More than 20 states and 40 local jurisdictions will increase their minimum wage rates on January 1, 2023. Below is a summary of these changes and guidelines to help you comply with your minimum wage requirements.

State minimum wage increases:

This interactive map covers January 1, 2023 minimum wage increases for all applicable states. Some states increase their minimum wage rates on a different schedule. The information below applies to January 1, 2023 (and December 31, 2022) increases only. The minimum wage will increase in the states in blue. Click on the state to reveal the new minimum wage.

Local minimum wage increases:

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

Other wage 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 Arizona will increase to $10.85 per hour on January 1, 2023. If the combination of direct cash wages and tips falls below Arizona's minimum wage ($13.85 per hour), employers must make up the difference.

Note: Some jurisdictions, such as Alaska, California, Minnesota and Montana, don't allow employers to apply a tip credit toward the minimum wage. In such cases, you must pay tipped employees the full minimum in direct cash wages. Check your state and local law for details.

Multiple minimum wage rates:

If an employee is subject to more than one minimum wage requirement (such as federal, state and local), you should pay 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.

Note: Some requirements may only apply to businesses of a certain size, or employees who perform a certain number of work hours in that jurisdiction. Check your state and local law for details.

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 and notices:

Most jurisdictions require employers to post an up-to-date minimum wage notice in the workplace. State and federal posters are available for downloading in the State & Federal Resources section of HR411®. ADP clients with the Labor Law Poster Compliance Update Service receive updated posters automatically. Your state or city may have additional notice requirements. For example, Minnesota employers are required to furnish each employee with a written notice of any change in pay before the change takes effect. 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, several state and local jurisdictions will increase their minimum wages on July 1, 2023.

Overtime exemptions:

In some states, including California, Maine, New York and Washington, the minimum salary required to be classified as exempt from overtime is tied to the minimum wage and therefore will also increase on January 1, 2023.

Note: State and federal law require that certain duties tests also be satisfied to qualify for exemption from overtime.

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 January 1, 2023 (December 31, 2022 in New York). Additionally, be sure to post updated minimum wage notices in each work location.