A Business Owners Guide to Minimum Wage Increases

Federal and state minimum wage increases are going into effect throughout 2020. Here’s what your business needs to know.

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The 2020 State Minimum Wage Increases

A State-by-State Guide for Business Owners

With the new year came minimum wage increases across the country. In fact, more than 20 states updated their minimum wage rates and those changes go into effect this year (and some have already).

Minimum Wage Basics

Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour. The federal FLSA requires that minimum wage be paid for all hours an employee is “suffered or permitted” to work for the employer (29 U.S.C. §203(g)). Additionally, an overtime wage is, by law, to be paid for all hours worked over 40 in a week. 

Hours worked include the time in which an employee is “required to be on the employer’s premises, on duty or at a prescribed workplace” (29 C.F.R. §785.7). This is a broad definition of hours worked and may require an employee - depending on the job - be compensated for time an employer may not necessarily consider “working” time. This could include travel time, waiting time, rest or sleep periods, and time the employee is required to spend in training or in meetings. The rules are strict and penalties steep so it’s import to consult with an HR professional if you are unsure if certain time must be paid or not.

Federal vs. State Minimum Wage

The federal minimum wage has not increased since 2009 and is, as mentioned, $7.25 per hour. However, state law supersedes the FLSA in cases where the local laws are more favorable to employees. Meaning if a state, county, or municipality has a minimum wage that is higher than the federal minimum, employers must pay the higher state or local minimum wage rate over the federal rate. 

Over the past year, many states elected to increase their minimum wage rates to keep up with inflation and the rising cost of living across the country. These new increases supersede the federal minimum wage rate and all go into affect in 2020. It’s important that employers know what the new rate increases are for their state.

Here’s a look at which states have updated their minimum wage rates and when those changes go (or have gone) into effect.

State Minimum Wage Changes for 2020:

Effective December 31, 2019

New York State: 

  • $11.80 per hour; increasing to $12.50 per hour on 12/31/20 with annual increases up to $15.00 per hour
  • For fast-food employees outside of New York City: $13.75 per hour; increasing to $14.50 per hour on 12/31/20 and $15.00 per hour on 7/1/21

New York City:

  • Large Employers (11 or more employees): $15.00 per hour
  • Small Employers (10 or less employees): $15.00 per hour
  • Fast-food employees in New York City: $15.00 per hour

Long Island & Westchester: $13.00 per hour; increasing to $14.00 per hour on 12/31/20 and $15.00 per hour on 12/31/21

Effective January 1, 2020

Alaska: $10.19 per hour

Arizona: $12.00 per hour; adjusted annually every January 1

Arkansas: $10 per hour; increasing to $11.00 per hour on 1/1/21

California: 

  • Large Employers (26 or more employees): $13.00 per hour; increasing to $14.00 per hour on 1/1/21 and $15.00 per hour on 1/1/22, and then adjusted annually
  • Small Employers (less than 26 employees): $12.00 per hour; increasing to $13.00 per hour on 1/1/21, $14.00 per hour on 1/1/22, $15.00 per hour on 1/1/23, and then adjusted annually

Colorado: $12.00 per hour; adjusted annually every January 1

Florida: $8.56 per hour; adjusted annually every January 1

Illinois: $9.25 per hour; increasing to $10.00 per hour on 7/1/20, $11.00 per hour on 1/1/21, and $12.00 per hour on 1/1/22

Maine:  $12.00 per hour; adjusted annually every January 1

Maryland: $11.00 per hour; increasing to $11.75 per hour on 1/1/21, $12.50 per hour on 1/1/22, $13.25 per hour on 1/1/23, $14.00 per hour on 1/1/24, and $15.00 per hour on 1/1/25

Massachusetts: $12.75 per hour; increasing to $13.50 per hour on 1/1/21, $14.25 per hour on 1/1/22, and $15.00 per hour on 1/1/25

Michigan: $9.65 per hour; increasing to $9.87 per hour on 1/1/21 and adjusted annually every January 1

Minnesota: 

  • Large Employers (annual gross revenue $500,000 or more): $10.00 per hour; adjusted annually
  • Small Employers (annual gross revenue of less than $500,000): $8.15 per hour; adjusted annually 

Missouri: $9.45 per hour; increasing to $10.30 per hour on 1/1/21, $11.15 per hour on 1/1/22, and $12.00 per hour on 1/1/23

Montana: $8.65 per hour; adjusted annually every January 1

New Jersey: 

  • Large Employers (more than 5 employees): $11.00 per hour; increasing to $12.00 per hour on 1/1/21, $13.00 per hour on 1/1/22, and $14.00 per hour on 1/1/23
  • Seasonal or Small Employers (5 or fewer employees): $10.30 per hour; increasing to $11.10 per hour on 1/1/21, $11.90 per hour on 1/1/22, and $12.70 per hour on 1/1/23
  • Agricultural employers: $10.30 per hour; increasing to $10.90 per hour on 1/1/22; $11.70 per hour on 1/1/23

New Mexico: $9.00 per hour; increasing to $10.50 per hour on 1/1/21, $11.50 per hour on 1/1/22, and $12.00 per hour on 1/1/23

Ohio: 

  • Large Employers (businesses with gross receipts of $319,000 or more): $8.70 per hour
  • Small Employers (businesses with gross receipts under $319,000): $7.25 per hour

South Dakota: $9.30 per hour; adjusted annually every January 1

Vermont: $10.96 per hour; adjusted annually every January 1

Washington: $13.50 per hour; adjusted annually on January 1 after 1/1/21

West Virginia: $9.50 per hour; increasing to $10.25 per hour on 1/1/21, $11.00 per hour on 1/1/22, and $12.00 per hour on 1/1/23

Effective July 1, 2020

D.C.: $15.00 per hour; adjusted annually every July 1

Nevada: 

  • For employees without healthcare benefits: $9.00 per hour
  • For employees with healthcare benefits: $8.00 per hour

Oregon: 

  • Portland metro area: $13.25 per hour; increasing to $14.00 per hour on 7/1/21 and $14.75 per hour on 7/1/22
  • Urban counties: $12.00 per hour; increasing to $12.75 per hour on 7/1/21 and $13.50 per hour on 7/1/22 
  • Rural counties: $11.50 per hour; increasing to $12.00 per hour on 7/1/21 and $12.50 per hour on 7/1/22 

Effective September 1, 2020

Connecticut: $12.00 per hour; increasing to $13.00 per hour on 8/1/21, $14.00 per hour on 7/1/22, $15.00 per hour on 6/1/23

Effective October 1, 2020

Delaware: $9.75 per hour; increasing to $10.25 per hour on 10/1/21

In closing...

Wage changes and employment law can be difficult to navigate as a business owner. With many changes coming in 2020, it’s important to know how new legislation will affect your business. If you are unsure how your state's minimum wage laws will impact your event or hospitality company, be sure to reach out to an HR professional or your legal team for more information.

Getting wages right is just one piece of the puzzle when it comes to managing employees. At Roosted we value data-based solutions to make managing staffing logistics simple. We can help manage staff and event scheduling, track employee performance metrics, utilize time tracking reports, and more. Contact a Client Success Engineer for more information on how we can support your business.

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