Effective January 1, 2017, 29 states plus the District of Columbia will have minimum wage rates that are above the federal minimum wage rate of $7.25 per hour. The District of Columbia will continue to have, as it did last year, one of the highest minimum wage rates in the country at $11.50 per hour until July 1, 2017, and $12.50 per hour after that date. With respect to state minimum wages, Massachusetts and Washington will have the highest minimum wages at $11.00 per hour effective January 1, 2017, with California close behind at $10.50 per hour (for employers with 26 or more employees), effective January 1, 2017, and Connecticut following at $10.10 per hour, effective January 1, 2017.
The states with the lowest minimum wages continue to be Georgia and Wyoming, both of which have rates of $5.15 per hour, along with Oklahoma, which allows employers that have fewer than 10 full-time employees and $100,000 or less in gross annual sales to pay $2.00 per hour to employees. Five states—Alabama, Louisiana, Mississippi, South Carolina, and Tennessee—have not enacted minimum wage laws. Of the 45 states plus the District of Columbia that have enacted minimum wage laws, 22 (or slightly less than one-half of them) will increase their minimum wage rates from 2016 to 2017 (up from 17 states—or just over one-third—that increased their minimum wage rates from 2015 to 2016).
The 2017 Minimum Wage
The chart below lists the minimum wage rates that will be in effect for 2017 in all 50 states and the District of Columbia and also reflects changes in state laws from 2016 to 2017. Importantly, all employers covered under the Fair Labor Standards Act (FLSA) will still be required to meet the applicable FLSA minimum hourly rate, which remains at $7.25 per hour, even if a particular state's law allows for a lower minimum wage rate. Thus, states with minimum wage rates that are lower than $7.25 per hour must pay employees at least $7.25 per hour.
The 2017 Maximum Tip Credit
The chart also breaks down the maximum tip credit that employers can count against the hourly rates of tipped employees. The tip credit is the portion of the cash minimum wage that employers are not required to pay to employees who receive tips. The minimum wage less the applicable tip credit is the lowest wage per hour that an employer must pay its tipped employees.
All FLSA-covered employers may apply a tip credit that, generally, should be no greater than the FLSA's maximum tip credit, which is currently set at $5.12 per hour. Employers in states with maximum tip credits that are higher than the federal maximum tip credit may be able to apply the higher tip credit only if the difference between the state minimum wage and the tip credit is at least $2.13. A more conservative approach, however, would be to adopt the lower federal maximum tip credit since it is more advantageous to employees. Employers in states that have enacted a tip credit that is lower than the federal maximum tip credit of $5.12 per hour (including states that have prohibited the payment of tip credits in their entirety) may continue to follow the more employee-friendly state law.
|
JURISDICTION |
2017 MINIMUM WAGE |
2017 MAXIMUM TIP CREDIT ALLOWED |
CHANGE FROM 2016 |
|
Federal |
$7.25 |
$5.12 |
No change |
|
Alabama |
No specific minimum wage rate under state law; the $7.25 federal minimum wage rate applies |
No specific tip credit minimum under state law; the federal $5.12 maximum tip credit applies |
No change |
|
Alaska |
$9.80, effective January 1, 2017 |
$0.00; no tip credit allowed under state law |
Increase |
|
$10.00, effective January 1, 2017 |
$3.00 |
Increase |
|
|
Arkansas |
$8.50, effective January 1, 2017 |
Employers should apply the maximum $5.12 federal tip credit, even though the state maximum tip credit is higher at $5.87. |
Increase |
|
$10.00 for employers with fewer than 26 employees, effective January 1, 2017 |
$0.00; no tip credit allowed under state law |
Increase for employees who work for employers with 26 or more employees |
|
|
$10.50 for employers with 26 or more employees, effective January 1, 2017 |
|||
|
Colorado |
$9.30, effective January 1, 2017 |
$3.02 |
Increase |
|
Connecticut |
$10.10, effective January 1, 2017 |
$3.72 (waitpersons); $1.87 (bartenders), effective January 1, 2017 |
Increase |
|
Delaware |
$8.25 |
Employers should apply the maximum $5.12 federal tip credit, even though the state maximum tip credit is higher at $6.02. |
No change |
|
$11.50 until July 1, 2017, then $12.50 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $8.73 until July 1, 2017, and will then be $9.17. |
Increase |
|
|
$8.10, effective January 1, 2017 |
$3.02 |
Increase |
|
|
Georgia |
The $7.25 federal minimum wage rate applies because the state minimum wage rate is lower at $5.15 for employers with six or more employees and annual sales of more than $40,000. |
Tipped employees are not subject to the state minimum wage rate. |
No change |
|
Hawaii |
$9.25, effective January 1, 2017 |
$0.75 |
Increase |
|
Idaho |
$7.25 |
$3.90 |
No change |
|
Illinois |
$8.25 |
$3.30 |
No change |
|
Indiana |
$7.25 |
$5.12 |
No change |
|
Iowa |
$7.25 |
$2.90 |
No change |
|
Kansas |
$7.25 |
$5.12 |
No change |
|
Kentucky |
$7.25 |
$5.12 |
No change |
|
Louisiana |
No specific minimum wage rate under state law; the $7.25 federal minimum wage rate applies |
No specific tip credit minimum under state law; the federal $5.12 maximum tip credit applies |
No change |
|
Maine |
$9.00, effective January 1, 2017 |
$4.00, effective January 1, 2017 |
Increase |
|
Maryland |
$8.75 until July 1, 2017, then $9.25 |
$5.12 until July 1, 2017, then $5.62, at which time employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit effective after July 1, 2017 is higher |
