Change is Coming! Minimum Wage and Exempt Employee Thresholds to Increase in 2023
As with every year, employers should take note that on January 1, 2023 several state and local minimum wages (as well as exempt employee thresholds) increase. Some states implement annual increases that account for inflation and are based on the Consumer Price Index. Other state laws are focused on reaching a certain threshold. For example, New York’s minimum wage law is focused on reaching the $15.00 threshold. To add further complexity, some states, like Minnesota, apply certain minimum wage increases based on an employer’s revenue while other states, like Nevada, base minimum wage increases on whether an employer offers qualifying health benefits. In Minnesota, if an employer’s gross revenue was $500,000 or more, then the minimum wage increased to $10.59 while an employer’s whose gross revenue was less than $500,000 only needs to implement a minimum wage increase to $8.63.
Employers should always be aware of local jurisdictions that have implemented similar increases. For example, California localities vary on minimum wage increases, Chicago’s minimum wage increases depend on the amount of employees employed and those employers with employees in Seattle, Portland, Flagstaff, Tucson, and others should conduct a review of certain applicable minimum wage increases.
Along with minimum wage increases, several state laws have corresponding increases to the state’s applicable exempt employee salary thresholds. Each threshold is different and may be increasing or remaining the same for the upcoming year. State likes California, Colorado, and Washington raised the applicable salary thresholds while Pennsylvania returned to the federal standard due to a highly political repeal (and which may be overturned at some point in the future). Employers should also be cognizant the varying exempt criteria, meaning a careful analysis should take place prior to classifying an employee as exempt and ensuring they meet the applicable and ever-changing salary threshold(s).
It should also be noted that while state and local jurisdictions have implemented certain wage increases, there remains a multitude of states and local jurisdictions maintaining the federal minimum wage standard and defer to federal law in analyzing salary thresholds for exempt employees. It should be further noted that some state and local 2023 increases have already taken effect as some jurisdictions implement the change throughout the year (in July 2022 for example). Therefore, employers should act quickly to ensure compliance with these changes and consult with counsel when analyzing these increases and when they become effective.
