United States: The Rising Minimum Wages And Tip Credits for 2017: An Overview

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

Arizona

$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

California

$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

District of Columbia

$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

Florida

$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

Massachusetts

$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

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

Oregon

$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

Washington

$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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Ogletree, Deakins, Nash, Smoak & Stewart
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Ogletree, Deakins, Nash, Smoak & Stewart
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions