State Minimum Wage Adjustments Require Careful Employer Review

The federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). Many states also have minimum wage laws. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

Under federal law, an employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference. Many states, however, require higher direct wage amounts for tipped employees. Please review the applicable state requirements.

There are eleven states – Arizona, Colorado, Florida, Missouri, Montana, Nevada, New Jersey, Ohio, Oregon, Vermont, and Washington – that annually adjust the minimum wage based on inflation and the Consumer Price Index (CPI).  The CPI, published by the United States Bureau of Labor Statistics, is a measure of the average change in prices over time for a fixed “market basket” of goods and services, such as food, shelter, medical care, transportation fares and other goods and services people purchase for day-to-day living.

Please carefully review the information and effective dates provided below as they vary by state.  For your convenience we have provided links to additional information which you may access by clicking the state name listed below.

Please note: the chart below contains highlights of the states that have issued minimum wage changes effective December 31, 2017 and after.  Employers should carefully review applicable state law requirements and monitor changes.

Federal Contractors. Effective January 1, 2018 the hourly minimum wage to be paid by federal contractors to workers performing on or in connection with covered contracts under Executive Order 13658, will be $10.35.  The required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts will be $7.35 per hour effective January 1, 2108.  Click here to access the Worker Rights poster reflecting the increased minimum wage.