Minimum Wage Increases and What They Mean for 2019

There has been a push across the country in recent years to increase state minimum wages. From coast-to-coast, states have been looking at pay increases that they hope will bring minimum wage earners more in line with what their higher earning counterparts make. To that end, your business needs to be prepared for 2019 changes.

Nearly two dozen states and the District of Columbia are implementing minimum wage increases at some point in 2019. Most of those increases become effective on January 1. It is incumbent upon you, as an employer, to know what the minimum wage is in your state. You are bound by the Fair Labor Standards Act (FLSA) to pay minimum wage.


Minimum Wage Defined

For purposes of clarity, minimum wage is defined by federal law as the minimum amount an hourly worker can be paid. Certain workers are exempt from minimum wage requirements, thus the 'exempt' designation. Also note that there is a federal minimum wage that exists alongside state minimums.

The current federal minimum wage is $7.25 per hour. It has remained unchanged since 2009. The law requires employers to pay their workers at least that much. In cities and states that have a minimum wage higher than the federal minimum wage, employers are obligated to pay the higher amount.

As for the difference between state and local minimum wages, that all depends on your location. We are not equipped to say that local minimum wage laws always supersede state laws. If you have conflicting laws to contend with, contact the appropriate authorities in your state for answers.


Minimum Wage and Overtime

Non-exempt employees are entitled to receive one-and-a-half times their normal pay rate for any overtime hours worked. When said workers are hourly, they are to receive one-and-a-half times the minimum wage they are normally paid.

This goes without saying in terms of understanding the law. We mention it only because older payroll software might have to be updated manually in order to bring overtime calculations in line with new minimum wage amounts. If your software doesn't manage the new calculations automatically, it might be time to look at an upgrade.


Minimum Wage Exceptions

The last thing we want you to know is that there are exceptions in many of the states increasing the minimum wage for 2019. For example, California's minimum wage rises to $12 per hour in 2019. But that new rate only applies to employers with more than 26 workers. Employers with fewer workers will only be required to pay their employees $11 per hour.

Similar exceptions are being implemented in Minnesota and New York. Both states have different minimum wage rates applied based on employer size. The lesson here should be obvious: just don't look at the new minimum wage rate and assume it applies evenly in your state. Check state law to see if there are exceptions or different rates for employers of different sizes.


Consider Working with Us

We want to close this post by reminding you that you do not have to handle payroll in-house. If annual regulatory changes make payroll more complicated for your HR department than you feel it should be, why not reach out to BenefitMall for help?

We are specialists in all things payroll. We make it our business to stay abreast of changes to the law so that our clients remain in compliance. If you were already a client, you would have the confidence of knowing that we are already on top of minimum wage increases. We are prepared to implement any and all changes that affect our clients.