Employers must ensure that they comply with federal, state, and local minimum wage laws. While the federal minimum wage ($7.25 per hour) isn't scheduled to change in 2020, many states and local jurisdictions have new minimum wage rates that took effect January 1, 2020. Below is a summary of these changes and guidelines to help you comply with minimum wage requirements.
Additional Information & Local Increases:*
|
Jurisdiction |
Requirements |
|
California |
$13.00 per hour for employers with 26 or more employees and $12.00 per hour for employers with 25 or fewer employees. San Jose, CA: $15.25 per hour. San Diego, CA: $13 per hour. Oakland, CA: $14.14 per hour. |
|
Colorado |
Denver, CO: $12.85 per hour. |
|
Minnesota |
$10.00 per hour for employers with annual gross revenue of $500,000 or more and $8.15 per hour for smaller employers. |
|
New Jersey |
$11.00 per hour for employers with six or more employees and $10.30 per hour for employers with less than six employees. |
|
New Mexico |
Albuquerque, NM: $9.35 per hour or $8.35 per hour for employers that provide employees with healthcare and/or childcare benefits of at least $2,500 per employee per year. |
|
New York (effective December 31, 2019) |
New York City (10 or fewer employees): $15.00 per hour. Nassau, Suffolk and Westchester Counties: $13.00 per hour. Rest of the state: $11.80 per hour. Fast food employees (outside New York City): $13.75 per hour. |
|
Washington State |
Seattle, WA: Employers with 500 or fewer employees must pay non-exempt employees at least $15.75 per hour. These employers can meet this requirement by paying no less than $13.50 per hour in wages and contributing at least $2.25 per hour to an employee's medical benefits and/or reported tips. |
* This list includes minimum wage increases for larger U.S. cities. Several smaller cities also have increases planned for 2020. Check your local minimum wage to ensure compliance.
More 2020 Increases Coming:
The minimum wage changes noted above won't be the last in 2020. Some states and local jurisdictions schedule their changes for July 1 or at another point during the year. Keep an eye out for changes throughout the year.
Multiple Minimum Wage Rates:
If an employee is subject to more than one minimum wage requirement (such as federal, state, and local), you should comply with the rate most generous to the employee. For example, if your state minimum wage is $10.00 and the local minimum wage is $11.00, you must generally pay the employee at least $11.00 per hour, since it is 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: Although coverage may vary by jurisdiction, state and local minimum wage laws typically apply to almost all employers and employees. However, some requirements 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.
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 State & Federal Resources section of HR411.* ADP clients with the Labor Law Poster Compliance Update Service receive updated posters automatically.
Employees Earning More than the Minimum Wage:
When the minimum wage increases, some employers wonder if they should also provide a raise to employees already earning equal to or more than the new rate. For example, if the minimum wage increases from $9 per hour to $10 per hour, should an employee already earning $10 per hour also get a raise? While the employer is under 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.
State Overtime Exemptions:
The federal Fair Labor Standards Act has exemptions from its minimum wage and overtime requirements for bona fide administrative, professional, executive, outside sales, and computer professional employees who meet certain salary and duties requirements. Many states have their own salary and duties tests for determining whether an employee is exempt from overtime under state rules. In some of these states, the minimum salary requirement for exemption increases automatically whenever the minimum wage increases. This may have impacted employers in Alaska, California, Colorado, and Maine on January 1, 2020 and in New York on December 31, 2019.
Note: Read about recent changes to federal rules on overtime exemption here.
Conclusion:
Ensure that you comply with the minimum wage rules that apply to your employees and post update-to-date minimum wage notices in each work location.
