Employers must be aware of a number of minimum wage changes at the federal, state, and local levels this year. While the federal minimum wage will remain steady at $7.25 for 2016, the U.S. Department of Labor is proposing large increases to the minimum salary for executive, administrative, and professional employees to be classified as exempt from federal minimum wage and overtime requirements under the FLSA. Employers will have to watch for this additional minimum wage issue throughout 2016.
For now, below are the various minimum wage changes taking effect in 2016:
State Minimum Wage Increases
|State||Current Min. Wage||New Min. Wage||Date of Min. Wage Change|
|Alabama – Birmingham only||$7.25||$8.50||7/1/16|
|Dist. of Columbia||$10.50||$11.50||7/1/16|
|Minnesota||$7.25 or $9.00||$7.75 or $9.50||8/1/16|
Local Minimum Wages
Those working politically to raise the minimum wages have pushed many cities and counties to enact local minimum wage laws and raise minimum wage rates well beyond what the States require. This presents a unique set of challenges for employers with multiple locations, some within cities with higher minimum wages and some outside of those cities or local jurisdictions.
|Local Jurisdiction||Current Min. Wage||New Min. Wage||Date of Min. Wage Change|
|California – Berkeley only||$11.00||$12.53||10/1/16|
|California – Emeryville only||$12.25 or $14.44||$13.00 or TBD||7/1/16|
|California – Los Angeles||$9.00||$10.50||7/1/16|
|California – L.A. County only||$9.00||$10.50||7/1/16|
|California – Mountain View only||$10.30||$11.00||1/1/16|
|California – Oakland only||$12.25||$12.55||1/1/16|
|California – Palo Alto only||$9.00||$11.00||1/1/16|
|California – Richmond only||$9.60||$11.52||1/1/16|
|California – San Francisco only||$12.25||$13.00||7/1/16|
|California – Santa Clara only||$9.00||$11.00||1/1/16|
|California – Sunnyvale only||$10.30||$11.00||7/1/16|
|Illinois – Chicago only||$10.00||$10.50||7/1/16|
|Kentucky – Lexington only||$7.25||$8.20||7/1/16|
|Kentucky – Louisville only||$7.75||$8.25||7/1/16|
|Maine – Portland only||$7.50||$10.10||1/1/16|
|Maryland – Montgomery County only||$9.55||$10.75||7/1/16|
|Maryland – Prince George’s County only||$9.55||$10.75||10/1/16|
|Missouri – St. Louis only||$7.65 or $8.25||$9.00||1/1/16|
|Washington – Seattle only||$11.00||$10.50 to $13.00||1/1/16|
|Washington – Tacoma only||$9.47||$10.35||2/1/16|
When The Minimum Wage Goes Up, Do Not Forget About Increases For Exempt Employees’ Salaries
Minimum wage increases can also affect overtime-exempt employees. In many states and local jurisdictions, the minimum salary for exempt employees is required to be a set weekly salary that could be 1.5 to 2 times that of the minimum wage for 40 hours of work. Increases in those states’ minimum wage rates can therefore increase the minimum salary which must be paid.
Minimum Recommendations For Employers
- Monitor minimum wage increases at the Federal, State, and Local level.
- Update minimum wage posters.
- Review exempt employees to make sure they are being paid a minimum salary that complies with the state or local minimum wage increase.
- Make sure non-exempt employees are paid at least the minimum wage.
- Ensure the minimum wage is paid separately for each hour of work in those states and cities that require it.
- Inform employees about their new rate(s).
- Review local city and county minimum wage laws to ensure compliance.
- Prepare your managerial employees so they can effectively respond to employee inquiries concerning wage rate changes.
- If you use a third-party payroll processor, make sure they are aware of minimum wage changes for the areas you operate in and pay your employees accordingly.