Changes to minimum wage requirements across states and cities adds another layer of complexity to managing your payroll.
2019 brings a host of minimum wage increases across multiple states and municipal jurisdictions. Here's a look at what's coming — where, when and how your organization can keep up with state, local and federal minimum wage increase laws.
Many states rolled out minimum wage increases on Jan. 1, 2019. In Arizona, wages rose to $11 per hour for most workers and $8 per hour for cash-tipped staff. The SeaTac area of Washington state saw the biggest boost, from $15.64 to $16.09- (for hospitality and transportation employees). States like Florida and Delaware saw smaller changes (from $8.25 to $8.46 and $8.75, respectively), while Indiana, Iowa, Kansas, Kentucky, Louisiana and others are keeping their minimum wages in line with federally mandated rates of $7.25 per hour.
The Multi-State Challenge
For employers, the fragmented nature of state wage increases brings compliance challenges. For example, workers in New York (other than workers in New York City, Nassau, Suffolk, and Westchester Counties) are now entitled to $11.10 per hour, while South Dakota businesses must pay $9.10. Meanwhile, businesses in the District of Columbia will have to pay staff $14.00, but not until July 1, 2019. Multi-state operators also face the challenge of local wage variations. While New Mexico has a state minimum wage of $7.50, Bernalillo County mandates $9.05 per hour. In Albuquerque, the minimum wage is now $9.20; in Las Cruces, employers must pay $10.10.
Organizations must also be aware of potential exemptions. As noted by the National Conference of State Legislatures, rate increases are delayed by one year in California for businesses with 25 or fewer employees, while in Montana businesses with gross annual sales of less than $110,000 can pay employees $4 per hour rather than the state-mandated $8.50. In Georgia, any businesses not covered by the Fair Labor Standards Act (FLSA) can pay staff the state wage of $5.15.
While paying staff more than the minimum wage may reduce total revenue, there are few other negative consequences. Paying less than the mandated wage, however, can lead to lawsuits or challenges under the FLSA that may result in monetary fines, operational penalties or long-term reputation damage.
Your best bet to stay compliant with state and federal minimum wage increase rules? Consider automated solutions designed to track and notify HR if wage adjustments are needed, or leverage the help of trusted third-party payroll providers to help manage the increasingly complex world of cross-state wage requirements. It's also a good idea to regularly review Department of Labor news releases to stay ahead of the salary curve.
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