Philadelphia's New Minimum Wage Is Now in Effect: Are You Compliant?

Philadelphia’s journey toward a $15-an-hour minimum wage began last week, part of an increasingly common trend in major U.S. cities. Minimum wage in the City of Philadelphia is $13.25 an hour as of July 1. Additionally, gradual increases are scheduled yearly for the next three years, until the minimum reaches $15 an hour by July 1, 2022. After that, the minimum wage level will continue to rise based on annual consumer price index adjustments.

Mayor Jim Kenney signed the Philadelphia Minimum Wage Bill in December 2018, amending the 21st Century Minimum Wage Standard Ordinance. As we previously reported, the amendments increased the minimum wage for employees working for the City and various categories of City contractors, subcontractors, and recipients of financial assistance from the City, among others. 

This minimum wage ordinance applies to more workers than employers might imagine, and employers should ensure they are compliant. Specifically, it applies to all City employees, but also to other employees of those doing business with the City, including recipients of City concessions, franchises, leases, and financial aid. Financial aid recipients include all people or entities that receive direct assistance from the City of more than $100,000 in any 12-month period. If an entity falls within that definition, it must comply with the minimum wage increase requirements for five years.

The amended ordinance also defines a covered City financial aid recipient as any person or entity that (a) leases property or equipment from a City financial aid recipient; (b) has more than 25 employees; and (c) in the case of a nonprofit, leases the property or equipment for consideration in excess of $100,000 a year, or, in the case of a for-profit entity, has annual gross receipts in excess of $1 million. The property must have been acquired with the City's assistance, and the person or entity must receive an intended material benefit from the financial assistance. The person or entity is subject to the minimum wage increases for the same compliance period as the City financial aid recipient from which they are leasing the property or equipment.

If you are covered employer, did July 1 come and go without ensuring your minimum wage complies with the new requirement? Ballard Spahr’s Labor and Employment Group is here to help. Attorneys in the Group routinely advise and assist our clients in drafting policies and procedures addressing regulatory compliance issues.

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