ST. PAUL - With the goal of achieving a $15-per-hour minimum wage within the next few years, the city of St. Paul will soon mandate that all employers offer a higher base rate than what the state currently requires, followed by annual increases thereafter.
The St. Paul City Council is scheduled to vote on a proposal from City Council member Chris Tolbert and St. Paul Mayor Melvin Carter’s office on Wednesday, Nov. 14, and the plan - which has been amended by the council over the past few weeks - is expected to win unanimous or near-unanimous support.
Following years of stagnant wage growth, Carter has estimated the city ordinance will lift wages for 56,000 low-income workers.
So what’s in the proposal? With variations based on size, most employers in St. Paul will be expected to pay employees $15 an hour within the next 3 1/2 to 8 1/2 years, with some important exceptions.
What’s not in the plan? Despite heavy lobbying from restaurant owners and workers, tipped workers can’t count tips toward wages. The council chose not to include a “tip credit” - or “tip penalty” - for restaurant servers.
Here are more details:
On Jan. 1, the statewide minimum wage will be $9.86 for large employers and $8.04 for small ones. In St. Paul, businesses won’t be expected to jump to $15 overnight. The first increases would begin in July 2020 and continue annually from there.
The proposal sets different schedules for city government, macro businesses (those that employ upwards of 10,000 workers globally), large businesses (more than 100 employees), small businesses (fewer than 100) and micro businesses (five or fewer workers).
Deadlines to reach a $15 minimum wage are:
- Macro businesses and St. Paul city government: July 2022
- Large businesses: July 2023
- Small businesses: July 2025
- Micro businesses: July 2027
After reaching a $15 minimum wage, employers would be expected to adjust minimums for inflation beginning the following year.
City Council member Rebecca Noecker submitted the requirements for macro businesses last Wednesday through an amendment, while exempting owners of independently owned franchises. “Any corporate-owned McDonalds would count as a macro business,” Noecker said Friday, by way of example. “They can’t get out of being a macro business just by having a branch that has fewer employees. But if someone operated five stores, employees from all five stores would count toward their business size.”
Contract employees would be exempt from the new wage requirements.
So will workers protected by collective bargaining contracts, workers enrolled in state-certified programs for the disabled, and the St. Paul Saints baseball team. Businesses must pay youth workers, ages 14 to 17 years old, at least 85 percent of the small business rate for their first 90 days on the job, followed by the full minimum wage after that.
City-approved youth training and apprentice programs that offer skills-building such as business etiquette, college application help and resume workshops would be allowed to pay youth workers 85 percent of the small business rate.
No tip credit
City council members have said they heard an earful from all sides when it came to the subject of exemptions for tipped employees.
Many restaurant workers fear that if restaurants raise food prices to compensate for wage increases, customers will reduce their tips or stop tipping entirely.
Some workers said they already earn $30 an hour after tips, and holding them to $15 an hour would cut their income in half. Under pressure from unions, social justice advocates and the mayor’s office, council members chose not to add tip credits to the proposal.
Noecker contributed amendments on Wednesday allowing workers to come forward with complaints against employers who violate the rules within a two-year period and bring forward civil actions.
Her amendments, which were unanimously approved by the council, prohibit retaliation against workers who file complaints.
“There’s a separate administrative ordinance coming calling for the creation of a labor standards division to implement and monitor the ordinance, and it’s going to call for technical support for small businesses,” said Noecker, who is working with council members Dai Thao and Jane Prince on the details. “Another part is an annual report to understand how this is going - a point that business owners raised is what this could do to the economy of the city, and I think it’s important that we pay attention to that. We heard a lot from small business owners about the need to provide support during this process.”