As the end of the year quickly approaches, human resources teams around the country are looking ahead to the next 12 months. The new year will bring many changes to how companies nationwide operate and compensate their employees. Under the Fair Labor Standards Act, the current federal minimum wage is $7.25. However, states with their own standards supersede the government figure. Therefore, employers in these locations must abide by the wage that is more favorable to employees. HR staff must prepare for these changes, making sure all necessary steps are taken for the mandatory increase if their state is affected.
New year, new wage
Many states are increasing their minimum pay for employees, effective Jan. 1, 2016, according to HR BLR. The locations making a change are as follows:
- Alaska: Increasing from $8.75 to $9.75.
- Arkansas: Raise from $7.50 to $8.00; scheduled increase to $8.50 on Jan.1, 2017.
- California: Increase from $9.00 to $10.00.
- Colorado: Raise from $8.23 to $8.31.
- Connecticut: Increase from $9.15 to $9.60; scheduled increase to $10.10 on Jan. 1, 2017.
- Hawaii: Raise from $7.75 to $8.50; scheduled increase to $9.25 on Jan. 1, 2017 and $10.10 on Jan. 1, 2018.
- Massachusetts: Increase from $9.00 to $10.00; scheduled raise to $11.00 on Jan. 1, 2017.
- Michigan: Raise from $8.15 to $8.50; scheduled increase to $8.90 on Jan. 1, 2017 and $9.25 on Jan. 1, 2018.
- Nebraska: Increase from $8.00 to $9.00.
- Rhode Island: Raise from $9.00 to $9.60.
- South Dakota: Increase from $8.50 to $8.55.
- Vermont: Raise from $9.15 to $9.60; scheduled increase to $10.00 on Jan. 1, 2017 and $10.50 on Jan. 1, 2018.
Two states will experience an alteration to their minimum wage before 2016. Effective Dec. 31, 2015, New York and West Virgina will raise their pay to $9.00 – $9.75 for fast-food workers – and $8.75, respectively.
These states won't be the only ones witnessing change in the new year. Other states increasing their minimum wage sometime in 2016 include:
Effective July 1, 2016:
Washington, D.C.: Raise from $10.50 to $11.50; annual increases beginning July 1, 2017.
Maryland: Increase from $8.25 to $8.75; scheduled increase to $9.25 on July 1, 2017 and $10.10 on July 1, 2018.
Effective August 1, 2016:
Minnesota: Raise from $9.00 to $9.50 for large employers; $7.75 for small employers.
Next steps for HR
It's crucial for HR teams to be aware of these upcoming changes to workers' compensation. Staff should distribute information on these alterations to all eligible employees to ensure everyone is on the same page. Personnel should take a closer look at their current pay structure and update it with the new pay information in mind. Businesses should also forecast how the additional pay for employees will affect their overall budget and necessary expenses. By taking a closer look at these aspects, HR teams can make sure they're as prepared as possible.