Although the federal minimum wage remains at $7.25 per hour, minimum wages increased in 10 states effective January 1, 2013. In nine of the 10 states, the increases are linked to cost of living adjustments based on a consumer price index. In Rhode Island, the increase is the result of legislation passed in 2012.
Those states whose minimum wages have increased and their new minimum wages are listed as follows, alphabetically:
Arizona—$7.80 per hour
Colorado—$7.78 per hour
Florida—$7.79 per hour
Missouri—$7.35 per hour
Montana—$7.80 per hour
Ohio—$7.85 per hour
Oregon—$8.95 per hour
Rhode Island—$7.75 per hour
Vermont—$8.60 per hour
Washington—$9.19 per hour
With these increases, the state of Washington has the highest state minimum wage rate at $9.19 per hour. However, a number of municipalities also have their own minimum wage and living wage laws that require a higher wage to be paid than under state or federal law. For example, the minimum wage in California is $8.00 per hour, but the minimum wage in San Francisco increased to $10.55 per hour, effective January 1. In Albuquerque, New Mexico, the minimum wage just increased from $7.50 to $8.50 per hour for those employers that do not provide annualized healthcare or childcare benefits equal to or in excess of $2,500.
Legislation is pending in New Jersey to raise that state’s minimum wage from $7.25 per hour to $8.50 per hour, effective March 1, 2013. Legislation to raise the minimum wage in other states, including California, also is anticipated this year.
In addition to increasing the general minimum wage, cost-of-living adjustments also pushed up the minimum wage for “tipped employees” in a number of the states referenced above. As the U.S. Department of Labor (DOL) states on its website:
A tipped employee engages in an occupation in which he or she customarily and regularly receives more than $30 per month in tips. An employer of a tipped employee is only required to pay $2.13 per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage. If the employee’s tips combined with the employer’s direct wages of at least $2.13 per hour do not equal the federal minimum hourly wage, the employer must make up the difference. Many states, however, require higher direct wage amounts for tipped employees.
However, the definition of tipped employees and the use of tip pooling and tip credits can vary from state to state. Tip pooling and tip credits also have been a hotbed for litigation in recent years, and employers should consult with legal counsel if they plan to treat an individual as a tipped employee.
Additional information and updates regarding state minimum wages, minimum wages for tipped employees, and a host of other state wage and hour topics are available through a subscription to O-D Comply: State Wage and Hour Issues.
Steven (“Steve”) F. Pockrass is a shareholder in the Indianapolis office of Ogletree Deakins, and he co-chairs the firm’s Wage and Hour Practice Group.