Minimum Wage Increased in most states on January 1st, 2024: What You Should Know to Pay Your Employees Properly.
As of January 1, 2024, your state minimum wage may have increased. There is some key information that will assist with smoothly phasing in the state wage increases into everyday payroll life and avoiding future messy payroll challenges.
If you have heard “A fair day’s-wage for a fair day’s work” then you know that being fair could involve a lot of work. The wage increase sounds easy enough. Here at FPC, being forensic payroll experts, we hear the concerns of employers. Can this be as easy as just paying your employees the new rate as of January 1st,?
What if you have an employee who worked hours in December but is being paid in January?
What if an employee worked on December 31, 2023, as well as the next day on January 01, 2024?
What if your company is an industry that has another wage increase in the coming months? (For example, in California, Fast Food Restaurant employees, effective April 1, 2024, and Healthcare Facility employees, effective June 1, 2024, will have a higher minimum wage.)
No matter which scenario you may have inquiries about, there is a good rule of thumb to remember. Use the minimum rate applicable at the time the work is performed. If the rate was $15 in 2023 and increased to $16 on January 1st, 2024, that means hours worked in 2023 must be paid no less than $15 per hour, (even if paid in 2024), and hours worked in 2024 are paid no less than $16 per hour. For example, an employee worked on 12/31/23 and again the next day on 01/01/24. On 12/31/23 wages earned would be at the old rate and when they work the next day on 01/01/24 the new rate would be in effect.
According to a survey done by the Workforce Institute at Kronos Incorporated, more than 50% of US workers have experienced a mistake on their paycheck. Miscalculating the Regular Rate of Pay is one of the Top common mistakes employers make says the California Employers Association.
If you are ever unsure about your state’s wage changes and/or dates you can start at the U.S Department of Labor – State Minimum Wage Laws page. You will find an easy list by state, providing the current rate of pay along with current labor information. From there you can find links to your state labor website for a more in-depth breakdown of wage increase amounts and dates.