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Jan. 1 marks first of four increases in Arizona, Colorado, Maine and Washington
The movement to raise the minimum wage in cities and states across the country has gained momentum in recent years, and voters in four states showed there's no sign of it slowing down.
Residents in Arizona, Colorado, Maine and Washington all approved gradual minimum-wage increases that will start in 2017 and end in 2020.
There's been a general social and political trend toward increasing wages for more workers, explained Tibor Nagy Jr., an attorney with Ogletree Deakins in Tucson, Ariz.
Catharine Morisset, an attorney with Fisher Phillips in Seattle, mentioned a few reasons these developments are popping up at the state level
"On one hand, it makes sense to address wages locally because the cost of living can vary significantly depending on where someone lives," Morisset said. "On the other hand, citizens—or state legislatures acting on behalf of citizens—are making changes out of frustration because the issue isn't being addressed at the federal level."
In some states, citizens can put measures on the ballot for a popular vote if they obtain enough signatures on a petition. This was the case for all of the 2016 minimum-wage measures.
This approach allows activists to circumvent potential roadblocks when there is no movement by the state or federal government, Nagy explained. "It's the point of least resistance."
The New Wages
On Nov. 8, voters in Arizona, Colorado and Maine approved measures to incrementally raise the minimum wage until it reaches $12 an hour in 2020. Washington residents gave the green light for increases that will reach $13.50 by the same time.
All of the states will see the first wage hike in January 2017, and the start of each new year will trigger an additional increase as follows:
Some of the new laws include provisions affecting wages for tipped workers.
Under federal law, employers may pay tipped employees less than the standard minimum wage if certain criteria are met.
[SHRM members-only HR Q&A: Time Worked: Must a company pay tipped employees minimum wage for all hours taken as vacation time, or is it permissible to pay only the tip credit wage?]
As with the standard minimum wage, states may elect to provide more-generous wage thresholds for tipped workers than federal law requires.
In Colorado, the tipped minimum wage will rise to $8.98 by 2020 because no more than $3.02 an hour in tip earnings may be used to offset the standard minimum wage.
In Maine, the wage for tipped employees will rise from half the standard minimum wage to $5 an hour in 2017. It will increase by $1 per year until it reaches the regular minimum wage, with a deadline of 2024.
The Arizona measure provides that tipped employees can still be paid $3 less an hour than the standard minimum wage, just as the existing law provides.
However, tip credits are not permitted in Washington, and all employees must be paid at least the standard minimum wage.
Employers should note that the measures in Arizona and Washington also provide for mandatory paid sick leave, which employees in each state will begin accruing in 2017 and 2018, respectively.
Changes Coming Soon
The Washington law is going to be a big change, and employers will have to work with their operations and finance departments to figure out the best way to make the transition, Morisset said.
The first increase in Arizona, which is coming up in less than two months, will have the most drastic impact on employers, particularly those with a lot of minimum-wage earners, Nagy said.
Employers should start budgeting and making assessments to get things in place before Jan. 1, he added. Businesses will need to give some thought as to whether they need to make adjustments to staffing levels or workers' hours or if they need to make other adjustments to account for what is going to be a hit to their budgets, he said.
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