Minimum Wage Updates by State — Is Your Business Compliant?
Minimum Wage Updates by State — Is Your Business Compliant?
The goal of the federal minimum wage requirement is to ensure that employees receive a fair wage. Since 1938, the Fair Labor Standards Act has set the federal rate that businesses must adhere to. While states can set their own minimum wage rate, businesses are required to comply with whichever rate is more favorable to the employee — federal, state or local. If the state rate is higher than the federal rate, then the state rate must be applied, and likewise if the federal rate is higher than the state rate, then the federal rate must apply.
Some minimum wages exceed $15. Other states may vary the minimum wage for small companies or those that are primarily seasonal. In addition, there are cities and municipalities that have their own minimum wage rate requirements. For example, New York state has an hourly wage rate of $16, while New York City and Suffolk and Westchester counties have rates of $17. Mountain View, California’s rate of $19.70 far surpasses the California state rate of $16.90. As a starting point, consult the U.S. Department of Labor website for an up-to-the minute state wage table. State Minimum Wage Table.
How rates may change
Many states will make annual adjustments to their minimum wage rates based on the inflation rate. Colorado also allows employers to pay tipped employees less than the standard wage by taking a tip credit. However, if the employee’s total earnings, including tips, fall below the full minimum wage, the employer must make up the difference. Idaho has a similar rule.
For companies that have employees working across the country, it is important that they comply with the minimum wage requirements for the state where the work is being done and not where the company is headquartered. Some examples are for employees who work remotely, travel across state lines to work or split time between two locations.
Remote workers are generally subject to the wage laws of the state or city where they perform their work. For those working in multiple locations, the employer must track when an employee moved to another state, covered shifts in another location or temporarily worked in a higher-wage jurisdiction. Failure to keep track of these complex wage scenarios can result in paying back wages to employees, paying interest and state-specific fines, or undergoing an audit.
The above examples are subject to change, often with little notice. So be sure to work closely with payroll professionals. And keep in mind that as minimum wage requirements continue to evolve it is up to the employer — with the advice of professionals — to monitor and comply with any new conditions that may affect their employees and ultimately their business.
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