The Seattle City Council unanimously voted to adopt a minimum wage for the City of Seattle, which will gradually increase to $15/hour and then automatically increase with inflation.  All employers that have employees working within the city limits of Seattle must comply with the ordinance by April 1, 2015.

All large employers (i.e., 500 employees or more and certain franchisees) must pay a minimum wage of $11/hour starting on April 1, 2015.  This will gradually increase to $15/hour by either January 1, 2017 (if the large employer does not pay toward an employee’s qualified medical benefits plan) or January 1, 2018 (if the large employer does pay toward an employee’s medical benefits plan).  Minimum wage does not include consumer-tips or credit for health benefits paid for by the employer.

All small employers, starting on April 1, 2015, must pay minimum wage equal to $10.00/hour and minimum compensation equal to $11.00/hour.  Unlike minimum wage, minimum compensation includes the base wage plus consumer-tips and money paid by the employer toward the employee’s qualified medical benefits plan.  For example, a small employer may make up the $1 difference between minimum wage and minimum compensation by counting tips and benefit payments.  If employees do not receive tips or benefits, the employer still must meet the minimum compensation level and pay a wage of $11.00/hour.

As summarized in the following table, the minimum wage and minimum compensation change every year, and eventually, the concept of minimum compensation is eliminated, and all employers will pay the same minimum wage regardless of size and/or employee benefits.

If you have additional questions, please contact Luke Campbell at lcampbell@mpba.com or 206-682-7090.