[US] Payroll companies threaten to leave DC when tipped wage law is enforced

In Washington D.C, the second attempt to raise the wages of tipped workers is underway and a complication related to the 2018 Initiative 77 repeal bill could seemingly have big consequences for local businesses, DCist reports.

The issue relates to the back-and-forth over Initiative 77, a 2018 ballot measure to eliminate the tipped minimum wage, which is currently $5.35 per hour. The initiative was approved by voters but then repealed by the D.C. Council and replaced with a different piece of legislation intended to assuage concerns from Initiative 77 advocates and prevent wage theft: the Tipped Wage Workers Fairness Amendment Act of 2018. 

Among other things, the law reportedly requires payroll companies to report certain wage data to the Department of Employment Services (DOES) on a quarterly basis. The move is intended to help the agency spot employers who fail to make up the difference if a worker’s tips plus their base pay (or tipped minimum wage) don’t add up to the full minimum wage, which is currently set at $16.10 per hour.

The 2018 law is not yet fully funded and, as a result, the National Payroll Reporting Consortium says DOES has not yet required these more detailed reports from payroll companies. Once enforcement kicks in, however, the consortium told the Council’s labour committee over the summer, and through an attorney more recently, that some members will no longer service D.C. employers because the new reporting requirements are too complex.

“Current payroll companies would abandon the D.C. market,” David Julyan - the lawyer representing the National Payroll Reporting Consortium - said at an April 14 meeting with the Tipped Workers Coordinating Council (a coalition of government and hospitality representatives).

“That is not a bluff,” Mr Julyan told the group, which included the deputy chief of staff for DOES, Alan Karnofsky.

The National Payroll Reporting Consortium is a nonprofit trade association representing companies that service nearly 40 per cent of the D.C. workforce, or more than 10,000 local employers. These companies are responsible for everything from payroll processing to administering benefits and hiring.

Andrew Kline - Restaurant Association Metropolitan Washington general counsel and Tipped Workers Coordinating Council member - said restaurants are worried about having fewer payroll options. “What likely happens is we are left with one or two and the pricing is commensurate as to what happens when you don’t have a competitive marketplace,” he told DCist/WAMU about what he believes will be the financial burden on local restaurants.

“The DOES reps say, ‘We don’t believe them. They’re not going to pull out of the market,'” he added. “I’m like, ‘I’m glad you are sure. I mean it doesn’t matter to you what they do. But my members are really concerned about this.'”

The 2018 law requires more wage details from an employer and their payroll provider than what is expected from other state and local governments, according to Paychex, a payroll company serving 1 in 12 private-sector employees nationwide and a member of the association. For example, payroll reports would have to delineate between cash and credit card tips, Paychex’s director of compliance Mike Trabold said.

“We certainly absolutely support and understand what D.C. is looking to do. We very much want workers to get all the wages they’re entitled to,” Mr Trabold told DCist/WAMU. “What D.C. is proposing is kind of incorporating some new aspects that really would be a pretty big lift.”

Mr Trabold said his industry has also taken issue with implementation so far, calling the process “unconventional.” He said payroll companies have not yet received all the information needed to comply with the 2018 law, even though they need time to prepare. Whenever he’s raised the issue with city regulators, Mr Traboldsaid he’s been told to proceed as usual because enforcement is not funded. “We have the high-level requirements,” he said, “but not these supporting regulations or [specifications] to allow us to go in and do that work.”

Various other measures of the 2018 law have reportedly been slow to roll out, including an anonymous tip line to report wage theft and managerial training on minimum wage laws due to budgetary constraints.

Mr Julyan said that the National Payroll Reporting Consortium has repeatedly communicated its concerns to government officials, including the fact that payroll companies are liable for submitting wage data instead of employers.

Mr Julyan presented the association’s proposed solution to the Tipped Workers Coordinating Council, which would be a reporting requirement similar to one already established in Maryland and that the association believes meets the legislative intent of the 2018 law. It would require an employer to provide workers with a report after each pay period showing their effective hourly rate, including tips. 

If a worker is underpaid, the employer is then required to take corrective actions and issue a new report. The employer would also have to submit reports to DOES. The association is still waiting on both a response to the proposal and enforcement details.

Justin Zelikovitz - a managing attorney at DCWageLaw - represents workers who aren’t being paid properly. He questions whether DOES will actually use the payroll data to go after wage theft. He is currently representing a former DOES employee who is suing the agency for unpaid overtime.

“It’s insanely complex,” Mr Zelikovitz said of the 2018 law. “And it’s all designed to address a problem that shouldn’t even exist.” He favoured raising the tipped minimum wage.

Currently, employers of tipped workers are expected to report certain wage data to DOES until payroll companies take the responsibility, as well as use a third-party service to prepare payroll. But Mr Zelikovitz said he has yet to encounter a restaurant that reports data to DOES via a portal. “The employers that were either intentionally or unintentionally violating the law - they’re not doing any of this,” he said. “The employers that are doing it right - they just have more burdens.”

A spokesperson for DOES declined to comment for this story and to say whether employers are reporting data via the portal.

At the April 14 meeting, Mr Julyan asked the Tipped Workers Coordinating Council to support the proposal from the payroll association, hoping to relay the endorsement to council members. DOES Deputy Chief of Staff Alan Karnofsky declined to share any thoughts, he repeated “We don’t legislate.”

