Hey Compliance Warriors!
Are you ready for all of the Minimum Wage Updates taking effect on January 1st, 2022?
Alaska has annual increases tied to the consumer price index (CPI).
However, because the CPI in Alaska fell 1.1 percent, there will not be a minimum wage increase for 2022.
Alaska’s 2022 minimum wage will remain at $10.34. The state does not have a separate rate for tipped employees.
Arizona voters in 2016 passed a ballot initiative to increase minimum wage rates through 2020. Since then, the rates have been indexed through the CPI.
In 2022, minimum wage in Arizona is:
- $9.80 for tipped employees
(For employers with locations in Arkansas, the voter-approved increases ended in 2021, and the statute did not call for any further bumps.)
The state with the highest minimum wage is California, which has separate rates depending on the size of the employer.
In 2022, California’s minimum wage rates are:
- $14 (small employers, 25 or fewer employees)
- $15 (large employers, 26 or more employees)
Notably, California is the first state to reach a $15 minimum wage.
The state does not have a separate minimum wage rate for tipped employees.
In Colorado, minimum wage increases are tied to the CPI. However, the state has a unique system in which rates are proposed, followed by a public comment period.
State officials have since released the Jan. 1, 2022, minimum wage rates for Colorado:
- $9.54 for tipped employees
Employers should also know that Colorado has given cities the ability to set their own minimum wage rates, removing a previous preemption, though only Denver has taken that step thus far.
The governor of Delaware signed a new minimum wage bill in July 2021, making it yet another state moving toward a $15 rate.
The first increase starts Jan. 1, 2022, with minimum wage increasing to $10.50.
Delaware did not have an increase to the minimum wage for tipped employees included in the legislation. It remains at $2.23.
Illinois has seen scheduled minimum wage increases since the signing of a 2019 bill.
For 2022, minimum wage rates in Illinois are:
- $7.20 for tipped employees
Maine is another state with increases tied to the CPI. After relatively small increases in 2021, the rates rise more sharply in 2022.
Starting Jan. 1, 2022, minimum wage in Maine is:
- $6.38 for tipped employees
For the first time in 2021, Maryland created separate rates for large and small employers. That continues in 2022, when Maryland’s minimum wage rates are:
- $12.50 (large employers, 15 or more employees)
- $12.20 (small employers, 14 or fewer workers)
As was the case in 2021, there is no increase for the minimum wage for tipped workers, which remains at $3.63 for 2022.
Yet another state moving toward a $15 minimum wage, Massachusetts has a scheduled increase for 2022:
- $6.15 for tipped employees
Due to the state’s unemployment numbers, the 2021 increases in Michigan did not go into effect. Still, as of this writing, the 2022 minimum wage rates in Michigan are:
- $3.75 for tipped employees
However, because of what happened with the 2021 rate, employers with locations in Michigan should keep an eye on news from state officials.
Minnesota’s minimum wage rates are tied to employer size of the employer, but unlike other states, it’s not based on number of workers.
Minnesota classifies employers by gross receipts. Companies with more than $500,000 are large; those with less than $500,000 are small.
In 2022, minimum wage rates in Minnesota are:
- $10.33 (large)
- $8.42 (small)
Both rates increased via the CPI. There is no separate minimum wage for tipped workers in Minnesota.
As part of a 2018 voter-approved minimum wage increase in Missouri, the state’s standard rate for 2022 is $11.15.
Tipped employees in Missouri get half the regular rate of pay. For 2022, that is $5.58.
The last scheduled increase for Missouri is set for 2023. After that point, increases will be tied to the CPI.
In Montana, which does not allow tip credits, minimum wage in 2022 is $9.20.
New Jersey in 2019 passed a minimum wage law that will also bring the state to a $15 rate.
In 2022, New Jersey’s minimum wage rates are:
- $13 (large employers, six or more employees)
- $11.90 (small employers, five or fewer workers)
Meanwhile, the 2022 minimum wage for tipped employees in New Jersey is $5.13.
Yet another state that passed a minimum wage law in 2019, New Mexico has planned increases for 2022:
- $2.80 for tipped employees
Employers should note that there are separate minimum wage rates for some jurisdictions in New Mexico.
Of all the states covered here, New York is the most complex, starting with the fact that minimum wage increases a day earlier than the others, on Dec. 31, 2021.
New York is also unique in how it assigns minimum wage rates. In 2022, the rates are:
- $13.20 – Standard
- $11 – Tips, service employees, resorts
- $11 – Tips, service employees, general
- $8.80 – Tips, food service
Employers should also be aware that New York City and three counties in the state have separate rates. And New York State legislators have introduced a bill that would allow smaller jurisdictions to set their own minimum wage.
Ohio is another semi-unique case. The state has three minimum wage rates, with one (small employer) following the federal minimum wage rate.
In Ohio, a large employer is defined as having $342,000 or more in gross receipts.
For 2022, minimum wage in Ohio is:
- $9.30 (large)
- $7.25 (small, the federal rate, which hasn’t changed since 2009)
- $4.65 for employees who receive tips
In May 2021, Rhode Island passed a new minimum law, with scheduled increases through 2025, when the rate will reach $15.
Starting Jan. 1, 2022, minimum wage in Rhode Island is $12.25.
The minimum wage for tipped employees remains at $3.89.
Minimum wage increases are indexed in South Dakota. In 2022, the rates are:
- $4.975 (tipped employees)
That tipped employee figure is not a typo. South Dakota law (So. Dak. Stat. 60-11-3.1) says the tipped employee wage shall be no less than 50 percent of the minimum wage. In this case, instead of rounding it, the state lets the rate go to three digits.
Virginia, which saw its 2021 minimum wage increase delayed due to the economic impacts of COVID-19, is back on schedule for 2022, with the standard rate increasing to $11.
The minimum wage for tipped employees in Virginia remains at the federal level, $2.13.
Vermont has increased minimum wage rates based on the CPI since 2019. In 2022, the Vermont rates are:
- $6.28 for tipped employees
Lastly, there’s Washington, whose 2022 minimum wage is $14.49.
Washington does not have a separate rate for tipped employees.
The complexities of minimum wage management have never been more challenging. Jan. 1, 2022, state minimum wage rates demonstrate how much HR and compliance teams need to monitor, not to mention the number of county and city laws, special rates, new and changing laws, etc.
Are you struggling with maintaining poster compliance for your remote workers?
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