Time & Attendance
By Gustav Anderson
Aug. 18, 2023
Employers in the United States are bound by different laws when it comes to minimum wage rates, depending on the state or even the city they’re in. The federal minimum wage rate is a fixed national rate set by the Fair Labor Standards Act (FLSA) and enforced by the U.S. Department of Labor (DOL).
The federal minimum wage was last revised in 2009 and is currently set at $7.25 per hour. President Biden has been pushing for this to increase to $15 and bumped the minimum wage for federal contractors to $15 in 2022 — possibly as a precursor to a nationwide increase.
In response to the inertia at the federal level, over half of the US states and cities have taken the initiative to institute higher minimum wage rates in their jurisdictions in 2023. In cases like these, the law favors the rate most beneficial to the employee — in other words, the highest minimum wage.
States with higher minimum wage rates include Washington at $15.74 and the District of Columbia at $16.50. Cities with minimum wage rates higher than those of their states include New York City ($15 — $0.80 more than in New York State) and Portland, Maine ($14, $0.20 higher than the rest of the state).
As an employer, it’s important to understand and stay current on all the laws and regulations regarding minimum wage increases or decreases. Using the right time tracking and payroll software ensures that you remain compliant with little effort.
Effective January 1, 25 states raised their minimum wage rates in response to inflation or according to previously enacted legislation. Florida is set to increase its minimum wage rate in September.
Overall, 30 states, as well as DC, Puerto Rico, Guam, and the Virgin Islands, have a minimum wage higher than the federal rate. Fifteen states, as well as the Northern Mariana Islands, use the federal minimum wage rate of $7.25 per hour. Five states have not adopted their own minimum wage rate law and, therefore, default to the federal rate of $7.25.
View all state minimum wages in the table below.
Note: states that raised their minimum wage in 2023 are denoted by an asterisk (*)
States with MW greater than federal
States with MW equal to federal ($7.25)
States that have not adopted a state MW law
|*Alaska $10.85 (from $10.34)||Northern Mariana Islands||Alabama|
|*Arizona $13.85 (from $12.80)||Iowa||Mississippi|
|*California $15.50 (From $14.00) and $16.00 starting Jan. 1, 2024||Idaho||South Carolina|
|*Colorado $13.65 (from $12.56)||Indiana||Tennessee|
|*Connecticut $15.00 (from $14.00)||Kansas|
|District of Columbia $16.10||Kentucky|
|*Delaware $11.75 (from $10.50)||North Carolina|
|*Florida $11.00 (from $10.00) and to $12.00 on Sep. 30, 2023.||North Dakota|
|Hawaii $12.00||New Hampshire|
|*Illinois $13.00 (from $12.00)||Oklahoma|
|*Maine $13.80 (from $12.75)||Pennsylvania|
|*Maryland $13.25 (from $12.50)||Texas|
|*Massachusetts $15.00 (from $14.25)||Utah|
|*Michigan $10.10 (from $9.87)||Wisconsin|
|*Minnesota $10.59 (from $10.33)||Wyoming|
|*Missouri $12.00 (from $11.15)|
|*Montana $9.95 (from $9.20)|
|*Nebraska $10.50 (from $9.00)|
|*Nevada $11.25/$10.25 (from $10.50/9.50) and $12.00 starting July 1, 2024|
|*New Jersey $14.13 (from $13.00)|
|*New Mexico $12.00 (from $11.50)|
|*New York $14.20 (from $13.20)|
|*Ohio $10.10 (from $9.30)|
|*Rhode Island $13.00 (from $12.25)|
|*South Dakota $10.80 (from $9.95)|
|*Vermont $13.18 (from $12.55)|
|Virginia $12.00 (from $11.00)|
|*Washington $15.74 (from $14.49)|
|West Virginia $8.75|
|Virgin Islands $10.50|
|Puerto Rico $9.50 (from $8.50)|
Currently, the District of Columbia is the entity that has the highest minimum wage at $16.50 per hour. There are 18 states (AK, AZ, CA, CO, DC, FL, ME, MN, MO, MT, NV, NJ, NV, NY, OH, OR, SD, and WA) that have scheduled adjustments to their MW rates. These vary from state to state, but most increases occur yearly in January. More information can be found on each respective state’s website, which you can find through this DOL link.
Some state laws exempt some jobs or sectors from the minimum wage labor law. For example, in New Jersey, such exemptions include salespersons of motor vehicles and employees caring for children in the home of their employers.
In some cases, some states set subminimum rates for groups such as minors and students or training wages for new hires. In Rhode Island, full-time students under the age of 19 who work for nonprofit religious, education, library, or community service organizations are entitled to a minimum wage rate of $11.70. The state’s standard minimum wage rate is $13.00.
Just before the turn of the new year, the state of New York increased its minimum wage from $13.20 to $14.20. This is the final part of a series of increases in the state’s minimum wages that began on December 31, 2016.
According to the NY.gov website, any future increases will be “based on an indexed schedule to be set […] following an annual review of the impact.”
These increased gradually and will differ for employees working in different industries. Large employers had to increase their minimum wages faster than small employers with fewer employees.
At a local level, New York City, Long Island, and Westchester Country enjoy a minimum wage of $15 per hour across the board. This includes tipped workers, although employers can take up to $5 an hour off the wage as tip compensation. Despite these increases, New York’s current minimum wage does not account for the current rate of inflation and how this has affected workers’ standards of living. This inertia has been the subject of recent criticism from academics and minimum wage workers alike.
