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E-Alerts

Further Increases In State Minimum Wage Rates Loom On Employers’ Horizon

[October 16, 2013]  As we noted in an e-alert earlier this year, the minimum hourly wage rates in ten states (Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont, and Washington) increased as of the beginning of 2013.  In addition, several other states (California, Connecticut, New York, and Rhode Island) have recently enacted increases in their minimum wage rates, which will go into effect in various stages over the next few years.  Employers operating in states affected by these increases should take note of these developments and adjust their payroll practices accordingly.

Upcoming Minimum Wage Increases

As a result of recent legislative enactments, the minimum wage rates in California, Connecticut, New York, and Rhode Island will increase as follows:

  • California:  from $8.00 to $9.00 (effective July 1, 2014), and subsequently to $10.00 (effective January 1, 2016);
  • Connecticut:  from $8.25 to $8.70 (effective January 1, 2014), and subsequently to $9.00 per hour (effective January 1, 2015);
  • New York:  from $7.25 to $8.00 (effective December 31, 2013), subsequently to $8.75 (effective December 31, 2014), and ultimately to $9.00 per hour (effective December 31, 2015); and
  • Rhode Island:  from $7.75 to $8.00 per hour (effective January 1, 2014).

In addition, New Jersey voters will decide on November 5 of this year whether to approve a ballot measure that would raise the state’s minimum wage rate from $7.25 to $8.25.

Future Trends

The current trend of increases in states’ minimum wage rates seems likely to continue.  In this regard, several other states (including Hawaii, Illinois, Maryland and Minnesota) are considering proposed increases in their minimum wage rates.  Many labor and liberal groups – with the support of some major employers, including the discount retailer Costco and the children’s shoe chain Stride Rite – have been pushing for higher minimum wage rates, contending that they are needed by low-income workers and would counteract growing income disparities within the nation.

Similarly, at the federal level, President Obama has called on Congress to pass legislation that would raise the federal minimum wage rate from $7.25 to $9.00 per hour and provide for automatic adjustments based on inflation.  Such a measure would have an immediate and significant impact, as most states’ current minimum wage rates are lower than the proposed $9.00 threshold.

Finally, a number of municipalities (including Albuquerque and Santa Fe, New Mexico; San Francisco, San Jose, and Long Beach, California; and Washington, D.C.) have enacted measures establishing their own minimum wage rates.  Thus, employers that employ workers within those municipalities need to ensure that employees’ wages are consistent with those local minimum wage rates.

Recommendations For Employers

In light of these developments, we recommend that employers:

  • Update their payroll practices as necessary to comply with all recent and upcoming increases in minimum wage rates;
  • Ensure that current versions of all required workplace posters relating to minimum wage rates and other employment matters are displayed in the appropriate locations;
  • Carefully review all written job descriptions to ensure that employees are appropriately classified as exempt or nonexempt – and that workers are not improperly classified as independent contractors rather than employees; and
  • Continue to monitor developments at the federal, state, and local levels regarding minimum wage increases.

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Please feel free to contact us if you have any questions regarding recent increases in minimum wage rates or any other wage-and-hour issues.