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What to Know About Minimum Wage Increases in 2018

On January 1, eighteen states will increase their minimum wages, with three more making changes to take effect July 1. With all these changes taking place, it’s important for employers to make their final preparations to ensure a smooth transition into some potentially new requirements.

First, note that the federal minimum wage will remain at $7.25 per hour for most employees, with the minimum wage for federal contractors in 2018 set at $10.35 per hour. These Fair Labor Standards Act rules, however, do not supersede any state or local regulations that could affect your business. Those rules take precedence over the federal minimum wage rates.

The states that will increase their minimum wage requirements in 2018 include the following:

  • Alaska: $9.84 per hour
  • Arizona: $10.50 per hour
  • California: $11 per hour for businesses with 26 or more employees; $10.50 per hour for businesses with fewer than 26 employees
  • Colorado: $10.20 per hour
  • Florida: $8.25 per hour
  • Hawaii: $10.10 per hour
  • Maine: $10 per hour
  • Maryland: $10.10 per hour
  • Michigan: $9.25 per hour
  • Minnesota: $9.65 per hour for employers with gross revenue of $500,000 or more per year; $7.87 per hour for employers with less than $500,000 annual gross revenue
  • Missouri: $7.85 per hour
  • Montana: $8.30 per hour
  • New Jersey: $8.60 per hour
  • New York: $11 per hour in Nassau, Suffolk and Westchester counties; $10.40 per hour elsewhere; $11.75 for fast food workers outside New York City
  • Ohio: $8.30 per hour
  • Oregon: $12 per hour in the Portland metro area; $10.75 per hour in urban counties; $10.50 in rural counties
  • Rhode Island: $10.10 per hour
  • South Dakota: $8.85 per hour
  • Vermont: $10.50 per hour
  • Washington: $11.50 per hour
  • Washington, D.C.: $13.25 per hour

How employers can prepare

Employers should be fully prepared to increase the pay of any employees below the minimum wage threshold. Most state enforcement agencies have made wage theft a high priority, and failure to pay workers the appropriate minimum wage constitutes a serious violation.

Additionally, if your business is in an area where minimum wage will rise and your employees’ rate of pay will increase on January 1 as a result, workers must receive notice from you no later than January 7, 2018. The only exception is if you have already reflected the change on a timely itemized wage statement, and this statement meets all legal requirements affecting it. If this is the case, you likely won’t need to submit a separate wage notice to your employees.

If your state or local government requires you to submit a wage notice to your employees, it must include the following:

  • Changes in standard rate of pay
  • Changes in overtime rate of pay
  • Allowances (such as meal pay or lodging) that can be claimed as part of minimum wage

If you could use some assistance with managing a minimum wage increase or any other payroll issue for your business, consider investing in a cohesive payroll management solution so that you can be sure you’re meeting all your obligations.