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Since July 2009, in the USA, the federal minimum wage has been $7.25/hour. Nevertheless, there have recently been plenty of changes to the minimum wage on a state and native level. Currently, 30 states have a minimum wage higher than federal law. As well as, cities and counties in over 80 localities have adopted minimum wages above their state’s minimum wage.
Don’t expect this trend to alter anytime soon. For instance, in my state (Florida), the minimum wage is increasing incrementally until it reaches $15/hour in September 2026. So, changes are happening repeatedly.
It’s really necessary to grasp what’s happening with minimum wage because if there’s a difference in minimum wage laws, employers are required to pay probably the most generous rate to non-exempt employees. Here’s a fast example as an instance. If I’m a non-exempt worker working in Denver, Colorado. How much should I receives a commission per hour?
- Federal minimum wage $7.25/hour
- Colorado minimum wage $14.42/hour
- Denver minimum wage $18.29/hour
Okay – this was a straightforward one, the right answer is $18.29/hour. And remember that this is applicable to additional time pay as well.
Truthfully though, I would like to imagine that employers know after they’re required to pay greater than federal minimum wage. But with all of the changes happening, employers have to ask themselves in the event that they have a process in place to make certain they stay current with all these minimum wage changes. Especially if the organization has employees who work remotely.
Take into accout, if the worker relocates, their rate of pay might change. Using the non-exempt Colorado worker example above, let’s say the worker has been living in Telluride and relocates to Denver. Employers is likely to be certain they’re paying someone greater than $7.25/hour. But when the worker is making $15/hour, did the organization know they should be making $18.29/hour?
That’s why it is likely to be useful to conduct a minimum wage audit. Simply to make clear here, we’re only focused on minimum wage. Employers is likely to be doing compensation related audits for other reasons like verifying exempt / non-exempt status under the Fair Labor Standards Act (FLSA) or evaluating pay equity. Those are also useful reasons to audit compensation and so they might factor into this conversation. But for now, let’s just give attention to minimum wage.
Tips on how to Conduct a Minimum Wage Audit
To conduct a minimum wage audit, listed below are three steps to contemplate:
- Discover a proven source for minimum wage information. Our friends at Poster Guard have developed a Minimum Wage MonitorÔ Premium Service. This online tool provides employers with a color-coded map that displays minimum wage data. It also shows past and future wage rates. This could possibly be very helpful for future planning and budgeting purposes. The tool sends email notifications each time minimum wage laws are passed or modified so employers can start preparing for the brand new rates to take effect.
- Examine worker wages in relation to the law and your internal practices. Once a company has partnered with a reliable information source, you may start conducting their wage evaluation. This isn’t simply a matter of “are we or aren’t we” paying greater than minimum wage. Employees know what the minimum wage is and so they would not have to seek advice from someone within the breakroom to work out in the event that they’re not being paid fairly (given a minimum wage increase). Oh, and I don’t need to get off-track, but in case your state/location requires pay transparency in recruitment marketing, then you definitely’ll need to be certain that you’re disclosing the right pay rate.
- Determine if there are “pay gaps” that must be addressed. Organizations need to keep in mind that they’re not only evaluating recent worker pay. Minimum wage changes can impact other things, like wage compression. As a fast refresher, wage compression happens when a brand new worker is paid nearly the identical amount as one other worker with longer tenure. An example could be if an employer hires a brand new customer support representative at $15/hour, but a customer support rep with 5 years of service is making $15.50/hour. The organization will need to search out the budget, put together a wage adjustment schedule, and plan to talk with employees about getting their pay heading in the right direction.
It’s possible that the outcomes of a minimum wage audit must be considered with other compensation related audits. After all, if you have got any questions along the way in which, don’t hesitate to seek the advice of together with your legal counsel because as I discussed earlier, this trend with minimum wage changes isn’t going away anytime soon.
The very last thing any employer wants is to be considered “out of touch” because they don’t know what the present minimum wage is for workers. Beyond appearing to be clueless, corporations can’t afford to risk the potential wage and hour or FLSA lawsuits from their employees. Minimum wage laws are changing repeatedly. Get reliable information so you may pay people properly.
Speaking of reliable information, our friends at Poster Guard are going to be speaking at a webinar on “Minimum Wage Rates on the Rise: Learn Tips on how to Keep Your Business Compliant” on Tuesday, June 18, 2024 at 1p Eastern. The webinar is free and eligible for skilled development credits. You’ll be able to register on the HR.com website.
Another thing. We spent our time today talking about minimum wage changes from the attitude of worker pay. That is reminder that almost all – but not all – of those changes require recent labor law posters. Don’t forget that Poster Guard’s Poster Compliance Service keeps you in compliance by providing automatic replacements (at no additional cost) each time a compulsory change occurs.
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