2023 Minimum Wage Increases and Changes
The minimum wage is a federally mandated minimum that dictates how much employers can pay their employees per hour of labor. It is up to your organization to decide a fair amount that meets or exceeds the federal minimum.
Some states have selected their own minimum wages. 30 states have minimums higher than the federal government’s, and more are following suit.
The minimum wage has been $7.25 since 2009, but many states have higher minimums and are set to raise them more. But states aren’t the only ones making changes HR pros should track—read on to figure out how to stay compliant with rising minimum wages in your location.
Do Some States Have a Different Minimum Wage?
States, counties, cities, and other locales may have minimum wage requirements that are higher than the federal minimum. For example, Washington D.C. has a minimum of $16.10, and Los Angelos County has a minimum of $15.96. Seattle, Washington, has a minimum of $17.27, while the state itself is set at $14.49—so which law are you supposed to follow?
Organizations operating in multiple locations must follow each location’s specific guidelines. So if the state, city, or county minimum is higher than the federal, your organization must pay the higher amount. In cases like this, it is more important than ever for HR pros to stay updated on increasing minimum wages, especially as inflation rises and lawmakers react accordingly.
Maine, New York, Maryland, Illinois, Minnesota, Missouri, Colorado, New Mexico, Arizona, California, Oregon, and Washington all have areas with higher minimum wages than the set state minimum.
What States Are Changing Their Minimum Wages?
Some states are hiking their minimum wages or introducing yearly increases—in which the minimum wage adjusts for inflation each year. One state, California, is raising its minimum wage AND instituting a yearly increase.
For more information, check out the interactive map below. Mouse over each state to see what changes to expect in 2023.
Take note of two states with lower minimum wages than the federal minimum. Georgia and Wyoming have a state minimum wage of $5.15, but employers subject to the Fair Labor Standards Act must use the federal minimum wage of $7.25.
How Do Minimum Wage Hikes Affect Compliance?
Keep in mind your state’s specific rules and regulations. Staying compliant with changing laws may mean adjusting your payroll to reflect minimum wage increases, or preparing your organization for newly introduced yearly increases.
For organizations with locations in more than one state, there are two different options:
- Pay the higher wage across the board. For example, if the organization has a location in California and one in Mississippi, this would require paying $15 to everyone to meet California’s minimum wage requirements, rather than paying $7.25 to meet Mississippi’s requirements.
- Pay employees according to each state’s minimum wage requirements. This means paying employees in California $15 and employees in Mississippi $7.25.
Organizations with remote employees must pay the minimum wage associated with the employees’ location. A remote worker in California must be paid $15 hourly, even if the organization is based in Mississippi.
Penalties for Noncompliance with Minimum Wage Laws
Penalties for noncompliance may include $1,000 fines for each violation. Organizations that pay beneath the minimum wage of their locale may also owe back wages, where they must pay employees the amount they owed to meet the minimum requirement. In Missouri, this means an employee paid $8.00 hourly will be owed $3.15 for every hour worked to reach the state minimum wage of $11.15.
Payroll is complicated for any HR pro. BerniePortal can streamline your payroll needs and reduce the risk of error when changes like these happen.
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