Executive Summary
With the advent of the holiday season, employers with US operations should review their pay practices to ensure compliance with the fast-approaching increases in minimum wage that will take effect in more than twenty US states.
What increases will take effect?
The US federal minimum wage has remained steady at USD 7.25 since 2009. Many states simply adopt the federal rate. However, in response to a national effort to provide gradual increases for hourly workers to USD 15.00 per hour, beginning on 31 December 2018, many US states will increase their minimum wage. The states providing the largest increase of USD 1.00 per hour are Massachusetts and California, where the minimum wage will see an increase from USD 11.00 per hour to USD 12.00, and Maine, where the rate will rise from USD 10.00 per hour to 11.00. Three states will grant raises of USD 0.50, including Arizona (from USD 10.50 to 11.00 per hour), Oregon (USD 10.75 to 11.25 per hour), and Washington (from USD 11.50 to 12.00 per hour).
Still others have increases of seemingly odd amounts, such as Vermont, which increases the minimum wage by USD 0.28, from USD 10.50 to 10.28 per hour, and Florida, where the minimum wage will increase by USD 0.21, to 8.46 per hour.
In addition, many larger municipalities are set to increase minimum wages for those employees working within their borders. Such local laws can be very nuanced. For example, in New York City, employers with ten or fewer employees will have to pay USD 13.50 per hour starting 31 December. Employers with 11 or more employees must pay USD 15.00 per hour. On Long Island and in Westchester County, just outside New York City, the minimum wage will increase to USD 12.00 per hour. And for the rest of New York State, minimum wage will increase to USD 11.10 per hour.
Finally, employers who wish to take advantage of the so-called ‘tip credit’, whereby the minimum wage is reduced for those employees who customarily earn tips, such as servers and bar tenders, will need to ensure compliance with any new ‘tipped wage rates’ taking effect in advance of the new year.
Employer’s Bottom Line
The multiplicity of state and local laws affecting the minimum wage provides a legal thicket for employers with operations in the US. Due diligence now is advised to ward off potential legal action in 2019.
