06 May 2019 Maryland General Assembly: What Small Businesses Need to Know
The month of April brings the end of the Maryland General Assembly Session. This year brought a couple of labor issues that small business owners need to be aware of.
The first is that Maryland has joined a growing number of jurisdictions who have passed a $15 minimum wage law. Beginning in 2020 the state minimum wage will rise to $11 per hour. Some local jurisdictions have a higher minimum wage, of which Montgomery County is the most notable.
- If you have 15 employees or more, that $15 per hour minimum wage will be phased in over a 5-year period (ending in 2025).
- If you have 14 or fewer employees, the schedule begins at $11 per hour in January of 2020, with an extended period to raise the minimum wage to $15 per hour by July 1, 2026.
It is likely that many folks aren’t happy about that, but that is what the statute is. If you want to have a philosophical discussion about minimum wage, give me a call. But, the law is going to be implemented.
Some big questions are being posed that don’t have answers quite yet. The first of these is that when there is a disparate level between 14 and 15 employees: what happens when a business that hires their 15th employee? In 2021, if you have 15 employees, the minimum wage is $11.75 per hour. But, if you have 14 or fewer it is $11.60. What happens when you hire that 15th employee? Do all of your employees get a .15 pay increase? That doesn’t seem so bad, but what about in 2025, when on January 1 if you have 14 or fewer employees the minimum wage is $14 per hour, but when you hire that 15th employee does it jump to $15 per hour for everyone? The converse is also a question, what if you drop below 15 employees, can you cut everyone’s hourly wage? Legally you can with some notice, but from an employee morale standpoint, probably not.
We have posed this question to a number of lawmakers only to be met largely with blank stares. We will also prepare a letter to the Maryland Department of Labor regarding the regulations that will be forthcoming. We will keep on working to figure out the details, and as soon as we do we will let you know.
In the meantime, it might be a good time to talk with your Maryland Representative. It is an important question and one that can carry significant financial commitments.
The next big legislation has to do with non-compete agreements. The state has passed a law that says that if an employee earns less than $15 per hour or $31,200 per year, they can not be subjected to a non-compete agreement. Non-competes are quite common to restrict employees from learning about a business and customers, and then going out and using those skills or contacts as a competitor.
A while back I told a story of noncompetes where Jimmy John’s sandwich makers were subject to a non-compete. Low-skilled workers being subjected to a non-compete is unfair and I am not in favor of anything like that, unless that employee has access to sensitive information. The non-competes will be void as a matter of public policy for anyone making those numbers. The interesting story is when the minimum wage increase hits, whether or not that will still apply since by 2025 no one will be able to make under $15 per hour.
Finally, as I had predicted before on the blog, the state of Maryland has joined a growing list of jurisdictions that bans the box. Ban the box is when employers are prohibited from inquiring about an applicant’s criminal background prior to a first in-person interview of an employee. Before that interview takes place, an applicant cannot be asked if they have a criminal record or accusations (if someone has been charged but not convicted).
This prohibition does not apply to an employer that is expressly authorized to conduct a screening as a result of another applicable federal law, or if the applicant applies programs, services, or direct care to minors or vulnerable adults. If there is a day care center, for example, you may still ask the criminal background question prior to a first interview.
Chances are that over time the ban the box law is going to be heavily policed, but initially there may be a phase in period where the regulatory oversight is not as strong. We recommend employers simply stop asking the question and remove it from any application materials except for employers who are permitted to ask about criminal background. If you are not sure whether your business is covered, please call us.
These are three primary laws of Maryland’s 2019 General Assembly that all small businesses should know about. At the time of this post, the Governor had already signed 200 bills, and the rest will be signed very soon.
If you have any questions about these laws, please feel free to contact us. We’ll be happy to discuss how these issues may affect your business.