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Legal Changes Impacting Low Wage Workers

June 2019

By: Melissa Calhoon Jones

Two new Maryland laws will take effect this year benefiting employees working for less than $15 per hour.  The first is the long-discussed “Fight For Fifteen” increase in the state minimum wage.   The second invalidates non-competition agreements with employees making equal to or less than $15 per hour.

Fight for Fifteen:  Increases to the State Minimum Wage

The state minimum wage will start its gradual climb to $15 per hour with an increase to $11 per hour effective January 1, 2020.  Based on the schedules established by the legislature, incremental increases will then vary for employers with 15 or more employees, and those with 14 or fewer employees.

For employers with 15 or more employees, the following schedule will apply:

Eff. Date         Wage Rate

1/1/2020          $11.00

1/1/2021          $11.75

1/1/2022          $12.50

1/1/2023          $13.25

1/1/2024          $14.00

1/1/2025          $15.00

 

For small employers (14 or fewer employees), the following schedule will apply.

Eff. Date         Wage Rate

1/1/2020          $11.00

1/1/2021          $11.60

1/1/2022          $12.20

1/1/2023          $12.80

1/1/2024          $13.40

1/1/2025          $14.00

1/1/2026          $14.60

7/1/2026          $15.00

Employers who currently have 14 or fewer employees should take note of the differences in the rates and dates for increases, as they will be covered by the large employer schedule when they reach the 15 employee threshold.

New Law Prohibits Non-Competes for Workers Making $15/hour or Less

Effective October 1, 2019, non-competition or conflicts of interest clauses contained in employment agreements, contracts or similar documents, that have the effect of restricting an employee’s future employment or self-employment in the same or similar business or trade, will be deemed null and void as against the public policy of the state.  This law applies whether or not the employer and employee entered into the agreement in Maryland, and only to employees earning $15.00 per hour (or $31,200 annually) or less.

By its own terms, this new law does not prohibit agreements restricting the use of client lists or other proprietary client-related information.

Next Steps for Maryland Employers:

1.         Prepare for minimum wage increases – know which schedule applies to your business and when increases are required.

2.         Small employers who are hiring should be mindful of the large employer requirements.

3.         Employers who utilize non-competition or conflicts of interest agreements should review their practices to determine whether their current agreements will be invalidated by the new non-compete law, and revise their practices accordingly.

This information has been prepared by Tydings for informational purposes only and does not constitute legal advice.

 

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