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Tax & Compliance

2014 State Minimum Wage Adjustments Require Careful Employer Review

The federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, an employee is entitled to the higher of the two.

On February 12, 2014, President Obama issued Executive Order– Minimum Wage for Contractors, which increases the minimum wage for employees under a federal contract that becomes effective on or after January 1, 2015. The Executive Order increases the minimum wage for those employees covered under its provisions to the higher of either $10.10 per hour or the state or local prevailing wage. Employees covered are those who are employed by contractors, subcontractors, or under a contract-like instrument for services or concessions that are covered under the Davis-Bacon Act, Service Contract Act, and any other related acts, such as the Fair Labor Standards Act.

In the upcoming year, it is likely we will see many states adjusting their minimum wage rates. ADP® continuously monitors minimum wage activity. The current state minimum wage rates and their effective dates can be found by clicking here: 2014 Fast Wage and Tax Facts.

Impact on Employers: Employers must comply with these minimum wage laws and should review their employees’ hourly rates of pay and make any necessary adjustments to bring their employees to the correct minimum wage if they have not already done so. Please take careful note of the effective dates, as they may vary by state.

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This article originally appeared on the ADP@Work Blog.

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