As of February 1, 2016, employers with employees who work in Tacoma must comply with two new legal requirements. First, employers must pay employees who work in Tacoma a minimum wage of $10.35 per hour, rather than the state minimum wage of $9.47 per hour.  Second, they must provide employees with at least 24 hours of paid leave per year. Some of the main nuances and exceptions to the ordinances are explained below. Employers are encouraged to review the ordinances (which are available on the City of Tacoma’s webpage) and to seek the advice of legal counsel when questions arise. Additionally, affected employers should notify all individuals involved in their payroll processes of these new requirements and ensure that those individuals have the information that they need in order to comply.

Minimum Wage Increased to $10.35 Per Hour, Will Reach $12 Per Hour by 2018

Tacoma Municipal Code Chapter 18.20, which took effect on February 1, increases the minimum wage in Tacoma to $10.35 per hour.  The increase benefits all employees age 16 or older who work at least 80 hours per year within Tacoma city limits, regardless of whether the employer is located in Tacoma.

This initial increase in the minimum wage represents the first phase of a two-year process that will gradually increase Tacoma’s minimum wage to $12 per hour.  The next increase, to $11.15 per hour, will take effect in 11 months on January 1, 2017.  The final increase, which will bring the minimum wage to $12 per hour, will take effect on January 1, 2018.  Beginning January 1, 2019, the minimum wage will increase annually by the rate of inflation.  Voters approved this gradual increase to $12 per hour in November 2015, while simultaneously rejecting an initiative that would have raised it to $15 per hour.

Employers should note that, as under state law, tips do not count as wages under the ordinance, and that the ordinance covers all employers, regardless of employer size.  Perhaps most importantly, the ordinance prohibits employers from retaliating against an employee who exercises a legal right protected by the ordinance.

Employers Must Provide Paid Leave to Eligible Employees

The second ordinance that took effect on February 1 is Tacoma Municipal Ordinance 18.10, which requires employers to provide all eligible employees with one hour of paid leave for every 40 hours worked.  An employee is “eligible” if he or she works within the Tacoma city limits for at least 80 hours in one calendar year.  Unlike Seattle’s corresponding ordinance, which differentiates between employers by number of employees or “tier,” Tacoma’s ordinance applies in the exact same way to all employers, regardless of size.  Like the Seattle ordinance, however, the Tacoma ordinance benefits all eligible employees in Tacoma, regardless of whether the employer is located in Tacoma.

Eligible employees can use accrued leave for their own or a family member’s mental or physical illness, injury, or preventative care.  They can also use accrued leave as bereavement leave after the death of a family member, to seek safety or legal help (either for the employee or his or her family member) from domestic violence, sexual assault or stalking, or when the employee’s place of employment or his or her child’s school has been closed by order of a public official.

It is important for both employers and employees to understand the difference between “use” of paid leave and “accrual” of paid leave under the ordinance.  While employees begin accruing paid leave immediately upon hire, they are not entitled to use it until the 180th calendar day after their hire date.  Moreover, employers can cap the amount of leave that an employee accrues in one year at 24 hours, but if an employer caps the number of hours that an employee can use in one year, the cap must not be less than 40 hours.  Since employees are permitted to use more hours in one year than they are permitted to accrue in one year, it follows that employees may use hours that they carried over from a previous year.  Employers must permit employees to carry over at least 24 hours of accrued but unused leave from one calendar year to another.

Key Takeaways for Employers

Beginning February 1, employers must notify all employees who work in Tacoma of the new minimum wage and paid leave ordinances.  Employers can do this by either posting or providing employees a copy of a notice.  Model notices for both ordinances are available (in several languages) on the City of Tacoma’s webpage.

Additionally, employers must maintain records documenting the hours that each employee worked in the City of Tacoma, as well as the wages that the employer paid the employee for those hours.  When applying for or renewing a business license, employers will be required to certify that they have complied with these requirements.  Employers are strongly encouraged to utilize the employer checklist on the City of Tacoma’s webpage to track their compliance with the ordinances’ various requirements.

© 2016 Perkins Coie LLP