2015-2016 Wisconsin Legislature Update Part 1

With the current Wisconsin legislature well under way, it is a good time to take a look at proposed and passed bills affecting labor and employment laws. Some of these are very likely to pass, while others stand little chance of becoming law given the political makeup of the 2015-2016 session. We’ll break the legislative activity up into two parts and provide detailed analysis in the future for any one of them that passes.

2015 Senate Bill 2 – Minimum Wage Reform

In a nutshell, SB2 seeks to raise the state minimum wage over the next few years and thereafter provide for regular increases. Currently, the minimum wage rate for employees generally in Wisconsin is $7.25 per hour, and for tipped employees $2.33 per hour. If passed, SB2 would provide for an immediate increase to $8.20 per hour for employees generally and to $3.00 per hour for tipped employees. Employees generally would then have a minimum wage of $10.10 per hour two years after SB2 passes. SB2 also provides for future regular increases of the state minimum wage for both employees generally and tipped employees that is tied to a formula based on the consumer price index. Tipped employees would also receive an annual increase in the minimum wage of 95 cents until the rate is 70% of the minimum wage for employees generally.

SB 2 was referred to the Committee on Labor and Government Reform on January 6, 2015. It remains in committee though a fiscal estimate on its effects for the Department of Workforce Development was received on April 28, 2015.

2015 Senate Bill 5 – Wage and Hour Claim Reform and New Disclosure Requirement

SB5 seeks to make several changes to the rules on filing a wage claim in Wisconsin. The bill would bring the Fair Labor Standards Act collective action concept to state law and allow an individual to file a claim on behalf of oneself and other employees who consent in writing. SB5 also increases the statute of limitations, or the time in which an employee can file a claim, from two to four years. The bill would also increase the liquidated damages an employer may be ordered to pay if found liable under Wisconsin wage and hour law. Currently, if an employee files a circuit court claim after an investigation by the Department of Workforce Development, he or she can collect an additional 100% of the unpaid wages as damages or 50% if he or she foregoes such an investigation. Those additional damages would increase to 200% and 100% respectively. With respect to wage claims, SB5 would also create penalties in the form of interests and surcharges for noncompliant defendants.

SB5 also creates a new disclosure statement requirement for all employers. The statement outlined by SB5 requires an employer to affirm the terms of employment to the employee. Such statement would need to be distributed to an employee at the time of hiring, on January 1 of each year, and no later than seven days prior to any change in the terms of employment. The “terms of employment” required by the disclosure statement include the employer’s contact information, wage and payment frequency information; when an employee may be paid at a higher rate; and other benefits the employer provides the employee. An employer failing to comply with this requirement may be forced to pay $50 per day that the statement is not provided and reasonable costs and attorney fees.

SB5 was referred to the Committee on Labor and Government Reform on January 16, 2015, where it remains. It has since received fiscal estimates from three government agencies, the most recent of which was from the Department of Workforce Development and is dated April 22, 2015.

2015 Senate Bill 69 – Restrictive Covenant Reform

SB69 would make significant changes to the law controlling enforcement of restrictive covenant agreements in Wisconsin. Restrictive covenant agreements include such contracts as non-compete agreements and non-solicitation agreements. These agreements are currently regulated by a Wisconsin statute, Wis. Stat. § 103.465, and a long line of court decisions.

If passed, SB69 will affect nearly everything lawyers know about enforcement of restrictive covenant agreements. For example, continued employment would constitute valuable consideration to support a restrictive covenant following passage of SB69 whereas current law does not recognize continued employment as sufficient consideration.

Perhaps most significantly, SB69 would make Wisconsin a “blue pencil” state with respect to restrictive covenants. That is, SB69 gives a court the power to rewrite an unenforceable agreement to make it enforceable. This is a major change as Wisconsin courts are not able to rewrite such agreements under current law.

SB69 was introduced on March 5, 2015. A similar bill, 2015 Assembly Bill 91, was also introduced in the Assembly on March 12, 2015. The senate version was immediately referred to the Senate Committee on Judiciary and Public Safety, where it remains as of this writing. As SB69 was introduced and co-sponsored by Republican legislators, in a Republican majority legislature, and enjoys the backing of the Wisconsin Manufacturers and Commerce lobbying group, SB69 stands a strong chance of becoming law. Check back with the Walcheske & Luzi blog for a detailed analysis if SB69 passes.