Minimum wages are set to go up across the country in the new year — if they haven’t already. While such changes may not be an issue for companies that have already increased wages to try to capture and retain employees, the breadth and variety of minimum wage adjustments can give HR professionals a headache.
“Most clients will either comply with applicable minimum wage or take the highest one of jurisdiction in which you operate and have that be the floor across your company,” Charles McDonald, shareholder in Ogletree Deakins’ Greenville office and co-chair of the firm’s wage and hour practice group, told HR Dive.
Nearly half of U.S. states increased their minimum wage for hourly workers since Jan. 1, and at least 13 states will increase wages in the new year, according to Paycor, with many taking effect Jan. 1, 2023.
But HR professionals can’t look at state numbers alone when determining what to pay workers because those numbers don’t account for city and county minimum wages that can be higher than what states require, especially if they’re tied to the Consumer Price Index. Denver, Seattle and others will increase their minimum wages at the start of the new year, for example.
It can be nearly impossible for any one person or company to keep track of every single municipality’s minimum wages, said McDonald, because “there’s no start and no finish” to the changes. But at least on the state level, many changes are already baked in for the next few years. Hawaii, for example, pushed minimum wages to $12 an hour Oct. 1 of this year, up from $10.10 per hour. Starting on Jan. 1, 2024, it will go up to $14 per hour, then increase by $2 per hour every two years until hitting $18 per hour on Jan. 1, 2028.
What these minimums won’t do is decrease, said McDonald. “Minimum wage is never going to go down in a state but it can stay [the same],” he said.
Minimum wage across jurisdictions
HR professionals have two options when attempting to align each employee with each city, county and state minimum wage. They can either comply in each municipality, or take the highest minimum wage from all the municipalities in which the company operates, and apply it to everyone.