lonnie Johns-Brown, National Organization for Women.

Neutral:  Clark Ransom, Department of Labor and Industries

House Committee - Testified Against: Bob Seeber, Lodging and Restaurant Associations; Clif Finch, Association of Washington Business; Paul Locke.

House Committee - Testimony For:     The state minimum wage has not been changed for ten years.  The decline in the value of the minimum wage has led to increasing poverty and a rise in the number of "working poor."

House Committee - Testimony Against: Raising the state minimum wage will inflate wages across the board and will limit entry level jobs.  The minimum wage calculation for tipped employees should include a portion of tips earned by these employees.