As we
roll into 2016, a concern from 2015 has followed us into the New Year. During 2015, much had been said, speculated,
and decided in regards to minimum wage increases. A good amount of the fruition of those
discussions and decisions begins in 2016. In our first Astronology of 2016, we will explore the changes in minimum wages
in 2016.
Currently,
the Fair Labor Standards Act (FLSA) has set the federal minimum wage to $7.25
per hour. According to the
United States
Department of Labor’s website, “Many states also have minimum wage laws.
Where an employee is subject to
both the state and Federal
minimum wage laws, the employee is entitled to the higher of the two minimum
wages.” Although the federal minimum wage is $7.25, your state may have a higher
rate.
In that case, the state minimum
wage prevails, as it is more generous to the employee.
Because your state may have a higher
minimum wage rate than the federal level, and possibly scheduled annual
increases, it’s important to stay informed on any state labor changes. As of
now, scheduled increases for 2016 include the following:
Minimum Wage |
State |
Date |
New Rate |
Notes |
Alaska |
January 1, 2016 |
$9.75 |
Future Increases 1-1-2017 |
Arkansas |
January 1, 2016 |
$8.00 |
$8.50 1-1-2017 |
California |
January 1, 2016 |
$10.00 |
|
Colorado |
January 1, 2016 |
$8.31 |
|
Connecticut |
January 1, 2016 |
$9.60 |
$10.10 1-1-2017 |
Hawaii |
January 1,2016 |
$8.50 |
$9.25 1-1-2017
$10.10 1-1-2018 |
Maryland |
July 1, 2016 |
$8.75 |
$9.25 7-1-2017
$10.10 7-1-2018 |
Massachusetts |
January 1, 2016 |
$10.00 |
$11.00 1-1-2017 |
Michigan |
January 1, 2016 |
$8.50 |
$8.90 1-1-2017
$9.25 1-1-2018 |
Minnesota |
August 1, 2016 |
$9.50 Large Employers
$7.75 Small Employers |
Future Increases
Annually 1-1-2018 |
Nebraska |
January 1, 2016 |
$9.00 |
|
New York |
December 31, 2015 |
$9.00 All
$9.75 Fast Food |
Future Increases
To $15.00 fast food by 2018,
all other industries by 2021 |
Rhode Island |
January 1, 2016 |
$9.60 |
|
South Dakota |
January 1, 2016 |
$8.55 |
|
Vermont
|
January 1, 2016 |
$9.60 |
$10.00 1-1-2017
$10.50 1-1-2018 |
Washington D.C. |
July 1, 2016 |
$11.50 |
Future Increases
Annually 7-1-2017 |
West Virginia |
January 1, 2016 |
$8.75 |
According to www.blr.com
- Of the 14 states that begin
the New Year with higher minimum wages, 12 of them increased their rates
through legislation passed in 2014 and 2015.
Two states automatically increased rates based on cost of living.
- There are 11 states that
currently tie minimum wage increases to the cost of living. Eight of those did not increase their minimum
wage rates for 2016. The three states from the 11 that will be making increases
in 2016 are
- Colorado ($0.08 per hour increase)
- South Dakota ($0.05 per hour increase)
- Nevada (to be announced later this year, and taking effect in July 2016)
- Maryland, Minnesota, and Washington D.C. have increases scheduled later in the year.
Perhaps your
state may not have any scheduled increases this year. Are you aware of the current minimum wage for all locations where your organization has employees?
The National Conference of State Legislatures
website has a
helpful,
more inclusive list of the established minimum wages for all 50 states for 2016.
You can also check your State Department of Labor (DOL) websites from the
United States DOL site.
In addition, cities or other local
jurisdictions may have minimum wage rates.
It is critical to ensure compliance with all applicable minimum wage
legislation for all employees for their applicable work locations.
While increases
to the minimum wage may present financial challenges to employers who have a
substantial number of employees paid at that level, all employers need to be
aware of and responsive to minimum wage changes. “Pay compression is a consideration for many
of our clients,” explains National Director Jennifer Loftus. “Pay compression occurs when the pay rates
for new employees are at the same or higher levels than those for current
employees. Pay compression can also
occur between pay rates of employees at the minimum wage, and rates for
positions one to two pay grades above.” Loftus explains that employers should conduct compression analyses to
determine additional employees impacted by the minimum wage changes, and
determine the cost to adjust pay rates accordingly, to ensure internal equity
is maintained between employees and various grade levels, and compression is
avoided. “Pay compression is sometimes a
costly matter to address,” states Loftus, “but the costs of employee turnover
may be far greater.”