From the Arkansas Statehouse...

Bad news for minimum-wage workers.

In Labor on 17 March 2009 at 1:40 pm

A bill approved by the House Public Health Committee today could mean an effective pay cut for workers paid the minimum wage. The bill, sponsored by Rep. John Burris, would change a rule that limits how much money an Arkansas employer can take out of a minimum-wage worker’s paycheck for goods and services the employer provides.

Currently an employer can withhold a maximum of 30% of pay for company food, clothing and lodging. The new rule would eliminate the 30% threshold and have the state Department of Labor establish a fair value for employer-provided goods.

The provisions apply only to minimum-wage workers. According to Rep. Burris, the bill would align Arkansas with federal minimum-wage standards.

States are free to establish labor laws above federal standards, but they cannot drop below those standards. The 30% withholding limit, which is stricter than federal standards, is not observed by every state.

Department of Labor attorney Daniel Faulkner opposed the bill on the grounds that it could mean a pay reduction for already-struggling workers. “We are against what is effectively a pay cut in a bad economy,” Faulkner said.

Rep. Burris said he brought the bill on behalf of a small-business owner who ran afoul of the 30% law. Though the owner was giving his minimum-wage employees 50% discounts on food, Burris said, he sold the employees so much that more than 30% of their paychecks had to be withheld. He was later compelled to repay the workers cash for money withheld over 30% of wages.

Asked whether the owner may have simply been ignorant of Arkansas Law, Rep. Burris said he was following federal standards. Rep. Burris also testified that employees can choose whether to purchase owner-supplied goods. He added that the bill does not change the state Department of Labor’s ability to pursue wrongdoing.

The bill cleared the committee easily, though there was some opposition. On a voice vote, Rep. Mike Burris and Rep. Willie Hardy were audible nos.

UPDATE 18 MARCH: The House failed the bill 42-39. Rep. John Burris tried to spin his handiwork as good for employees whose employers offer them discounts on their goods. Those who voted against must have realized that employers can pay cash and offer discounts at the same time.

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