Ep 52: Minimum Wage at a Maximum

June 9, 2014

Nasir and Matt talk about the effects of Seattle raising the minimum wage to $15 an hour and discuss whether cities like San Diego will follow suit. They then answer, “In late November 2013 I bought some things for a local business and was given a check for the exact amount a few days later. I had forgotten about the check for 2 months and when I went to the bank to cash the check, it bounced due to a closed account. I called the business owner and they said someone had stolen their checkbook awhile back and they had to close the account, and not to worry as they would write another. It’s been 4 months now of me texting them each week asking about the check she was supposed to leave at the business and they always just come up with some excuse.”

Full Podcast Transcript

NASIR: This is Legally Sound Smart Business.
My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: Welcome to our business podcast where we cover business in the news and answer some of your business legal questions that you, the listener, submits to ask@legallysoundsmartbusiness.com.

MATT: For our loyal listeners, they heard a slightly different intro. This is our alternative intro. As you said, “this is” instead of “welcome” and that’s all right.

NASIR: I thought I usually say “this is” but do I say “welcome” first? I don’t remember.

MATT: Well, I think it’s still fine. It doesn’t have to be the same every time.

NASIR: Well, big news in the northwest, huh?

MATT: Yes, we talked about this at the beginning of the year. I didn’t really want to talk about it again – a repeat – but this is just too big of a story to pass up.
For those of you that don’t know, Seattle just approved what’s going to be the highest minimum wage in the country. It’s eventually going to crawl up to $15.00 an hour. I think the state minimum wage is the highest right now at $9.32 so this is a pretty significant increase. Also, San Francisco had the highest minimum wage and that was $10.74 an hour. This is just a huge jump up from what it’s been.
Obviously, we can look at the numbers and see, if you have minimum wage employees, you’re going to be paying them X amount of dollars more. It gets into non-exempt employee issues as well but this is just huge. I think this is going to have a rippling effect – not just for Seattle but for other cities in the country as a whole.

NASIR: Yeah, it’s definitely huge news. I think that $15.00 mark, even though that’s going to be years from now, it’s still just so apparent that that’s going to be a big deal for businesses for all.
I read an article of Forbes, I thought it was great. They basically say it’s not difficult to outline the effect of the new $15.00 an hour minimum wage. They claim that basically, if the minimum wage is of a certain percentage away from the median average income, then it has little to no effect. But, once it goes beyond a certain percentage, then that’s when you get some significant employment effects. I think we get around 45 to 50 percent of the median wage, that’s when you really start to see those effects. That’s from a kind of financial economic point of view. I’m sure there are going to be people that disagree with that but it’s definitely interesting to note.

MATT: Yeah, and I think it’s going to stick, too. There’s obviously going to be and there already are groups – and I think franchise owners are the ones the ones that are kind of leading it – planning to sue and stop this. I mean, this still is a significant jump. It is gradual; it’s not like it’s going to go up to $15.00 tomorrow. It is slowly going to climb.
I’m in San Diego and there’s been talks about it jumping up in San Diego as well. I think there’s kind of a push to get it up to roughly $13.00 an hour, slowly throughout time. But I can see other cities doing this as well, especially some of those bigger cities where the cost of living is kind of high.

NASIR: Yeah, we already have San Francisco is classically already at $10.74 and, of course, Seattle’s $15.00 will surpass that. But I wouldn’t be surprised that San Francisco, later on in the year, starts to also increase that.
It does make an interesting note that, when you have local ordinances or minimum wage, it supersedes the state, right? And the state ordinance supersedes the federal minimum wage even though there are some states that actually don’t have any minimum wage and just fall back on the national standard.

MATT: One thing that Seattle did well was make it an even $15.00 an hour. The proposed one in San Diego is supposed to eventually get up to $13.09 so, I mean, I hate numbers that aren’t round. I’m fine with it not being $13.00 flat but at least make it $13.10. It should always end in a zero, right? $13.09? I would protest just solely based on that.

NASIR: Well, I tend to agree with that. You know it’s just a matter of somehow to justify the actual minimum wage hike, they did some kind of calculation – maybe based upon inflation or what-have-you. But, you’re right, I understand how you came up with a number but there is something called rounding. It’s okay.

MATT: The worst thing is you go to a convenience store or a restaurant and they have a weird number, something is priced with a weird number like it must be for tax purposes and then you go up and pay and with tax and it’s still $7.04 and it’s like, ‘What?” I don’t understand this at all. That’s just my little thing. I guess I wouldn’t knock down my price just to get an even number for tax purposes but there’s things you can do.

