It shrinks state workplace protections and the number of workers covered.
Federal labor laws set a bare minimum floor on labor standards, on top of which states customize their own worker protections. For example, 29 states and D.C. have adopted a minimum wage higher than the federal $7.25; and Kentucky’s current 7th day overtime law builds on federal overtime protections. But SB 237 lowers Kentucky to the floor, and eliminates protections the state has put in place in the past.
SB 237 alters who we count as employers and employees in Kentucky, substantially reducing the number of employers who have responsibility for compliance with our labor laws as well as the number of workers who are covered by them.
- It applies the definition of employer subject to the Fair Labor Standards Act’s (FLSA) basic wage standards – businesses with net gross revenue under $500,000, which is $405,000 more than KY’s current threshold of $95,000 — to all of Kentucky’s wage and hour laws. That means employees who work for small businesses grossing less than $500,000 would become ineligible for the state’s minimum wage and overtime protections, but also all other wage and hour provisions regarding such issues as withholding from employee checks, rest and lunch periods, last paychecks and vacation and sick leave pay. The state would no longer enforce those protections for workers at businesses below the $500,000 size threshold.
- It makes those workers not included in the definition of employee in federal minimum wage law exempt from Kentucky’s wage and hour laws as well, leaving these workers (for example, in recreation, fishing, newspapers, criminal investigation and computer programming) unprotected by the state’s additional wage and hour provisions listed above.
SB 237 would also:
- Make it possible for employers to waive employees’ unpaid lunch period at any time and get rid of ten-minute rest periods.
- Allow employers to mandate tip pooling, where employees’ tips – rather than pay from the employer – can be used to bring other employees’ pay up to the minimum wage. Tip pools are notoriously subject to abuse, with funds being skimmed off the top or tips going to supplement non-tipped workers’ low wages.
- Eliminate Kentucky’s law that requires employers to pay time and a half for work on the seventh day of the week.
- Shorten the statute of limitations for wage and hour violations from five to two years (three years when the action arises out of willful violation).
- Specifically exempt some workers from the state minimum wage law, including newly hired employees under 20 years of age and seasonal employees.
- Repeal leave for workers when they adopt a child.
It increases penalties for workers but decreases them for employers.
Currently, when an employer wants to penalize an employee for financial losses associated with breakage, cash shortages, defective workmanship, lost and stolen property, and customers’ default on credit, for example, Kentucky law requires the employer to prove willful and intentional disregard and to get written authorization before those losses can be deducted from the employees’ paycheck. SB 237 would allow employers to simply “attribute” and deduct those losses.
More broadly, under current law, withholdings (besides for taxes, social security and garnishments) must be authorized “in writing.” SB 237 would allow employers to reduce paychecks with just “express or implied agreement,” including for loans employers have made to employees. Both these provisions leave employees vulnerable to employers’ interpretation of situations where they have a financial interest.
While putting employees’ paychecks at risk, the bill shelters employers from the financial consequences of their illegal activity. For illegal deductions from workers’ paychecks, SB 237 would reduce the interest employers pay on penalties from 10 percent to 5 percent. And instead of being fined for each violation (e.g. per day, per employee) of wage and hour provisions, violations would be lumped together and fined as one offense. For example, a violation of 8 employees’ rights that currently constitutes 8 separate offenses and carries a total fee of $8,000 could, under SB 237, constitute 1 offense and carry a $1,000 fee.
Protecting workers and Kentucky requires rejecting SB 237.
A bill that so heavily favors employers over employees further tips the balance against workers and opens the door for abuse. By limiting wages and other protections, SB 237 would widen divides in our communities and weaken our economies as reductions in workers’ wages mean they have less money to spend. The General Assembly should reject it.