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Montgomery County Will Increase Minimum Wage To $15 Per Hour

The Montgomery County Council voted last week to increase its minimum wage to $15 per hour by 2021 for employers with more than 50 employees.  Under Bill 28-17, beginning July 1, 2022, and each July 1 thereafter, the County minimum wage rate will be increased by the annual average increase, if any, in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the previous calendar year in the Washington-Baltimore area.  The indexing to CPI-W kicks in for mid-sized and small employers when they reach the $15 minimum wage, as explained below.  The CPI-W adjustment is an annual adjustment that will further increase the minimum wage.

The County minimum wage does not apply to employees who are:  (1) exempt from state and federal minimum wage laws; or (2) are under a 19 years old and “employed” no more than 20 hours in a week.  In addition, Montgomery County employers may pay a wage equal to 85% of the County minimum wage to employees under 20 years old for the first six months of employment.

For large employers (defined as those employers with 51 or more employees), effective July 1, 2018, the County minimum wage will be $12.25 per hour.  The rate will increase to $13.00 per hour on July 1, 2019, $14.00 on July 1, 2020, and $15.00 on July 1, 2021.

Mid-sized employers (those with between 11 and 50 employees) must pay a minimum wage of $12.00 effective July 1, 2018, $12.50 effective July 1, 2019, $13.25 effective July 1, 2020, $14.00 effective July 1, 2021, $14.50 effective July 1, 2022, and $15.00 effective July 1, 2023.  Effective July 1, 2014, the minimum wage for mid-sized employers must be adjusted annually by the annual average increase in the CPI-W.  If the increase is less than $0.50, the adjustment must be one percent of the prior year’s minimum wage, up to an increase of $0.50.

Small employers (those with 10 or fewer employees) must pay $15 per hour beginning in 2024.  The annual adjustment applies to small employers too.

The current minimum wage in Montgomery County is $11.50.  The minimum wage in Prince George’s County increased to $11.50 per hour on October 1, 2017.  The minimum wage in the rest of Maryland is $9.25 an hour, and will increase to $10.10 hour on July 1, 2018.

Council attorneys predict a significant fiscal and economic impact as a result of Bill 28-17.  Per an October 6, 2017 memorandum, the attorneys predict a $10 million fiscal impact to the County over a six year period.  Further, a study commissioned by County Executive Ike Legget after he vetoed a prior iteration of the bill found that the minimum wage increase would result in the loss of approximately 47,000 jobs by 2022 and a loss of $396.5 million in income over the next five years.

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