When it comes to minimum wage for employees, things can sometimes get muddled. As an employer, which should you be following: the federal or regional minimum wage?

As an employer, you need to make sure that you’re paying your employees properly. For established businesses, it can be easier, as they’ve been able to stay up to date with wage changes as they’ve happened. But for new employers or start-ups, things can get trickier. The federal minimum wage is often different than state or city-level minimum wages, so it may be difficult to know which minimum wage you should be paying your employees.

The federal minimum wage hasn’t actually gone up for 10 years now. It has been stagnant at $7.25 an hour since 2009, though there is a popular demand for an increase. The cost-of-living over the past few years has gone up drastically, especially in larger cities, and the federal minimum wage often is not considered to be a livable wage. This public outcry is what has driven states and cities to impose their own wage levels, though an updated federal minimum wage would make wage management much easier for business owners.

Currently, there is a motion that has been put forth to raise the minimum wage, known as “The Raise the Wage Act of 2019.” It is in the first stages of the legislative process. The bill was introduced to Congress in January of 2019, with hopes of being pushed forth into law. Before the bill can be voted on by the House and then the Senate, it must first be considered for vote by committee. The overall goal of this bill is to raise the minimum wage from $7.25 up to $15 an hour by 2024.

Although the details of the bill are subject to change due to amendments and suggestions by the committee, and then by both the House and the Senate, here are some details for how the bill is currently laid out:

  • The federal minimum wage would be increased to $8.55 in the first year of the bill passing, and it would gradually increase over the next five years, up to $15 per hour.
  • After it reaches $15 per hour in 2024, the minimum wage would be adjusted every year to match the overall market growth and average workers’ wages.
  • This bill would look at doing away with server wages and other subminimum wage pay rates. Currently, the subminimum wage for tipped workers is $2.13 an hour, where it has been since 1991.
  • In addition to the subminimum wage for tipped positions, the bill would also retire the subminimum wages for employees with disabilities and for employees under the age of 20.1

For both experienced employers and new business owners, staying on top of wage changes is critical for the success of your business. If you have questions about the minimum wage in your state or county, you can refer to ClearPath’s Minimum Wage Cheat Sheet, which is updated twice a year. This cheat sheet is made for employers to quickly reference to make sure they are paying the correct wages. If you have more detailed questions, contact ClearPath directly.

Sources: 1 https://www.epi.org/publication/why-america-needs-a-15-minimum-wage/