January 12, 2016
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Minimum Wage Increases for 2016
As a business you must comply with many state and local laws. Accordingly, we want to alert you to the increase in minimum wages that passed for 2016. If you have any questions on the information below or how this may affect your business please do not hesitate to give us a call.
Federal Minimum Wage
The current Federal minimum wage is $7.25 per hour according to the Fair Labor Standards Act (FLSA). However, Federal Minimum wage is subordinate to state or local laws if they stipulate wages which are more favorable to employees. Hence, if a state has a minimum wage that is higher than the Federal minimum wage, employers in that state must pay employees at the higher wage. In addition, the minimum wage rate for federal contractors will increase to $10.15 beginning in January 1, 2016.
State Increases to Minimum Wage
In 2016, 13 states increased their minimum wages. The new minimum wages in these states are as follows:
- Alaska: $9.75
- Arkansas: $8.00
- California: $10.00
- Connecticut: $9.60
- Hawaii: $8.50
- Massachusetts: $10.00
- Michigan: $8.50
- Nebraska: $9.00
- New York: $9.00
- Rhode Island: $9.60
- South Dakota: $8.55
- Vermont: $9.60
- West Virginia: $8.75
Three other states have minimum wage increases that are set to take effect later this year:
- District of Columbia $11.50 (effective July 1, 2016)
- Maryland: $8.75 (effective July 1, 2016)
- Minnesota: $9.50 (effective August 1, 2016)
Local Minimum Wage Increases
Some localities have increased the minimum wage at the local level. For instance, Chicago has implemented a $10.00 minimum wage, whereas the statewide minimum wage in Illinois is $8.25. Thus employers must ensure that the wages paid to employees are the highest of the local, state, and Federal minimum wages.
In order to ensure that you are in compliance with the various minimum wage laws, it is imperative that those in charge of human resources within companies are aware of and in compliance with the pertaining laws. When processing payroll, it is imperative that the employer change the hourly pay rate for the employees (self-processed payroll) or ensure that their payroll processor has entered the correct pay rates (outsourced payroll). Finally, employers should ensure that posted wage notices reflecting the applicable minimum wage are visible to all employees.