The Future Of The Minimum Wage – 2015 And Beyond

2014 has been "The Year of the Minimum Wage." Protests throughout the country, with workers calling for increased wages, drew significant media attention. President Obama and Democrats in both legislative chambers advocated for increasing the minimum wage under the federal Fair Labor Standards Act (FLSA) - which was last raised in July 2009 - from $7.25 to $10.10 in increments over time. Due to the gridlock in Washington, legislative efforts failed, though the president exercised his executive authority to increase the minimum wage for federal contractors. In the absence of federal action, state legislators acted. Roughly 20 percent of state-level jurisdictions passed minimum wage laws in 2014. Unlike prior legislative actions, which resulted in a single increase, each minimum wage bill enacted in 2014 called for multiple increases, with some also requiring subsequent annual increases. Moreover, a handful of states put the question of whether to increase the state minimum wage before voters in the November 4, 2014 general election.

Recent changes to how minimum wage compliance is measured add to the issue's complexity. Under the FLSA, compliance is generally determined by dividing an employee's total compensation for a week by the total hours worked in the week. If the result is equal to or greater than the minimum wage, then the employer is in compliance with its obligations. The calculation may be affected by credits for such things as tips, meals and lodging, and reductions for employee-purchased uniforms and tools. In some states, such as California, the minimum wage must be paid separately for each hour of work.1 And, for employees paid by piece rate or commission, the minimum wage must be paid separately for time spent in activities that do not directly result in the earning of piece rate or commission compensation.2

Regardless of whether operations exist in multiple states or a single state, employers must carefully monitor developments to successfully address the flurry of minimum wage activity. Moreover, businesses impacted by minimum wage increases are not limited to those with employees paid at or near the minimum wage. Minimum wage changes can also impact overtime-exempt employees in some situations.

This article will discuss minimum wage changes in 2014 that will take place in 2015 and future years. It will also examine the impact minimum wage increases may have on the compensation of some overtime-exempt employees, local minimum wage laws, and recommendations for managing minimum wage increases.

Overview of Minimum Wage Increases

Currently, the following 10 states require state officials to examine and potentially adjust the minimum wage annually: Arizona; Colorado; Florida; Missouri; Montana; Nevada; New Jersey; Ohio; Oregon; and Washington.

To date, legislatures in 10 states have enacted legislation which will increase each state's minimum wage in 2015. Also, voters in four states decided on November 4, 2014, to increase the state minimum wage in 2015.

Additionally, several states have enacted minimum wage increases for years following 2015:

2016: Alaska; Arkansas; California; Connecticut; District of Columbia; Hawaii; Maryland; Massachusetts; Michigan; Minnesota; Nebraska; Vermont; and West Virginia. 2017: Arkansas; Connecticut; Hawaii; Maryland; Massachusetts; Michigan; and Vermont. 2018: Hawaii; Maryland; Michigan; and Vermont. In addition to the 10 above-referenced states that adjust their minimum wage rate each year, the following jurisdictions also plan to adjust their rates annually in the near future.: South Dakota (effective January 1, 2016); Alaska (effective January 1, 2017); District of Columbia (effective July 1, 2017); Minnesota (effective January 1, 2018); Vermont (effective January 1, 2019); and Michigan (effective April 1, 2019).

Minimum Wage Increases by State, Date, and Amount

Following are the increases in the minimum wage...