On the first of the year, a minimum wage increase went into effect in 21 states. And later in the year, four more states and Washington, D.C. will raise their minimum wage requirements. Given the onslaught of changes, it’s no wonder many business owners are double and triple checking that they’re playing by the rules. Need a refresher? Here’s everything employers need to know about the latest minimum wage requirements.
Depending on where your business is located, you may have more than one applicable minimum wage law. While there’s a federal minimum wage law, most states, and even some cities and counties have their own rules. So which should employers follow? Well, when more than one minimum wage law applies, employers are required to pay the hourly minimum wage that’s the most favorable to the employee. Because of this, it’s important to be aware of federal, state and local rates.
To make sure you’re current on the minimum wage rates that apply to you, check the Department of Labor (DOL) or state and local websites for location-specific minimum wage rates, and be aware of federal requirements. The federal minimum wage for non-exempt employees is $7.25 per hour, as established by the Fair Labor and Standards Act (FLSA). It was last increased in 2009 from $6.55. In some cases, states have a minimum wage that’s the same as the federal rate, such as Wisconsin, but many states have a higher minimum wage. Illinois, for example, raised their minimum wage from $8.25 to $9.25 per hour, effective January 1, 2020. And Illinois employees are set to see another increase of $0.75 this year, raising their minimum wage to $10.00 on July 1.
While the minimum wage requirements apply to most non-exempt employees, there are some exceptions outlined by the FLSA, including:
As of now, there are no public plans to increase the federal minimum wage. But, many legislators have been pushing for a minimum wage increase. In July 2019, the House of Representatives passed Raise the Wage Act, which would incrementally increase the federal minimum wage by $1.10 each year, until it reaches $15.00 by 2025. However, the Senate did not take the bill to a vote, so the federal rate will stay as is for the foreseeable future.
What about at the state and local levels? Across the country, many advocates are pushing for minimum wage increases in their area, and legislators regularly introduce legislation proposing minimum wage increases. To ensure you’re up to date with the latest, keep tabs on minimum wage legislation in your area. You can do this by visiting your state’s DOL website and signing up for newsletter updates if they’re available. You can also sign up for newsletters from industry organizations, such as the American Payroll Association (APA).
As the volume of employee information and compliance requirements rise, errors and oversights can quickly lead to regulatory penalties and other legal trouble. At some point, using paper records, spreadsheets or applications that don’t “talk to each other” just doesn’t cut it. To make managing compliance easier, employers should consider replacing disparate solutions with a full-suite, unified tool like Orbit Solutions. With all of their workforce information and tools in one place, employers can avoid compliance issues by using Orbit Solutions to:
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