UPDATE TO EARLIER: A lightly attended House committee meeting this evening approved Rep. Robin Lundstrum’s bills to undo parts of the minimum wage increase approved by voters in November.
The House Public Health Committee approved the two bills on a voice vote. HB1752 exempts businesses with fewer than 20 employees, nonprofits with an operating budget under $1 million, and certain nonprofits that provide services for people with developmental disabilities. HB1753 exempts those younger than 20 (a previous version exempted those younger than 21 who were full-time students; Lundstrum amended it today to lower the age and remove the education component). Watch it here.
In 2018, voters overwhelming backed increasing the state minimum wage to $9.25 in 2019, $10 in 2020, and $11 in 2021. Lundstrum told the committee that her bill would freeze the state minimum wage for those exempted at the current $9.25. Advocates for the minimum wage hike dispute this and argue that the plain language of the bill would roll back the state minimum wage for those exempted entirely, leaving only the federal minimum wage of $7.25 (see our earlier reporting below for more details, including commentary from an expert in labor and employment law who likewise disputes Lundstrum’s characterization).
Lundstrum told the committee that she was aiming to protect small businesses and nonprofits and that preventing the minimum wage increases would help them “catch their breath.” She argued that HB1753 would benefit teenagers by allowing lower wages. “Once you get a good teen that’s willing to work, their wages are going to go up, but when those wages are $10 or $11, they’re not going to get those-first time jobs,” she said.
She got only one substantive question from committee members: Rep. Justin Boyd asked whether HB1753 would cause employers to hire teenagers over adults because they could pay them less; Lundstrum argued the lower wage wouldn’t cause employers to disproportionately hire teens but would “give them an opportunity to hire teenagers.”
There was otherwise no discussion. There was no opposition. Though the bills are highly controversial, all of this took place after 6 p.m., over the course of six minutes. Minimum wage advocates were caught unaware that the bills would run tonight.
The bills, as changes to a referred act, will require a two-thirds vote in the House.
*Update: Lundstrum filed an amendment on one of the bills, HB1753, that adds non-codified “legislative intent” language attempting to clarify that the legislation would only apply to the coming wage hikes in 2020 and 2021, freezing the wage at $9.25 for those exempted. However, Little Rock attorney David Couch, who drafted the minimum wage ballot initiatives, said that the non-codified language in the amendment changes nothing because the bill’s text would still alter the minimum wage statute, exempting those under 20 years old from the state minimum wage altogether. Lundstrum filed no such amendment for HB1752.
Our earlier reporting follows:
We noted on the blog last week that Rep. Robin Lundstrum filed two bills to exempt a large number of employers and employees from the minimum wage hike approved by voters just last November. In a telephone interview, Lundstrum argued that she was not thwarting the will of the voters despite seeking to alter the initiative that overwhelmingly passed.
Most at the Capitol believe that Lundstrum’s bills are more likely to go forward than the previous bill to undo much of the minimum wage hike filed by Rep. Bob Ballinger; Lundstrum’s bills were referred to the House Public Health committee yesterday. The bills would exempt the following from the state minimum wage hike:
* Businesses with fewer than 25 employees
* Nonprofits with an annual operating budget of less than $1 million
* Certain nonprofits that provide services for people with developmental disabilities
* Full-time students under the age of 21 [UPDATE: amended to anyone under 20, whether a student or not]
Lundstrum claimed that the employers and employees exempted would still be subject to the current state minimum wage of $9.25. That was the first in a series of wage hikes approved by voters in 2018; next year, it would go up to $10 and the following year it would go up to $11. Lundstrum said that the intent of her bill was to freeze the minimum wage for these groups at the current rate of $
“The people voted to have a minimum wage increase,” Lundstrum said. “I’m not trying to thwart that.” She said that her aim was to protect nonprofits, small businesses, and student employees from “unintended consequences.”
“We’re not rolling anything back,” Lundstrum said. “That’s what the people passed. I’m not taking that back — I think that would be wrong. It would not roll up [for the exempted groups]. It would not roll up to $10 and $11.”
But that’s not what the language of the bill says, according to Little Rock attorney J. Bruce Cross, an expert in employment and labor law. “There’s nothing in the bill that says [those exempted would freeze at $9.25],” he said. “That would be inconsistent with law. It changes what the Arkansas Minimum Wage Act says on who is subject to that law.” The bill doesn’t just undo portions of the 2018 initiated act, it re-writes the state minimum wage statute itself. Those exempted by the bill would no longer be subject to the current $9.25 state minimum wage or the previous wage hikes approved by voters in 2014, Cross said. They would simply be exempt from the state minimum wage law altogether. “If the legislature intends to say that you still must pay or maintain a minimum of $9.25, they should have said it,” Cross said. “That’s not expressed in the bill.” Those exempted would be under no obligation under state law to pay any state minimum wage; they would still be subject to federal law, which establishes a $7.25 minimum wage for most employers.
