The Kentucky and Louisville chambers of commerce are supporting a bill intended to conform state laws governing the wage and hour protections of workers with that of federal law — though two prominent local labor attorneys have called the legislation an attack on the rights of many low-income workers.
Senate Bill 237 was filed by Sen. Chris McDaniel, R-Taylor Mill, who told IL in an email that the legislation “simply aligns Kentucky with the Federal Fair Labor Standards Act (FLSA), keeping Kentucky businesses from playing by two sets of rules. Nothing more than that.”
Both Greater Louisville Inc. and the Kentucky Chamber of Commerce expressed support of the legislation in nearly identical terms. Sarah Davasher-Wisdom, the chief operating officer of GLI, told IL in an emailed statement that SB 237 “brings Kentucky into alignment with the Federal Fair Labor Standards Act,” while Kentucky Chamber spokeswoman Jacqueline Pitts said the bill “would simply conform Kentucky law with the federal law, providing one set of laws for employer compliance. Kentucky employees will still be protected by federal overtime and minimum wage law.”
However, labor attorney David Suetholz tells IL the federal FLSA is merely a floor of rights for workers that most states like Kentucky have expanded on for many years, filling in gaps not covered by the federal law with its own state statutes to make sure more employees were protected in the workplace. Suetholz claims the scope of SB 237 is “mind-blowing,” as it would strip away the ability of many workers to file complaints with the Kentucky Labor Cabinet, allow employers to withhold wages without the written consent of employees, and limit the ability of some workers to receive overtime pay, rest and lunch periods, and a minimum wage — in addition to lowering the potential amount of damages an employer could be fined for violating such rules.
“I’m absolutely astounded by this bill… it’s just rapacious,” says Suetholz. “This affects low-wage workers who live paycheck to paycheck. This goes straight to the heart of the most vulnerable people in our society, and it’s absolutely infuriating.”
According to Suetholz, one of the worst aspects of the bill is exempting small employers with an annual revenue of less than $500,000 from the state wage and hours laws. Having once served as the general counsel to the Kentucky Labor Cabinet, he says workers have always been able to file complaints with the cabinet if their employer violated state laws, such as not paying them within 14 days of doing work or waiting longer than 18 days to pay an employee after they have been terminated. While this is typically a quick process that can lead to an employee being awarded twice the wages they are owed and attorney fees, if SB 237 is passed, Suetholz says for many employees of such small businesses “their sole recourse will be to go through the federal bureaucracy, which is lengthy and expensive.”
Suetholz also says that while state law used to specifically prohibit employers from withholding wages from an employee without prior written consent, SB 237 flips around the language, explicitly giving employers the ability to make deductions if they believe the worker caused financial losses by negligence or intent.
KRS 337.060 currently states that employers may deduct or withhold wages when that is “expressly authorized in writing by the employee,” such as to cover insurance premiums. It also states that employers may not deduct wages if there is a cash shortage in a register or till used by at least two employees, broken inventory, acceptance of a bad check, or losses due to faulty workmanship or stolen property if they are not attributable to an employee’s “willful or intentional disregard of the employer’s interest.”
However, SB 237 alters this section to say an employer is authorized to deduct wages if there is an “implied agreement” with the employee, which no longer has to be in writing. Additionally, the bill strikes the sections of the statute prohibiting deductions in the aforementioned circumstances, creating a new section of instances when an employer “may deduct, without authorization” from an employee’s wages. These include circumstances such as “intentional breakage” or “intentionally defective workmanship” attributed to an employee and cash shortages from a till “where evidence establishes a specific employee is at fault.”
“Who is supposed to be policing ‘intent’ here?” asks Suetholz. “If someone reaches around the counter and grabs the $20s and runs off, does that come out of their check? … If a clerk doesn’t catch a shoplifter, the way our law is currently written there’s no way you’re going to take it from the clerk’s meager check. But this bill specifically authorizes that. It is unbelievably rapacious. The greed of the chamber of commerce knows no bounds.”
Shelly Henry, a labor attorney in Louisville, agrees with Suetholz that while SB 237 may align Kentucky’s wage and hour laws with federal law, “our law provided substantial additional protection to employees.” For employees of small businesses engaged in the broad definition of interstate commerce, their only recourse to seek assistance with a violation under the bill would be from the federal Department of Labor or a lawsuit in federal court, which she called “insane.”
“These proposed changes to Kentucky’s wage statute eliminate critical protections for all Kentucky workers but will impact low-income workers most dramatically,” says Henry, “by permitting employers to make unauthorized deductions from their pay and also eliminating their ability to seek redress through Kentucky’s Labor Cabinet.”
Suetholz and Henry both pointed out the following significant changes to Kentucky statutes in SB 237 that they say will negatively impact low-income workers:
- Minimum Wage: KRS 337.275 is amended to exempt categories of employees from being paid the federal and state minimum wage of $7.25 an hour, including newly hired workers who are less than 20 years old and employees of seasonal amusement or recreational establishments, such as Kentucky Kingdom in Louisville.
- Overtime Pay: While some workers currently are explicitly exempted in Kentucky statutes from receiving time and a half overtime pay when working past 40 hours a week, SB 237 expands this exemption to workers in 31 more sectors that are wide in variety, including petroleum distributors, makers of wreaths, computer programmers and employees of movie theaters. Additionally, it would repeal KRS 337.050, the statute that currently requires an employee to receive overtime pay if he or she is working on their seventh consecutive day.
- Lunch and Rest Periods: While KRS 337.355 requires employees to be given “a reasonable period for lunch,” SB 237 is amended so that an employer may require “a lunch period waiver,” which may be authorized “by implied agreement” or as a condition of employment “at any time prior to or during the employment relationship.” While KRS 337.365 gives nearly all employees a right to have a rest period of at least 10 minutes during each four-hour period of work, the bill amends this statute to say that such rest periods are not mandated “in the absence of a readily available co-employee who may provide break coverage” when this may jeopardize the service of the business.
- Employer Liability and Civil Damages: While Suetholz says there is currently a five-year statute of limitations on when workers can bring complaints against their employers for violating wage and hour laws to the Labor Cabinet, the bill amends KRS 337.385 to change that to two years. He also points out that while the employers may currently be assessed a civil penalty of anywhere between $100 and $1,000 for each separate violation to each employee on each day, SB 237 amends this so that civil penalties “shall not be calculated on a per employee, per day, or per pay period basis, and each daily or pay period violation shall not constitute a separate offense.”
- Adoption Leave: The bill repeals KRS 337.015, which allows an employee to be granted a reasonable personal leave from work of no more than six weeks “when the reception of an adoptive child under the age of seven is the reason for such a request.”
- Tip Pooling: The bill also repeals KRS 337.065, which prohibits an employer from forcing an employee — like waitresses and waiters — to pool their tips with co-workers.
SB 237 is currently in the Senate Economic Development, Tourism, and Labor Committee, where it is expected to receive its first hearing next week. In the first week of this year’s session, the General Assembly passed legislation repealing the prevailing wage and making Kentucky a so-called “right-to-work” state, both longtime goals of Republicans and chambers of commerce in the state but strongly opposed by labor unions and Democrats.