by Sophie Zdatny
On June 9, Governor Peter Shumlin signed House Bill 522 into law, making Vermont the first state to approve a minimum wage above the $10.10 goal set by President Barack Obama.
As of January 1, 2015, Vermont’s minimum wage will rise to $9.15, from its current level at $7.25. The minimum wage will increase to $9.60 effective January 1, 2016, and then to $10.00, effective January 1, 2017. The minimum wage will rise to $10.50 on January 1, 2018, and will continue to increase each subsequent January 1 by five percent or the percentage increase of the Consumer Price Index (whichever is smaller).
Tipped employees will receive at least one-half of the minimum wage. Tipped employees are those working in the hotel/motel, tourist, and restaurant industries who customarily and regularly receive more than $120 per month in tips for direct and personal customer service.
Vermont is the eighth state to vote for a minimum wage increase this year, and so far it has passed the highest minimum wage of any state in the country, although at the local level, Seattle’s city council recently raised that city’s wage to $15 an hour and the District of Columbia is gradually hiking its wage to $11.50 by 2016, after which wages will be indexed to inflation. Connecticut, Hawaii, and Maryland have passed increases that will eventually raise their minimum wage to $10.10. Washington’s minimum wage is indexed to inflation and is likely to top $10 by 2018. Delaware, Michigan, Minnesota, and West Virginia are the other states that have passed minimum wage increases this year.
Bottom line for Vermont employers
The phased-in approach is intended to reduce the impact of the wage increase on businesses. Employers should begin planning for the upcoming hikes and consult with their financial advisors and legal counsel to address any concerns they may have on complying with the new law.
Sophie Zdatny, an attorney with Dinse, Knapp & McAndrew in Burlington and an editor of Vermont Employment Law Letter, assists employers and institutions of higher education in managing and litigating employment and other disputes. She can be reached at email@example.com or 802-859-7084.