As the new year approaches, a number of states will see index-driven increases to their minimum wage rates. Specifically, Arizona, Montana, Ohio, Oregon, Vermont, and Washington will each add around 10 cents per hour to their existing wage rates, based on an increase in the Consumer Price Index (CPI) of a little more than one percent from August 2009 to August 2010. Two other states, Florida and Missouri, have chosen not to adjust their indexed wages.
In Arizona, the state minimum wage will increase from $7.25 to $7.35 per hour and will remain at that rate throughout the next year. Tipped employees’ hourly wages also will increase 10 cents, from $4.25 to $4.35. The new minimum wage must be posted in an area where employees can read the poster, such as the break room.
In Montana, the indexed wage will increase 10 cents to $7.35 per hour on January 1, 2011.
In Ohio, the minimum wage will rise from $7.30 per hour to $7.40 per hour, while tipped employees will receive a five-cent increase, bumping their hourly wage to $3.70 per hour. The state minimum wage applies to employers that gross more than $271,000 annually. The federal minimum wage of $7.25 applies to smaller companies and to employees under age 16.
Oregon’s minimum wage is going up by 10 cents, from $8.40 to $8.50 per hour.
In Vermont, the hourly wage will increase by 9 cents, to $8.15 per hour, on January 1. Service or tipped employees (those who customarily and regularly receive more than $120 a month in tips) will receive a four-cent increase to $3.95 per hour, which is the minimum required employer contribution toward the minimum wage for tipped employees. The maximum allowable tip credit will increase by five cents to $4.20 per hour.
Washington’s state minimum wage, the highest state wage in the country, will increase by 12 cents to $8.67 on January 1. The wage hike, however, is not without some challenge. Business groups in the state have filed suit, claiming that the wage doesn’t need to be increased and that the hike would be detrimental to the state’s economy.
Opponents of the wage hike argue that although the CPI increased slightly this year, there has not been a net increase in the CPI since 2008. Though several states have implemented laws that track and adjust state minimum wages when the CPI increases, most of those states (including Washington) do not have provisions to decrease wages when the CPI goes down. Colorado is the only state with an indexed wage that has ever decreased wages — a three-cent drop that occurred in 2010 — to reflect a decline in the CPI. As a result, though the CPI actually decreased from 2008 to 2009, Washington’s minimum wage remained at the same rate. And even though the CPI increased this year by 1.1 percent, that did not result in a net increase since Washington’s wages were last adjusted.
State officials in the Department of Labor and Industries felt that the 12-cent increase was the clearest interpretation of the law, but that issue will have to be settled by a judge in the coming weeks.
Get additional insight on your federal wage and hour obligations under the Fair Labor Standards Act with the comprehensive desk reference Wage & Hour Compliance: Practical Solutions for HR. You can find state minimum wage laws and other state employment laws in the reference book 50 Employment Laws in 50 States.