Increase |
|
$11.00, effective January 1, 2017 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $7.75, effective January 1, 2017. |
Increase |
|
|
Michigan |
$8.90, effective January 1, 2017 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $5.52, effective January 1, 2017. |
Increase |
|
Minnesota
|
$9.50 for employers with gross sales of $500,000 or more |
$0.00; no tip credit allowed under state law |
No change
|
|
$7.75 for employers with gross sales less than $500,000 |
|||
|
Mississippi |
No specific minimum wage rate under state law; the $7.25 federal minimum wage rate applies |
No specific tip credit minimum under state law; the federal $5.12 maximum tip credit applies |
No change |
|
Missouri |
$7.70, effective January 1, 2017 |
$3.85 |
Increase |
|
Montana |
$8.15, if the employer's annual sales are more than $110,000, effective January 1, 2017; otherwise the $7.25 federal minimum wage rate applies because the state minimum wage rate for other businesses is lower at $4.00 |
$0.00; no tip credit allowed under state law |
Increase |
|
Nebraska |
$9.00 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $6.87. |
No change |
|
Nevada
|
$7.25 if the employee receives health benefits provided by the employer |
$0.00; no tip credit allowed under state law
|
No change
|
|
$8.25 if the employee does not receive health benefits provided by the employer |
|||
|
New Hampshire |
$7.25 |
$3.99 |
No change |
|
New Jersey |
$8.44, effective January 1, 2017 |
Total wages and tips must equal at least the minimum wage. |
Increase |
|
New Mexico |
$7.50 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $5.37. |
No change |
|
New York City's (NYC) Large Employers (11 or more employees): $11.00 ($12.00 for fast food workers), effective December 31, 2016 |
NYC's Large Employers: $1.85 for service employees, $3.50 for food service workers, and $0.00 for fast food workers, effective December 31, 2016 |
Increase |
|
|
NYC's Small Employers (10 or fewer employees): $10.50 ($12.00 for fast food workers), effective December 31, 2016 |
NYC's Small Employers: $1.75 for service employees, $3.00 for food service workers, and $0.00 for fast food workers, effective December 31, 2016 |
||
|
Long Island and Westchester: $10.00 ($10.75 for fast food workers), effective December 31, 2016 |
Long Island and Westchester: $1.65 for service workers, $2.50 for food service workers, and $0.00 for fast food workers, effective December 31, 2016 |
||
|
Remainder of New York: $9.70 ($10.75 for fast food workers), effective December 31, 2016 |
Remainder of New York: $1.60 for service employees, $2.20 for food service workers, $0.00 for fast food workers, effective December 31, 2016 |
||
|
North Carolina |
$7.25 |
$5.12 |
No change |
|
North Dakota |
$7.25 |
$2.39 |
No change |
|
Ohio |
$8.15, if the employer's annual gross receipts are more than $297,000, effective January 1, 2017; otherwise $7.25 |
$4.07 |
Increase |
|
Oklahoma |
$7.25; the federal minimum wage rate applies because the state minimum wage is lower at $2.00 for employers with fewer than 10 full-time employees with gross annual sales of $100,000 or less |
$3.625 ($1.00 if the employer has fewer than 10 full-time employees with gross annual sales of $100,000 or less) |
No change |
|
$9.75 until June 30, 2017, then $10.25 |
$0.00; no tip credit allowed under state law |
Increase |
|
|
Pennsylvania |
$7.25 |
$4.42 |
No change |
|
Rhode Island |
$9.60 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $5.71, effective January 1, 2017. |
No change |
|
South Carolina |
No specific minimum wage rate under state law; the $7.25 federal minimum wage rate applies |
No specific tip credit minimum under state law; the federal $5.12 maximum tip credit applies |
No change |
|
South Dakota |
$8.65, effective January 1, 2017 |
$4.325 |
Increase |
|
Tennessee |
No specific minimum wage rate under state law; the $7.25 federal minimum wage rate applies |
No specific tip credit minimum under state law; the federal $5.12 maximum tip credit applies |
No change |
|
Texas |
$7.25 |
$5.12 |
No change |
|
Utah |
$7.25 |
$5.12 |
No change |
|
Vermont |
$10.00, effective January 1, 2017 |
$5.00 |
Increase |
|
Virginia |
$7.25 |
Employers should apply the maximum $5.12 federal tip credit, even though employers are not required to pay tipped employees a cash wage unless the employee demonstrates that tips do not equal at least the minimum wage. |
No change |
|
$11.00, effective January 1, 2017 |
$0.00; no tip credit allowed under state law |
Increase |
|
|
West Virginia |
$8.75 |
Employers should apply the maximum $5.12 federal tip credit, even though the state-imposed maximum tip credit is higher at $6.13. |
No change |
|
Wisconsin |
$7.25 |
$4.92 |
No change |
|
Wyoming |
The $7.25 federal minimum wage rate applies because the state minimum wage rate is lower at $5.15. |
$3.02 |
No change |
Employers may also want to be careful to take into account applicable local laws that set a higher minimum wage in certain cities or localities than the minimum wage generally applicable in the state. By way of example, the following big cities or localities currently impose minimum wages that are higher than the statewide minimum wage of the state in which they are located: New York City; Long Island and Westchester, New York; Los Angeles, San Diego, and San Francisco, California (among numerous other cities in California); Chicago and Cook County, Illinois; Montgomery and Prince George's Counties, Maryland; Portland, Maine; Albuquerque and Santa Fe, New Mexico; and Seattle, SeaTac, and Tacoma, Washington. It is expected that this list will continue to grow in 2017.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
