With the election season behind us and 2015 fast approaching, employers need to start looking ahead to the new year when, traditionally, a host of new laws take effect. As we discussed after the election, 2014 was a busy year for wage and hour laws, and 2015 will be no different. Four states—Alaska, Arkansas, Nebraska, and South Dakota—voted to increase their minimum wages beginning as early as January 1, 2015. Those are not the only states that will see changes to the minimum wage in 2015, though.
As I have covered on Twitter in recent months, a number of states automatically adjust their minimum wages annually based on a number of factors. Employers in Arizona (10 cents to $8.05), Colorado (23 cents to $8.23), Florida (12 cents to $8.05), Missouri (15 cents to $7.65), Montana (15 cents to $8.05), New Jersey (13 cents to $8.38), Ohio (15 cents to $8.10), Oregon (15 cents to $9.25), and Washington (15 cents to $9.47) will all need to adjust wages on January 1.
Montana in particular has a quirk in its law. Unlike other states, such as Ohio, that provide complete exemptions from the minimum wage for small businesses, Montana employers with gross annual sales of $110,000 or less are required to pay a minimum wage of $4.00 per hour. Nevada employers can expect an increase, too, but the state’s Office of the Labor Commissioner does not have to publish its decision until April 1, 2015.
New York will jump the gun on all of those states. On December 31, 2014, the state increases its minimum wage to $8.75 per hour, though the minimum cash wage for various service employees will remain unchanged (only the tip credit maximums will adjust). New York is considering further changes in 2015 regarding tipped employees. Look for a specially convened Wage Board to make recommendations in 2015.
In Connecticut, the minimum wage will increase from $8.70 to $9.15 per hour. For hospitality employers, the state also provides various limits on tip credits. The maximum tip credit an employer can claim will be 36.8% of the minimum wage per hour for wait staff, 18.5% of the minimum wage per hour for bartenders, and $0.35 per hour for other tipped employees.
In Hawaii, the minimum wage will increase by 50 cents to $7.75 on January 1. Hospitality employers get an increase in the maximum tip credit, too, to $0.50 per hour. The bad news is that employers can only take the tip credit if the employee earns at least $7.00 an hour more than the minimum wage (at least $14.75 per hour, starting January 1).
In Maryland, employers will face not one but two minimum wage increases in 2015. On January 1, the rate jumps from $7.25 to $8.00 per hour. Then, on July 1, 2015, Maryland will increase its minimum wage again to $8.25 per hour. Tipped employees will continue to have a minimum cash wage of $3.63 per hour, meaning the maximum tip credit will increase.
Both Massachusetts and Rhode Island will increase their minimum wage on January 1, 2015 from $8.00 to $9.00 per hour, while Vermont will increase its minimum wage to $9.15 per hour. Finally, West Virginia’s minimum wage will jump from $7.25 to $8.00 per hour.
Later in 2015, Delaware will increase its minimum wage from $7.75 to $8.25 per hour effective June 1, while Washington, D.C. will move from $9.50 to $10.50 on July 1. Finally, on August 1, Minnesota will increase its two tier minimum wage from $8.00 to $9.00 per hour for employers with gross sales over $500,000 and from $6.50 to $7.25 per hour for employers whose gross sales fall under that threshold. In all, a total of 23 states, and the District of Columbia, have established a minimum wage above $7.25, the current federal rate.
Over the past few months, we have also highlighted the increasing number of local ordinances that apply to employers around the country. For instance, Los Angeles recently enacted a “living wage” ordinance for hotel employees. Oakland, Seattle, San Francisco, San Jose, and Santa Fe, among others, enacted local rates for all employers in those cities that exceed federal and state minimum wage requirements. Of course, this doesn’t capture paid sick leave initiatives or other non-wage and hour changes, either. Suffice to say, 2015 will be another busy year on the wage and hour and employment law front.
The myriad of changes in minimum wage thresholds at the state and local level in 2015 mean that employers must be vigilant in monitoring legislation and adopting changes. Remember that these changes not only mean adjusting payroll but also displaying new wage and hour posters and, potentially, providing notices to employees about the new wage rates. More of these initiatives are on the horizon. Next up? Both Chicago and Philadelphia will consider minimum wage increases in spring 2015 elections.