Source: DCist

(Links and quotes via original reporting)

In Washington D.C, the second attempt to raise the wages of tipped workers is underway and a complication related to the 2018 Initiative 77 repeal bill could seemingly have big consequences for local businesses, DCist reports.

The issue relates to the back-and-forth over Initiative 77, a 2018 ballot measure to eliminate the tipped minimum wage, which is currently $5.35 per hour. The initiative was approved by voters but then repealed by the D.C. Council and replaced with a different piece of legislation intended to assuage concerns from Initiative 77 advocates and prevent wage theft: the Tipped Wage Workers Fairness Amendment Act of 2018. 

Among other things, the law reportedly requires payroll companies to report certain wage data to the Department of Employment Services (DOES) on a quarterly basis. The move is intended to help the agency spot employers who fail to make up the difference if a worker’s tips plus their base pay (or tipped minimum wage) don’t add up to the full minimum wage, which is currently set at $16.10 per hour.

The 2018 law is not yet fully funded and, as a result, the National Payroll Reporting Consortium says DOES has not yet required these more detailed reports from payroll companies. Once enforcement kicks in, however, the consortium told the Council’s labour committee over the summer, and through an attorney more recently, that some members will no longer service D.C. employers because the new reporting requirements are too complex.

“Current payroll companies would abandon the D.C. market,” David Julyan - the lawyer representing the National Payroll Reporting Consortium - said at an April 14 meeting with the Tipped Workers Coordinating Council (a coalition of government and hospitality representatives).

“That is not a bluff,” Mr Julyan told the group, which included the deputy chief of staff for DOES, Alan Karnofsky.

The National Payroll Reporting Consortium is a nonprofit trade association representing companies that service nearly 40 per cent of the D.C. workforce, or more than 10,000 local employers. These companies are responsible for everything from payroll processing to administering benefits and hiring.

Andrew Kline - Restaurant Association Metropolitan Washington general counsel and Tipped Workers Coordinating Council member - said restaurants are worried about having fewer payroll options. “What likely happens is we are left with one or two and the pricing is commensurate as to what happens when you don’t have a competitive marketplace,” he told DCist/WAMU about what he believes will be the financial burden on local restaurants.

“The DOES reps say, ‘We don’t believe them. They’re not going to pull out of the market,'” he added. “I’m like, ‘I’m glad you are sure. I mean it doesn’t matter to you what they do. But my members are really concerned about this.'”

The 2018 law requires more wage details from an employer and their payroll provider than what is expected from other state and local governments, according to Paychex, a payroll company serving 1 in 12 private-sector employees nationwide and a member of the association. For example, payroll reports would have to delineate between cash and credit card tips, Paychex’s director of compliance Mike Trabold said.

“We certainly absolutely support and understand what D.C. is looking to do. We very much want workers to get all the wages they’re entitled to,” Mr Trabold told DCist/WAMU. “What D.C. is proposing is kind of incorporating some new aspects that really would be a pretty big lift.”

Mr Trabold said his industry has also taken issue with implementation so far, calling the process “unconventional.” He said payroll companies have not yet received all the information needed to comply with the 2018 law, even though they need time to prepare. Whenever he’s raised the issue with city regulators, Mr Traboldsaid he’s been told to proceed as usual because enforcement is not funded. “We have the high-level requirements,” he said, “but not these supporting regulations or [specifications] to allow us to go in and do that work.”

Various other measures of the 2018 law have reportedly been slow to roll out, including an anonymous tip line to report wage theft and managerial training on minimum wage laws due to budgetary constraints.

Mr Julyan said that the National Payroll Reporting Consortium has repeatedly communicated its concerns to government officials, including the fact that payroll companies are liable for submitting wage data instead of employers.

Mr Julyan presented the association’s proposed solution to the Tipped Workers Coordinating Council, which would be a reporting requirement similar to one already established in Maryland and that the association believes meets the legislative intent of the 2018 law. It would require an employer to provide workers with a report after each pay period showing their effective hourly rate, including tips. 

If a worker is underpaid, the employer is then required to take corrective actions and issue a new report. The employer would also have to submit reports to DOES. The association is still waiting on both a response to the proposal and enforcement details.

Justin Zelikovitz - a managing attorney at DCWageLaw - represents workers who aren’t being paid properly. He questions whether DOES will actually use the payroll data to go after wage theft. He is currently representing a former DOES employee who is suing the agency for unpaid overtime.

“It’s insanely complex,” Mr Zelikovitz said of the 2018 law. “And it’s all designed to address a problem that shouldn’t even exist.” He favoured raising the tipped minimum wage.

Currently, employers of tipped workers are expected to report certain wage data to DOES until payroll companies take the responsibility, as well as use a third-party service to prepare payroll. But Mr Zelikovitz said he has yet to encounter a restaurant that reports data to DOES via a portal. “The employers that were either intentionally or unintentionally violating the law - they’re not doing any of this,” he said. “The employers that are doing it right - they just have more burdens.”

A spokesperson for DOES declined to comment for this story and to say whether employers are reporting data via the portal.

At the April 14 meeting, Mr Julyan asked the Tipped Workers Coordinating Council to support the proposal from the payroll association, hoping to relay the endorsement to council members. DOES Deputy Chief of Staff Alan Karnofsky declined to share any thoughts, he repeated “We don’t legislate.”

Source: DCist

(Links and quotes via original reporting)