“When you’re no longer subject to the Arkansas minimum wage law, there’s no provision in there that they could go after,” Cross said. “Who’s going to enforce that? The state Department of Labor no longer has jurisdiction over you because you meet the exemption standards. If I was on an employer’s side and was challenged on that, I would say we’re no longer covered by this law, we’re only subject to federal law. There is nothing that would prevent [exempted employers] from paying at a lower rate provided they are meeting their obligations under federal law.”
Lundstrum insisted that her bill wouldn’t “roll back” the wage from $9.25 for anyone. “We wouldn’t roll back the $9.25, what’s already there,” she said. “We wouldn’t do that.” She pointed to the fact that the bill’s effective date is 2020 (when the state minimum wage is set to go up to $10). But as Cross points out, that is simply the date that the bill’s statutory changes — which roll back the state minimum wage for those exempted — take effect. The plain language of the bill, while acknowledging the 2018 initiated act, explicitly changes the statutory definitions that impact the state’s entire minimum wage law. (None of those definitions were included in the initiated acts; they are part of the underlying law.) The bill’s language doesn’t merely undo coming changes; it creates clear exemptions for the state minimum wage law itself. It contains no provisions that would freeze the wage at $9.25 for these newly exempt parties. Therefore, it at least appears that beginning at the bill’s effective date in 2020, the state minimum wage would no longer apply at all to those exempt.
“She’s just wrong,” said David Couch, the Little Rock attorney who drafted the ballot initiatives that increased the state minimum wage in 2014 and 2018. Couch said that he had also conferred with multiple other legal experts, who were unanimous on the impact of the bill. “You cannot, under any interpretation of the bill she proposes, reach her conclusion. If that’s what she’s intending to do, she needs to get the bill amended.”
This point will surely be haggled over by attorneys in committee, or before it runs. If it turns out that an amendment is necessary to accomplish Lundstrum’s purported aim, it will be interesting to see whether the business lobby approves of such an amendment or would prefer to keep it as is.
Even if Lundstrum’s bill is tailored to freeze the current $9.25 state minimum wage, it would still undo the coming wage hikes approved by voters for those exempted. Lundstrum acknowledged this but argued nevertheless that she was not rolling back what voters approved.
“The voters spoke,” she said. “I’m not trying to do anything radical or scary or thwart the will of the people. That’s not my intention at all.” Lundstrum said that nonprofits could be in financial trouble if forced to start paying low-wage employees $10 in 2020 and $11 in 2021. She said small businesses would also struggle with that
“I don’t think the people of Arkansas — they were trying to be generous and trying to help, I don’t think their intention was to hurt nonprofits,” she said. “This is just a small course correction to help those nonprofits and small businesses catch up.”
Lundstrum noted that employers could still choose to pay a wage higher than the minimum, and predicted that many would do so in order to keep good employees, but she nevertheless advocated for allowing them to pay workers a lower wage: “It’s just they wouldn’t have to go up as drastically. They wouldn’t have to make those big leaps [to $10 in 2020 and $11 in 2021]. This just gives them a little bit of breathing space. They’ll have to catch up [to compete with other businesses paying higher wages], but it will be a slower climb.”
On the employee side, regarding her bill to exempt full-time students under the age of 21, Lundstrum said, “I want these kids to have those first-time jobs. You’re not going to hire a 16-year-old at eleven dollars an hour — that’s what I’m hearing from a lot of these restaurants and a lot of these would-be first-time jobs, they’re not going to hire kids.”
Unlike Ballinger’s bill, which exempted anyone younger than 18, Lundstrum’s bill specifically targets students. That would create an unusual situation: An employer could pay a working college student less than a 19-year-old not in school for doing the same job; dropping out of high school or college could make those younger than 21 eligible for a raise. [NOTE: See update above; Lundstrum amended the bill to remove the education component.]
“That could be,” Lundstrum
Lundstrum repeatedly stated that her intention was not to do anything “extreme” or “roll back” the will of the votes, although even her description of her bill would reverse the wage hikes approved by voters to $10 and then $11 for those exempted. “These bills are very structured and very tight,” she said. “They’re not broad-sweeping.”
In practice, however, the bills could impact a large number of employers and workers, including the overwhelming majority of businesses in the state. For example, Arkansas Advocates for Children and Families has been able to crunch the numbers at a slightly lower threshold based on available
Lundstrum said that she was uncertain when her bill would run.