The new year brings several changes to minimum wage laws across the United States. The District of Columbia and 29 states are raising their minimum wage pay rates above the federal government’s minimum of $7.25 per hour. Workers in the District of Columbia will be paid one of the nation’s highest minimum wage pay rates at $11.50 per hour. This rate jumps to $12.50 per hour after July 1, 2017.
Washington and Massachusetts now have the second highest minimum wages (next to D.C.) with rates rising to $11 on January 1. California minimum wage earners now accrue $10.50 per hour. However, this minimum wage level strictly applies to employers with a workforce of 26 or more workers. The next highest minimum wage is Connecticut’s $10.10, which went into effect on the first of January.
Change is Here
In general, the trend for the new year is a bump in minimum wages across the nation. Though five states have yet to enact minimum wage laws, 22 of the states that have such laws are raising pay rates from ’16 to ’17. This number of states represents nearly one-half of the 45 states with minimum wage laws. Merely one-third of these states raised minimum wage laws between 2015 and 2016.
FLSA and the Minimum Wage
Employers covered by the Fair labor Standards Act (FLSA) must pay employees the minimum hourly rate of $7.25 per hour. This pay rate must be provided even if the state’s law permits a lower minimum wage or if the state lacks minimum wage laws.
Maximum Tip Credits
The maximum tip credits an organization can count against employee hourly pay rates are also changing in many states. The tip credit is the component of the cash minimum wage that an employer is not forced to pay to workers who are given tips. The lowest wage per hour that an employer is required to pay tipped employees is determined by subtracting the applicable tip credit from the minimum wage.
Employers covered by the FLSA can apply a tip credit that is not in excess of the FLSA’s tip credit ceiling of $5.12 per hour. Employers conducting operations in states with tip credit ceilings in excess of the federal tip credit ceiling can use the higher tip credit if there is a minimum of a $2.13 difference between the tip credit and the state minimum wage credit.
By outsourcing your payroll administration to a PEO (Professional Employer Organization) we can help you stay compliant with state and federal laws. At Niroc Consultants, we focus on your employees so you can focus on your business.