Information you can rely on.

People you can trust.

$15.00 minimum wage hitting the I-5 corridor

Author: Jan Fernandez    Posted: May 4, 2015

Is the $15 an hour minimum wage really what the public thought that they were getting?  And, how is it really impacting employers in Seattle and Tacoma?

First, I’d like to let you know that for today this blog is focused on Seattle.  I will have more to say on Tacoma once we more clear on what the heck is going on there.

Lots of employees were ecstatic when they learned that the voters passed the $15 an hour rule. However, their cheers quickly turned to jeers when they learned that their employers were changing the rules on how they got paid.  Some restaurants had to increase their prices and completely redesign their compensation structure to enable them to pay the new wage.  [Seattle Times] How did they appease their clientele? Well, they no longer allow tipping the service staff.  These employees, who were used to receiving sometimes in excess of $10 an hour in tips alone, making upwards of $25 an hour, are now caped at a flat $15.  Not so great for those employees.

But this is a benefits blog, not a wage and hour blog, so let’s see how this new ruling is impacting our clients who offer benefits. In the begining, employers thought “I can’t afford benefits and a wage hike, I’m throwing in the towel”.  But, fear not, there is some hope for our employers trying to do the right thing; we have what is called “minimum compensation”.  While all small employers (less than 500 W-2 wage earning employees) are required to pay what is called minimum compensation, they can get to it in two ways:

According to the Office of Labor Standards at the City of Seattle:


Small employers pay hourly minimum compensation rate based on the following schedule.


2015 (April 1) $11.00 /hour
2016 (January 1) $12.00/hour
2017 (January 1) $13.00/hour
2018 (January 1) $14.00/hour
2019 (January 1) $15.00/hour


So, how much can you reduce the total compensation to achieve both the minimum wage and offer benefits? The table below explains.


Small employers pay an hourly minimum wage and reach the minimum compensation rate through employee tips reported to the IRS and/or payments toward an employee’s medical benefits plan.  If the tips and/or payments toward medical benefits do not add-up to the minimum compensation rate, the small employer makes up the difference.


2015 (April 1) $11.00 /hour $10.00/hour
2016 (January 1) $12.00/hour $10.50/hour
2017 (January 1) $13.00/hour $11.00/hour
2018 (January 1) $14.00/hour $11.50/hour
2019 (January 1) $15.00/hour $12.00/hour
2020 (January 1) $15.75/hour $13.50/hour
2021 (January 1) $16.49/hour $15.00/hour


I focused my blog mainly on the small employer in Seattle (less than 500), because these are usually the privately held companies working hard every day to make it in our ever-changing world.  This compensation structure reminds me of prevailing wages for some unions.  An employee may make $25.00 an hour in prevailing wages, but a hypothetical $3.83 can be used towards benefits.  While employees may not think “taking some of their money” and using it towards benefits is a good thing, they need to realize that that bucket of fringe benefits money is now not tax-free because it’s being run through a Section §125 premium only plan document.

According to an article in Forbes, the restaurant industry may be taking the largest hit from the $15 an hour rule. [Forbes] Restaurants employ around 50% of all minimum wage labor and thus where the law will have the greatest impact.  Many just can’t take the hike and will be closing their doors this year.

Now back to benefits.  Employers need to know what options are out there for their businesses and effective ways to work benefits into their overall compensation strategy. It can be done!

We’ll talk about Tacoma soon – it’s right around the corner!

« Return to Blog HomeEmail the Author

Connect With Us

Rapport Benefits Group
Physical Address:
2367 Tacoma Ave S
Tacoma, WA 98402
Get Directions »

Mailing Address:
12708 252nd St E
Graham, WA 98338

Phone: 253.753.9930
Toll Free: 844.523.2633
Fax: 253.442.6092


From The Blog - OIC Advisory Committee Notes – October, 28th, 2015

On October 28th we convened the advisory committee at the Insurance Commissioner’s office. These meetings are always filled with interesting and important updates for the insurance industry and the residents of Washington State. It’s also a great opportunity to share the perspective of the individuals and businesses that are buying insurance every day in this market and what various regulations and reforms would mean to them directly. The Commissioner shared information on some of the […]

Continue Reading

©2014 - 2018 Rapport Benefits Group Inc. | All Rights Reserved | Site by: KILMERHANSEN Design