NASIR: I like everything rounded to the next hundred dollars, too. Bag of chips? I’d rather just pay $100 just because that’s all I have in my pocket. It’s just easier, you know? I don’t want change. I don’t want to hold anything else. Make it nice and simple.

MATT: That’s a good thing. You can give good tips that way as well.

NASIR: Yeah, exactly, they get to keep the money.

MATT: Question of the day. This is probably our longest one we’ve ever had. Let me prepare for this.

NASIR: Take a deep breath.

MATT: I hope I can get this in one take.
“In late November 2013, I bought some things for a local business and was given a check for the exact amount a few days later. I’d forgotten about the check for two months. When I went to the bank to cash the check, it bounced due to a closed account. I called the business owner and they said someone had stolen their check book a while back and they had to close the account and, not to worry, they would write another. It’s been four months now of me texting them each week, asking about the check they were supposed to leave at the business, and they always just come up with some excuse.”
I guess there’s no actual question. I guess they’re probably asking, “What can I do about this?”
This comes from someone in Pennsylvania. There is actually no question so this is the longest statement we’ve ever had submitted.

NASIR: No question. They’re just complaining about this person. It’ll be like, “Yeah, that sucks.” Okay, let’s go on. Hmm. What should they do? Pennsylvania.

MATT: In my opinion, the first thing is always to try to, if there is an issue, talk it out. I don’t know if texting them is really the way to go because they still owe you the money – whatever it is – we don’t know what the amount is. They still owe you the money so maybe just open up a more – I don’t know if we can even answer this from a legal perspective – legally, they still owe the money, right? Maybe we can open it off from another angle.

NASIR: Yeah, well, I was thinking I’d like to know how much it was for. It’s hard to put in exact ranges here but let’s just say it’s a relatively small amount, then I would say – both from a legal perspective and practical perspective – you have two choices. One, you just forget about it. Two, you just file a small claims action – assuming you’ve gone through the process of asking in writing and so forth and they haven’t denied you. It’s been months now. Most likely, any of your requests aren’t going to do anything. But, I assume, because they’re not wanting to pay and maybe it’s a little bit bigger, if it’s a small amount, they’re just too lazy to write you a check or what-have-you, then that’s a different story than if they don’t want to pay it or they can’t afford it or what-have-you. If it’s a large amount of money, then you need to hire an attorney, have them send a demand letter. See how far that goes and then evaluate whether or not you want to go on to the next step of litigation which is just a cost benefit analysis and, without knowing how much that is, it’s hard to tell where to go from there.

MATT: Yeah. Last week, we talked about how we don’t like demand letters and have attorneys send them but that might be the way you need to go here. I’m taking from how it’s written, if someone’s just texting me and telling them I owe them money, I wouldn’t take that as serious as if I got a demand letter from the person written by an attorney. That will probably change things. I think that would be enough to get them to pay. If not, yeah, you can take them to small claims court. I would assume we’re talking about a small amount of money because, if you hadn’t encashed the check for two months, then it must not have been that important.
My advice is to get mobile banking where you can just take a picture of the check and it deposits into the account.

NASIR: Yeah, 100 percent. They do have limits in those things because perhaps maybe it was so big of a check that they couldn’t do that but then why would they not just drive to the bank and do it? Unless they live in the middle of Pennsylvania – in the middle of nowhere – that could be a possibility.

MATT: Pennsylvania is a pretty long state.

NASIR: Dead state.

MATT: Maybe they were in a location where it was hard to get to a bank. I don’t know. It’s probably not an excuse.

NASIR: We’re giving all the excuses possible to this person. You know what, the real advice is, first, you’ve got to deposit your checks right away. Every business that is in business needs to be able to do that. You have to be able to go through that banking process and you should have a process in place.
Second, every business needs to have a collection procedure – how often they contact the person for money that’s owed and what the next step is and how you elevate it. Everyone should be aware of what these other big companies do and those are all designed very specifically to influence the person to pay their debt as soon as possible. A demand letter may be a part of that but you need to make sure you go through that process before you start spending money on an attorney to do so.

MATT: Yeah, we were all over with this question. We first were nice and just told them to do something simple. Now you’re criticizing their operations.

NASIR: I’m like, “You’re an idiot. You just need to quit business. I don’t know what you’re doing here. Don’t ask me another question or send me another statement without a question.”

MATT: This has been the weirdest one over the board. This longest question wasn’t even a question. I think that might be it for this one.

NASIR: Let’s end it on that confusing note.
Thank you for joining us for today. I hope you enjoyed it.

MATT: Yeah, keep it sound, keep it smart.


The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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