Fourteen states have announced they will be raising their minimum wages the first of the year.
- Alaska: $8.75 to $9.75
- Arkansas: $7.50 to $8.00
- California: $9.00 to $10.00
- Colorado: $8.23 to $8.31
- Connecticut: $9.15 to $9.60
- Hawaii: $7.75 to $8.50
- Massachusetts: $9.00 to $10.00
- Michigan: $8.15 to $8.50
- Nebraska: $8.00 to $9.00
- New York: $8.75 to $9.00 (effective New Year’s Eve)
- Rhode Island: $9.00 to $9.60
- South Dakota: $8.50 to $8.55
- Vermont: $9.15 to $9.60
- West Virginia: $8.00 to $8.75 (effective New Year’s Eve)
The District of Columbia, Maryland, Minnesota, and Nevada have announced they will be raising their wage floors later in 2016.
In addition, many states automatically adjust their wage floors each year according to a consumer price index. Given the slow rate of inflation, eight states that index their minimum wages—Arizona, Florida, Missouri, Montana, New Jersey, Ohio, Oregon and Washington—will not be raising their minimum wage this coming year. Several other states that index their minimum wage have not yet announced their intentions and could still raise them.
Obviously, an increase in the minimum wage will impact the pay for most employees paid the minimum wage. But, just because a retailer pays more than minimum wage does not mean it can ignore these increases.
An increase in the minimum wage may also impact the pay to commissioned salespersons and salaried employees. For example, a commissioned salesperson is exempt from minimum wage and overtime pay, only if over half of the employee's total earnings must be from commissions, and the salesperson’s total earnings from commissions and base salary adds up to an effective hourly rate that is more than one and one-half times the state minimum wage. Any increase in the minimum wage, therefore, will automatically increase the minimum total compensation required for commissioned sales.
Similarly, an increase in the minimum wage is the impact it may have on the salary test for preserving an administrative and management employees who are exempt from overtime. A number of states set the salary test as a multiple of the minimum wage. For example, in California a supervisor classified as exempt must be paid a monthly salary that is no less than two times the wages paid to a full-time minimum wage employee. There may be a number of other consequences from the increases of the minimum wage, such as increasing meal and lodging credits.
It is important for flooring dealers to be vigilant in determining whether their state or local governments have increased the minimum wage and whether that increase impacts other salary requirements. Given the impact of violating these requirements, it is recommended that competent legal or accounting counsel be consulted.
Notice: The purpose of this blog is to review the latest developments that are of interest to clients of Mr. King. The information contained is abridged from legislation, court decisions, and administrative rulings and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.