In November 2022, voters in Tukwila approved Initiative Measure No. 1, which will impact employers within that city starting July 1, 2023. Items in the new measure include the following:
- Pay employees a minimum wage that will be comparable to that of neighboring SeaTac and Seattle (phased in) for all time worked within the Tukwila city limits;
- All tips and gratuities, and service charges not specifically reserved to the employer, must be paid to the employees in addition to the higher minimum wage; and
- Offer additional hours of work to part-time employees before hiring additional employees or engaging subcontractors; and
- Prohibits retaliation, and presumes retaliation occurred if an individual is subject to an adverse action within 90 days of exercising their rights under this ordinance; and
- Provides expansive remedies and a five-year period in which to bring claims.
What employers are covered by these new requirements?
All employers in Tukwila are covered except “Small Employers.” Small Employers are those with (a) fewer than 15 employees worldwide AND (b) less than $2 million in annual gross revenues. Both of those criteria need to be met to be considered a “Small Employer.” All other employers are covered.
How much is the new Tukwila minimum wage?
In the near future, the minimum wage rate depends on the size of the employer:
- Large Employers: employers with more than 500 employees worldwide and all franchisees associated with a franchisor or network of franchises that employee 500 employees in the aggregate worldwide. Large Employers must begin paying $18.99/hour beginning July 1, 2023. The minimum wage will increase thereafter each January 1 based on the annual average growth rate of the bi-monthly Seattle-Tacoma-Bellevue Area Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in August.
- Mid-Size Employers: employers with 15-500 employees worldwide or annual gross revenue over $2 million. Beginning July 1, 2023, Midsize Employers must begin paying a minimum wage of $16.99/hour. Effective 2024, mid-size employers must begin paying a minimum wage that is $1/hour less than the 2024 minimum wage required of Large Employers. Beginning 2025, Midsize Employers must begin paying the same minimum hourly wage as Large Employers.
What employees and which work hours are covered by these new requirements?
These requirements apply to non-exempt employees under Washington law, working inside the city limits of Tukwila. There is no minimum number of hours to be worked inside Tukwila before this ordinance to applies: all hours worked by a non-exempt employee inside Tukwila must be paid at least at Tukwila’s minimum wage. Note, just travelling through Tukwila or stopping for fuel or employee meals within Tukwila does not count as working in Tukwila.
Rules related to tips, gratuities, and service charges.
Tips and gratuities are verifiable sums presented by a customer as a gift in recognition of some service performed for the customer by the employee receiving the tip or gratuity. All tips and gratuities must be paid to the employee and cannot offset the required minimum wage. The ordinance is silent as to whether tip pool arrangements will comply with this requirement, but there will be some rule making by the city within the next year that may address that issue.
“Service charge” under the Tukwila ordinance is the same as in RCW 49.46.160(2)(c). Under RCW 49.46.160, employers who impose an automatic service charge must disclose on an itemized receipt or a menu what percentage of that service charge is paid directly to the employee(s) serving the customer. Under the Tukwila ordinance, any service charge that is “described in such a way that the customers might reasonably believe that the amounts are for” services provided to them by an employee must be paid to the employee, in addition to the minimum wage.
Requirements related to hiring: fair access to additional hours.
Before a covered employer can hire additional employees or subcontractors, including though temporary services or staffing agencies, the employer must offer additional hours of work to existing employees who the employer determines in good faith and reasonable judgment have the skills and experience to perform the work. Employers must use a reasonable, transparent, and nondiscriminatory process to distribute the hours of work among the qualified existing employees. Note, this section does not require an employer to offer hours to existing employees if those hours would be compensated at 1.5 times the employee’s regular rate (that is, overtime hours) or hours at some other premium rate under any law or collective bargaining agreement.
Retaliation is prohibited/90-day presumption.
Employers are prohibited from taking an adverse action against an employee for exercising their rights under the ordinance in good faith. The ordinance specifically mentions that informing an employee exercising their rights under this statute that a person is willing to inform a government employee about their citizenship or immigration status is prohibited. The ordinance also creates a rebuttable presumption of retaliation if an adverse action occurs within 90 days of the person’s exercise of any right protected under the ordinance. If in the case of seasonal employment, the seasonal employment ended in less than 90 days after the exercise of rights under the ordinance, failure to rehire the employee the following season is also presumptive retaliation. The employer would need clear and convincing evidence to overcome the presumption of retaliation.
Private right of action as individual or class/remedies.
Any aggrieved person or class of persons or any other individual or entity acting on behalf of the aggrieved person(s) may bring a court action against an employer or any other person who violates the ordinance. Damages include lost wages; liquidated damages in an additional amount of twice the lost wages; interest at 12% (or more if allowed by law) on the unpaid wages; compensatory damages (e.g., emotional distress damages); a penalty of up to $5,000 for retaliation; and attorney fees and costs. These remedies are not intended to be exclusive of any other available remedies or penalties. An aggrieved person includes employees and any other person who suffered a tangible harm due to a violation of the ordinance. A “class” under this ordinance consists of two or more employees who (a) were employed by the same employer at some point during the immediately preceding five years, (b) allege violations that raise similar questions as to liability, and (c) seek similar forms of relief.
Failure to maintain records/presumption of violation.
Any employer who fails to keep records as required under RCW 49.46.070 (for each employee: their name, address, occupation, rate of pay, amount paid each pay period, and hours worked each day and workweek) will be presumed to have violated Tukwila’s ordinance in each period and for each employee for whom records were not retained. The presumption can only be rebutted by clear and convincing evidence.
Five (5) year statute of limitations.
Claims under this ordinance can be brought for five (5) years following any alleged violation. This is two years longer than the standard three (3) years in Washington in which employees can bring wage claims. Given the record retention provisions, employers with employees in Tukwila should ensure that they are keeping pay and time records at least five years rather than the standard three years.
Employers will be required to certify annually (probably under oath) that they are in compliance with the ordinance. The city will develop the certification requirements over the next year.
Key Takeaways: Employers with employees working within the city limits of Tukwila need to begin preparing now to be in compliance with all the ordinance requirements on July 1, 2023. Given some of the unique aspects of this ordinance and the significant possible penalties for failure to comply, we recommend consulting with legal counsel.
The legal issues impacting workplaces are ever changing (Employment Law in Motion!) and since publication, new or additional information not referenced in this blog post may be available.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.