The minimum wage in the state of California is currently $15.50, $8.25 higher than the federal minimum. Usually, this rate would only apply to larger businesses with over 26 employees, while the rate for those under 26 employees would be $15.00. However, since the inflation rate this past year exceeded 7%, by California law, all businesses, regardless of size, must abide by the $15.50 standard.
However, this rate is set to increase again next year. Starting January 1, 2024, California’s minimum wage will increase from the current rate of $15.50 to a whopping $16.00 per hour. According to the California Labor Code section 1182.12, California’s Director of Finance has the authority to determine annually if an increase to the minimum wage is needed. The coming $0.50 increase was deemed necessary because the CPI grew by over 6% between July 2022 to June 2023.
In some cases, meals or lodging can be used to meet part of the minimum wage obligation. This can only be done if agreed upon by the employer and employee and supplemented with a voluntary written agreement. The amounts credited to the employee’s minimum wage are also limited based on the information found via this official notice.
California has some exemptions to its minimum wage law. Such exemptions and exceptions include:
The minimum wage for the state of Illinois increased by $1 from $12 to $13 on January 1, 2023. This was the fifth increase since 2019, putting Illinois on track to hitting a $15 minimum wage by 2025.
Illinois workers who regularly earn tips saw an increase in minimum wage to $7.80 per hour and must still earn minimum wage after receiving tips. If they don’t, the employer must pay the difference.
Rates are higher in Chicago, where the minimum wage is currently $15.40 per hour, effective July 2022, for employers with 21 or more employees. Small employers with 4 to 20 workers must pay a minimum wage of $14.50 per hour.
Chicago tipped workers have a minimum wage of $8.70 (employers with 4 to 20 workers) and $9.24 (employers with 21 or more employees) per hour. Similar to the state minimum wage conditions, employers must cover the difference for tipped workers if their wages plus tips do not equal at least the full minimum wage.
Effective Jan. 1, 2023, Florida’s minimum wage is $11 per hour. This is also part of a gradual increase of $1 per year that will lead to a $15 minimum wage rate in September 2026. Later this year on Sep. 30, the minimum wage will again increase to $12.00 per hour.
Employers who have tipped employees such as those in the hospitality industry and meet eligibility requirements under the FLSA may credit some of the tips received toward the minimum wage. The employees must pay a direct wage equal to the state’s minimum wage ($11) minus the tip credit of $3.02.
The state minimum wage in Texas is $7.25, equal to the federal rate. This has been in effect since January 24, 2009.
Employers can count tips, meals, and lodging toward the minimum wage with specified restrictions on how much can be allocated to them. There are conditions where an employer can pay a rate lower than minimum wage to an employee who is a patient of the Texas Department of Mental Health and Mental Retardation. This can also include individuals of a certain age or with “productivity impairments.”
Other exemptions covered by Texas Minimum Wage Act include:
As noted in the table, you’ll see that Nevada has two minimum wage rates. In this two-tier system, employees who receive qualifying health insurance have a minimum wage rate of $10.25. However, if they do not receive qualifying health insurance, the minimum wage rate is $1 higher, at $11.25 per hour.
This long-standing two-tier system is set to be eliminated next year. Effective July 1, 2024, Nevada will increase its minimum wage rate to $12.00 across the board for all employers, regardless of whether or not they offer health insurance.
With so many differences and exemptions that affect different states and even different cities within those states, it can be tricky for an employer to remain compliant with the law.
Industries where workers earn tips can be particularly tricky, according to Workforce.com’s chief strategy officer Josh Cameron:
In hospitality or anything where you earn tips, you can pay the staff a minimum wage much lower than the normal one. So it would be $7.50 an hour if they’re not tipped, but it’s $2.50 if it’s tipped. As long as they get enough tips to get them over that—it’s called the tip credit—then they can receive the lower $2.50 per hour from their employer.
Apart from the legal implications and the hefty fines, underpaying employees can be a PR nightmare for your business. Andrew Stirling, Workforce.com’s head of product compliance, argues, “An underpayment scandal can bring companies to their knees. Customers can decide to take their business elsewhere. People are less likely to visit a restaurant or shop that has been reported for underpaying their people.”
Workforce management software like Workforce.com takes state and local laws into account. Workforce’s labor compliance software allows you to pay your staff in accordance with federal, state, and regional wage laws. This includes exemptions and special situations, including tipped employees.
The system remains up to date as laws change, and it also undergoes regular audits, ensuring you remain compliant and avoid unnecessary penalties.
Workforce.com offers time and attendance software that gives you the resources you need to calculate pay and remain up to date in the ever-changing minimum wage landscape. You can apply new compliance rules to the system as new minimum wage rates are put in place and new legislation is passed.
The system calculates correct pay for all your employees based on minimum wage, hours worked, and overtime, automatically creating highly accurate electronic timesheets. These timesheets can then be exported directly into your payroll system for processing.
Schedule, engage, and pay your staff in one system with Workforce.com.
ComplianceMinimum Wage by State (2023)
federal law, minimum wage, pay rates, state law, wage law compliance
Staffing Management4 proven steps for tackling employee absenteeism
absence management, Employee scheduling software, predictive scheduling, shift bid, shift swapping
Time and Attendance8 proven ways to reduce overtime & labor costs (2023)
labor costs, overtime, scheduling, time tracking, work hours