As the new year begins, some things are still the same. Small businesses are still struggling, and the US Chamber of Commerce reports that 50% of small businesses are concerned they can only survive another year or less of current conditions before they’d have to permanently close. Of course, many businesses of all sizes have already taken measures like furloughs, lay-offs, and downsizing. Businesses need to be prepared for some more potential hardships, though including increases in minimum wage.
Between December 31st and January 1st, 20 states saw a minimum wage raise. (The Federal minimum wage, however, is not rising. It will stay at $7.25 per hour, as it has since 2009.) Over the course of 2021, five more states are set to increase their minimum wage. This is a record-breaking number of minimum wage increases in a single year. Employers should ensure they’re aware of these important HR updates and that their payroll system is revised with new, applicable rates.
Why the Minimum Wage Laws are Changing Now
Some of these changes come as part of long-term efforts that were begun before the pandemic. People have wanted to help facilitate wage and hour changes that bring workers towards goals like $15/hour minimum pay. Some of these changes are part of long-term plans to simply adjust wages for cost-of-living. Notably, 11 of these states changed their minimum wage because of initiatives begun by citizens and approved by voters. The others were initiated by law makers. It’s worth noting that all of these efforts will probably continue to be supported by a Biden-Harris administration, as Biden spoke about his support for a $15 minimum wage in October 2020.
What Employers Need to Do Next
To get in compliance, MP’s HR services team recommends that employers check the chart below and work with their payroll services to ensure that they aren’t paying anybody below the new minimum wage rates. If your team has discovered this change in rates later than January 1, 2021, make sure back pay is added to the payroll. Employers will also want to keep their eyes out for further changes in minimum wage later this year, as these states will also be increasing their minimum wage: Connecticut, Oregon, Virginia, and Nevada. In Florida, the minimum wage will increase again in September.
Here are the states with increases in minimum wage, effective January 1, 2021:
|State||New Minimum Wage||Increased By:|
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