Bangor joined a list of about 24 cities and five counties across the nation, including Portland, last week that have raised local wages above the minimum set by state and federal governments.
The ordinance will bump the minimum wage paid to Mainers who work within the city to $8.25 per hour in January 2017. It will rise an additional 75 cents per year until 2019, after which the local wage will be pegged to the Consumer Price Index.
But now that Bangor has a minimum wage on its books, the city has a new responsibility that previously belonged to other levels government: enforcing the minimum wage rule.
Creating a strategy
In Maine, the state Department of Labor has traditionally been responsible for investigating minimum wage violations. But when it comes to labor issues, the department defers enforcement to the jurisdiction — federal, state or local — that has a standard more protective of workers.
With the hourly wage in Bangor set to rise above the state minimum, Maine Department of Labor spokeswoman Julie Rabinowitz said it will be the city’s responsibility to investigate minimum wage violations.
“The state’s position is it’s their ordinance and they have to enforce it,” Rabinowitz said. “That’s going to be a burden for municipalities, and it’s a burden they’ve chosen to take on.”
In Bangor, the city manager’s office will be charged with enforcing the minimum wage and investigating alleged violations, though the city hasn’t decided yet how it will allocate staff and resources to the task.
“We’re going to take a look at what enforcement will entail and create a strategy,” Robert Farrar, assistant city manager, said.
Last year, the state’s five wage and hour inspectors received 300 complaints about wage violations; they confirmed 120 as violations, according to Rabinowitz. The department was not able to immediately provide wage violation data for prior years nor for violations within Bangor.
“Some violations are out of ignorance, but others are willful violations,” Rabinowitz said. “Most employers are aware of the minimum wage and how to comply.”
Minimum wage violations most commonly occur when employers miscalculate overtime or round down hours worked based on when a worker clocks in, pushing a worker’s total hourly pay below the state-mandated wage. Determining how a violation occurred can be time-consuming, Rabinowitz said.
Under Bangor’s ordinance, workers who think their employer is violating the minimum wage ordinance can file a written complaint with the city manager’s office, which will have 15 days to respond and make a determination. Businesses found to be in violation must pay the owed wages and, under the general penalties provision of the city code, could face a fine ranging from $100 to $2,500 for each day the violation occurred.
“We expect employers to do their best to comply,” city solicitor Norman Heitmann said. “The goal isn’t to interfere with someone’s business but to make sure they can comply.”
Any business could dispute a penalty levied by the city, Heitmann said. In that case, it would be up to the city to prove in court a violation occurred.
A working model
Next month, the minimum wage in Portland will rise to $10.10 per hour. It will rise the following January to $10.68, with subsequent increases pegged to the Consumer Price Index. Like Bangor, Portland will rely on workers to submit written complaints about wage violations to the city manager’s office.
Once Portland’s elevated wage takes effect, Bangor will watch how Maine’s largest city handles the transition to see how it can adapt its enforcement approach in preparation for 2017, Heitmann said.
Either way, Bangor and Portland are unlikely to find perfect enforcement strategies. While a large city like Seattle can rely on its Office of Labor Standards to enforce a higher municipal minimum wage, there are few proven enforcement models to guide small cities that often struggle with tight budgets and limited staff.
According to a recent study by the University of California-Berkeley’s Center for Labor Research and Education, delivering on the promise of a higher wage depends on effective penalties to deter violators, a well-staffed local agency to respond to violations in a timely manner and good relationships with community organizations to educate workers and businesses.
As it looks for an effective enforcement strategy, Bangor can look to Santa Fe, New Mexico, which became one of the first cities to enact a local minimum wage in 2003, for a glimpse of what such a strategy may look like. The minimum wage for the city of 70,000 rose to $10.84 in March, an 18 cent raise from the year before.
Zachary Shandler, the assistant city attorney charged with investigating violations, said minimum wage violations aren’t commonly reported in Santa Fe. In the last year, however, he has seen “a big spike in complaints” — 15 so far this year, compared with six in 2014.
He attributed the rise in complaints in part to activism by Somos un Pueblo Unido, an immigrant advocacy group, that has rallied workers who have accused local businesses of violating the city’s ordinance to file complaints.
Workers in Santa Fe who believe they have been paid less than the minimum wage file written complaints with the city manager’s office. After the city has received a complaint, the accused business gets 15 days to respond, then the worker gets an opportunity for a rebuttal. With this information, Shandler must determine whether there has been a violation.
If needed, Shandler will review up to three years of a business’ payroll records as part of an investigation into an alleged violation.
Businesses found to be in violation must pay the owed wages and could face additional punishment, according to the city ordinance, including a fine of no more than $500 for each day the violation occurred, loss of economic development benefits and suspension of the business’ license for a year, though the city hasn’t resorted to the last penalty.
While he can resolve most violations within a month or two, Shandler said he has been working on some cases for over a year.
As the only person on the city staff working wage cases, Shandler doesn’t have the time to aggressively investigate cases or inspect workplaces for violations. The Santa Fe City Council has debated hiring an inspector who can visit businesses to check for compliance with the city’s minimum wage ordinance, but for now the city doesn’t have the resources, Shandler said.
“There’s more we could do if we had the resources, but I’m more focused right now on reacting to complaints as they come in,” Shandler said.
Wild card
A statewide ballot initiative expected next November would give voters the option of raising the state’s minimum wage from $7.50 to $12 per hour by 2020, which would make the local raise in Bangor a moot point. If it wins at the ballot box, the state minimum wage would rise to $9 per hour Jan. 1, 2017 — the same day Bangor’s ordinance is set to take effect — and then by a dollar per year until 2020.
With a higher minimum wage at the state level, the Department of Labor would be responsible for investigating violations.
“If the state referendum passes in the fall, that would supercede the city ordinance and the state would continue to enforce it as it does now,” Farrar, the assistant city manager, said.