Planning Ahead for Local and State Minimum Wage Increases
Tuesday May 28th, 2019
Managing payroll is already complex, and when you factor in the ever-changing regulations, it can be downright challenging. One of the changes your business may be facing in 2019 is a local or state minimum wage increase. This year, 21 states and a number of local jurisdictions have increased their minimum wage or will do so at some point.
Among the states increasing minimum wage, six are resulting from legislative bills, while eight are the result of changes in the area’s cost of living. Some jurisdictions, such as counties and cities, also impose higher minimum wages than what is required statewide.
Businesses in New York City with 11 employees or more saw a $2 per hour increase, while New Jersey’s minimum wage increased by $1.25. Washington, D.C. employers must comply with a $14 minimum wage this year. Businesses with tipped workers can apply a tip credit against the minimum wage when they are eligible, although every tipped worker must receive no less than minimum wage for each hour worked. If the tips aren’t enough, the employer is legally required to make up the difference. Some states don’t allow for a tip credit, so it depends on the specific requirements in your area.
New York state’s minimum wage is especially complicated because it has four different requirements in effect. Westchester, Nassau, and Suffolk counties’ rates increased to $12 per hour and will continue to increase by $1 per year until the minimum wage is $15 by the end of 2021. The minimum wage for the remainder of the state increased by $0.70, with two exceptions:
· New York City employers with 11 or more employees currently pay a minimum wage of $15
· Employers with fewer than 11 employees pay an hourly minimum wage of $13.50, which is scheduled to increase to $15 on December 31st.
Next year, the statewide rate reaches $12.50 per hour.
California also increased its minimum wage to $12 for companies with at least 26 employees. Those with 25 or fewer remain at $11 per hour. The state did implement the Fair Wage Act of 2016, which increases the state minimum wage to $15 for large employers by the year 2022 and for small employers by 2023. Any increasing number of localities in California are setting higher minimum wage rates.
Additionally, a bill regarding a federal minimum wage increase is currently moving through the U.S. House of Representatives. This bill proposes an increase to $15, which would more than double the current wage of $7.25, by the year 2024.