Minimum Wage Changes Coming July 1: What You Need to Know

Two states, the District of Columbia, and many local jurisdictions will increase their minimum wage rates on July 1, 2023. Below is a summary of these changes and guidelines to help you comply with your minimum wage requirements.

State and district minimum wage increases

This table covers July 1, 2023 minimum wage increases for all applicable states and the District of Columbia. Some states increase their minimum wage rates on a different schedule. The information below applies to July 1, 2023 increases only.

* Oregon: Oregon's minimum wage differs based on where the employer is located:

• Non-urban counties: Employers in Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler must pay non-exempt employees at least: 
  o    $13.20 per hour beginning July 1, 2023.
• General: Employers that aren't located in one of the non-urban counties above and aren't located within the metropolitan Portland urban growth boundary (see below) must pay non-exempt employees at least: 
  o    $14.20 per hour beginning July 1, 2023.
• Portland metro: Employers that are within the metropolitan Portland urban growth boundary (https://www.oregonmetro.gov/urban-growth-boundary) must pay non-exempt employees at least: 
  o    $15.45 per hour beginning July 1, 2023.
  

Local minimum wage increases

Several cities and counties are also increasing their minimum wage effective July 1, 2023. Some local jurisdictions adjust their minimum wages annually for inflation each July, but they haven't announced their 2023 rates yet. The following table includes many of the announced local rate changes for 2023 as well as some other local jurisdictions that typically make annual adjustments each July but haven't announced their 2023 rate yet.

This is not an exhaustive list. There may be additional local jurisdictions that have scheduled increases for July 1. Check your local laws to confirm compliance.

Other considerations

Tipped employees

In some jurisdictions, the minimum cash wage required for tipped employees also increases with the minimum wage. For example, the minimum cash wage for tipped employees in the District of Columbia will increase from $6.00 per hour to $8.00 per hour on July 1, 2023. In the District of Columbia, if an employee's hourly tip earnings (averaged weekly) and cash wages don't equal or exceed $17.00 per hour, the employer must pay the difference. Check your state and local law to determine whether the minimum cash wage is changing on July 1, 2023.

Multiple minimum wage rates

If an employee is subject to more than one minimum wage requirement (such as federal, state and local), you should generally comply with the rate most generous to the employee. For example, if your state minimum wage is $14 and the local minimum wage is $15, you must generally pay the employee at least $15 per hour, since it's higher than the state and federal minimum wage rates. 

Additionally, if your business is located in one state, but you have employees (such as remote workers) working in another jurisdiction, the minimum wage in the location where the employee performs work generally applies.

Employees earning more than the minimum wage

When the minimum wage increases, some employers provide a raise to employees already earning equal to or more than the new rate. While there's no obligation to provide a raise in such cases, some employees may be expecting one. Consider the potential impact on labor costs, employee morale, internal equity (how employees are paid when compared with other employees within your company based on skills and experience), and your typical merit increase schedule.

New posters

Most jurisdictions require employers to post an up-to-date minimum wage notice in the workplace. State and federal posters are available for download in the HR section of RUN Powered by ADP®. ADP clients with the Labor Law Poster Compliance Update Service receive updated posters automatically. Your state or city may have additional notice requirements. Check your jurisdiction's requirements to ensure compliance.

More 2023 increases coming

Some jurisdictions schedule their changes at another point during the year. For example, Florida's minimum wage will increase to $12.00 per hour on September 30, 2023. Closely monitor minimum wage changes in your jurisdiction to ensure compliance.

Overtime exemptions

In some states, including Oregon, the minimum salary required to be classified as exempt from overtime is tied to the minimum wage. However, Oregon's new minimum salary requirements for exemption will still be lower than the federal salary requirement of $684 per week. Therefore, the change in the state's salary requirements for exemption will likely impact only employees who aren't covered by the federal Fair Labor Standards Act (virtually all employees are covered) but are covered by state law. 

To determine the monthly minimum salary requirement for exemption from overtime, Oregon uses the following formula: multiply the applicable minimum wage by 2,080 and then divide by 12.

Changes to the minimum wage can also impact other overtime rules. For example, nonexempt employees in Nevada who are paid less than 1.5 times the minimum wage rate are also entitled to overtime pay whenever they work more than 8 hours in any workday. This is commonly referred to as daily overtime. Effective July 1, 2023, the daily overtime requirement will apply unless nonexempt employees are paid at least $15.375 per hour (if they are offered health benefits) and $16.875 per hour (if they aren’t offered health benefits). Keep in mind that the employees would still be entitled to overtime pay if they work more than 40 hours in a workweek, regardless of whether the above thresholds are met, unless otherwise exempted.

Conclusion

Ensure that you understand the minimum wage rules that apply to your employees and, if applicable, make any necessary changes in RUN Powered by ADP® before July 1, 2023. Additionally, be sure to post updated minimum wage notices in each work location.