Understanding Minimum Wage: Are You Compensating Employees Fairly?

The Payroll Company Payroll, Compensation Management, Retention, Compliance, Employee Retention

Understanding Minimum Wage Changes Are You Compensating Employees FairlyNavigating minimum wage is an important practice for you as a business owner to make sure you are fairly compensating your employees and are remaining compliant with local laws. 

The minimum wage has been a hot topic of late in the business and political arena. There is a great deal of change taking place with regard to this issue, especially within the 20 states that increased their minimum wage rates as of January 1st, 2022. Yes, Midwest states, like Missouri and Illinois are two of those first 20.


So, what does that mean you need to know? What is there to be aware of as a business owner operating within one of the states making changes to the minimum wage? Are you fairly compensating your employees currently based on their position? How can you be sure? Thankfully, we have compiled some information that we hope will help answer these questions and more:

What Minimum Wage Changes are Being Made?

The following are the changes made within the states previously mentioned. Keep in mind, these listed rates will not always reflect the same for tipped employees. Also, some states, like California, Maryland, Minnesota, Missouri, Montana, New Jersey and Ohio have lower rates of exemptions for small businesses. Some individual counties and municipalities can also have higher rates.

  • Arizona: $12.80
  • California: $15.00
  • Colorado: $12.56
  • Delaware: $10.50
  • Illinois: $12.00
  • Maine: $12.75
  • Maryland: $12.50
  • Massachusetts: $14.50
  • Michigan: $9.87
  • Minnesota: $10.33
  • Missouri: $11.15
  • Montana: $9.20
  • New Jersey: $13.00
  • New Mexico: $11.50
  • New York: $13.20
  • Ohio: $9.30
  • Oregon: $13.50
  • Rhode Island: $12.25
  • South Dakota: $9.95
  • Vermont: $11.00
  • Washington State: $14.49

Will there be any Changes to Minimum Wage on the Federal Wage?

According to a Department of Labor announcement, beginning January 1st, 2022, as per Executive Order 13658, the minimum wage rate is increased to $11.25. In addition, employees who are tipped and in covered contracts generally must be paid a minimum cash wage of $7.90 an hour. Any contract entered into after January 30th, 2022, can be subject to a higher minimum wage of $15.00 based on Executive Order 14026.


How Can You Make Sure You are Compensating Employees Fairly?

It can be hard to determine that your HR, payroll and accounting departments are staying compliant with all recent changes. You could navigate the process internally, but that is a risky endeavor because it can be difficult to ascertain whether you are compensating your employees fairly based on your specific business. Having an HR partner by your side can help with this process significantly as we stay abreast of the changes in the laws and keep our finger on the pulse of the industries in which you work.

Sometimes, it’s worth looking for signs that you are not compensating your employees enough to ensure that you fix this issue before negative repercussions, such as your employee retention rate falling. Signs like employees leaving and citing payment as their reasoning, finding compensation becoming an all too common issue in your workplace, realizing your company is having issues with pay compression, noting pay equity issues and more can all be indicators that you need to make some changes in the way you are currently compensating your workforce.

Bottom Line: Don’t Try to Navigate This Alone

If you and your business need help navigating how to fairly compensate your employees, would like help recruiting and retaining quality staff or want to ensure that you are compliant with all local and federal laws, contact our team. We are experts and would love to take care of the minutiae for you. Don’t try to navigate compensation alone!


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