United States: It's A New Year – With Many New State Minimum Wage Laws

The new year brings a host of new state wage and hour laws. Employers should take note that as of January 1, 2022, almost half of U.S. states increased their minimum wage rate. As a result, 30 states and the District of Columbia now have minimum wage rates higher than the federal minimum wage, which has remained at $7.25 per hour for over a decade.

Some examples of new minimum wage rates that went into effect January 1 (or will at some point in 2022), include:

It is important to note that many states have exceptions to their minimum wage rates for a variety of workers, including but not limited to employees of small businesses, farm workers, and tipped employees. Also, some states impose different minimum wages in different locations. For example, effective December 31, 2021, employees in New York City employed by business with 10 or fewer employees must receive $15.00 per hour, which is the rate that already applied to larger employers in New York City. Workers in New York's Nassau, Suffolk, and Westchester counties must also receive $15 an hour in 2022. The minimum wage in the rest of New York state is generally $13.20 per hour, although workers at certain fast food restaurants must be paid $15 an hour throughout the state.

In 2022, many states also increased the minimum salary required to be exempt from overtime. Under federal law, in order to qualify as an executive, administrative, or professional employee exempt from overtime, the employee must: (1) meet the duties test of the exemption; and (2) be paid a minimum salary of $684 per week ($35,568 annually). However, state law can impose more stringent requirements, and many states have imposed even higher minimum salary requirements for an employee to be exempt from overtime pay under state law. For example, beginning January 1, 2022, California employers with 25 or more employees must pay a salary of at least $1,200 per week ($62,400 annually) to workers to satisfy the salary requirement for exemption. And in New York, employers in New York City and Long Island/Westchester County must pay most employees a minimum salary of $1,125 per week ($58,500 annually) for them to be exempt, while the rest of New York state requires a minimum weekly salary of $990 ($51,480 annually) to maintain exempt status.

These are just a few examples of the state-law wage and changes going into effect in 2022. Given the increased activity by states and local governments to impose higher minimum wage rates and other compensation requirements that differ from federal law, is it important for employers to stay up to date on, and ensure compliance with, not only federal wage and hour laws, but also applicable state and local minimum wage requirements in the jurisdictions where they operate.

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.