Is Anything Happening With the Minimum Wage?

At a federal level significant overhaul has stalled in Congress.  The Fair Minimum Wage Act seeks to raise the federal minimum wage to $10.10 per hour with inflation adjusters, which would raise this threshold periodically and, presumably, stop the political fighting over the issue when it arises every 10-years.  Although Congress has sidelined universal raising of the minimum wage, the President took it upon himself to raise the minimum wage for federal contractors by Executive Order.  On February 12, the President signed an order requiring that by January 1, 2015, federal contractors raise the minimum wage for certain (most) workers to $10.10 per hour with annual inflation adjusters based on the Consumer Pricing Index (CPI).  Sound familiar?  Yes, this is effectively the legislation that has stalled in Congress.  Federal contractors should have regulations providing additional guidance on this by October 1, 2014. 

At the state level there has been significant movement.  So far, in 2014, 38 states have proposed legislation that would raise the minimum wage.  Already bills raising the minimum wage in many of these states have passed and been signed into law.  Most notably for us Minnesota was among them.  The new Minnesota minimum wage law rocketed the state from the bottom to the top of the minimum wage ladder when on April 14th Governor Dayton signed legislation that will eventually raise Minnesota’s minimum wage to $9.50 per hour, with inflation adjusters of up to 2.5% to come in future years.  Important details to know about the Minnesota minimum wage increase:

• It will be implemented in stages. By August 1, 2014 all covered employers must pay at least $8.00/hour. By August 1, 2015 the minimum wage will be $9.00/hour. By August 1, 2016 it will be $9.50/hour.

• There is no tip credit.

• It increased the number of businesses who are “large employers” in MN by lowering the amount of annual revenues significantly to qualify as a large employer.

• Small employers will be required to pay $7.75/hour by August 1, 2016.

• Employers will still be able to pay lesser rates to children and certain hotel & resort workers.

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