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A Higher Federal Minimum Wage Remains Uncertain, But States and Cities Continue to Raise Rates

The federal minimum wage has stayed at $7.25//hour since 2009 – the longest period in history without an increase. Is 2022 the year this changes? Perhaps … but only if Congress acts on President Biden’s plea in the recent State of the Union Address. In the address, Biden pushed for a wage increase of $15/hour, so “no one has to raise a family in poverty.”

Currently, the path to a higher federal minimum wage is anything but clear. An amendment within a COVID relief package was shot down in Feb. 2021, and the fate of the stand-alone Raise the Wage Act of 2021 remains uncertain. Some Senators are advocating for a more modest increase of $11/hour, despite more than 60% of Americans favoring a $15/hour rate (Pew Research Center).

In the meantime, changes remain brisk among states, counties and cities, which impacts businesses of all sizes. Specifically, these minimum wage increases can affect your payroll practices and posting compliance. Learn how to prepare for a potential new federal minimum wage, as well as keep current with the latest state and local minimum wage rates.

Minimum Wage Rates Continue to Climb in States and Cities

From a legislative perspective, it’s important to recognize that states have authority to pass laws that are more generous than federal law, and municipalities can enact laws that surpass state laws. That’s why we’re seeing a flurry of state, city and county minimum wages that are higher than the federal wage.

State and local minimum wage rates continue to increase at a steady rate (as high as $15/hour), despite the federal rate remaining at $7.25/hour since 2009.

As of Jan. 1, 2022, 21 states and 30+ cities have raised their minimum wage -- and several other states are planning to increase rates later in the year.

Arizona $12.80
California (26 or more employees) $15.00
Colorado $12.56
Delaware $10.50
Illinois $12.00
Maine $12.75
Maryland (15 or more employees) $12.50
Massachusetts $14.25
Michigan $9.87
Minnesota (annual gross revenue of $500,000+) $10.33
Missouri $11.15
Montana $9.20
New Jersey (six or more employees) $13.00
New Mexico $11.50
New York (variable rates based on location)
Ohio (gross revenue $324,000+) $9.30
Rhode Island $12.25
South Dakota $9.95
Vermont $12.55
Virginia $11.00
Washington $14.49

Some affected cities:

Flagstaff, Arizona $15.50
Belmont, California $16.20
Cupertino, California $16.40
Mountain View, California $17.10
Oakland, California $15.06
Palo Alto, California $16.45
Sunnyvale, California $17.10
Denver, Colorado $15.87
Las Cruces, New Mexico $11.50
Seattle, Washington (more than 500 employees) $17.27

These increases impact your business in a few different ways, most notably payroll and postings:

Payroll – When federal, state and local minimum wage laws differ, you’re legally required under the Fair Labor Standards Act (FLSA) to pay the most generous rate to your hourly, nonexempt workers. Along with paying the highest possible minimum wage, you must provide overtime pay of time-and-a-half for 40+ hours in a workweek. It’s advisable to complete a Payroll/Status Change Notice to document any wage changes with affected employees — and carefully track their hours to protect your business from any disputes.

You may also need to distribute state-specific employee handouts covering wage theft, which is when employers don’t pay their staff what they’re rightfully owed, whether through minimum wage and overtime violations or by expecting employees to work “off the clock” or taking illegal deductions. A handful of states — including California and Minnesota — have passed laws requiring specific notifications.

Postings – If you operate a business in most of the states and cities listed above, you’re at risk of non-compliance if your workplace labor law postings don’t reflect the latest minimum wage increases. Something else to consider: Although 30 states and Washington, D.C. now have higher rates than the current federal rate of $7.25/hour, businesses in these locations must post the federal FLSA poster and all applicable state and local postings.

To ensure complete compliance, follow these pointers:

  • Display all postings in every business location — even when federal, state or local minimum wages conflict.
  • Check out the Minimum Wage Monitor™ Premium Service for a precise, real-time view of state and local minimum wage rates across the United States, the District of Columbia and Puerto Rico. This interactive tool allows you to verify the latest minimum wages, as well as those scheduled to take effect so you can plan for any changes.
  • Rely on our dedicated service, Poster Guard® Compliance Protection, for 365 days of guaranteed, hassle-free labor law posting compliance. You’ll receive an up-to-date federal, state and local poster set, along with automatic poster replacements every time a mandatory change (such as minimum wage) occurs.

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