LEGISLATIVE UPDATE
Eye on Washington
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.
Under federal law, an employer of a tipped employee is only
required to pay $2.13 per hour in direct wages if that amount,
combined with tips received, at least equals the federal minimum
wage. If the employee’s tips combined with the employer’s
direct wages of at least $2.13 per hour do not equal the federal
minimum hourly wage, the employer must make up the
difference. Many states, however, require higher direct-wage
amounts for tipped employees.
There are eleven states – Arizona, Colorado, Florida, Missouri,
Montana, Nevada, New Jersey, Ohio, Oregon, Vermont, and
Washington – that annually adjust their minimum wage, based on
inflation and the Consumer Price Index (CPI).
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.
Also included in the Executive Order is a provision for tipped
employees working in the categories of employers described
above. Effective January 1, 2015, the direct wage required to be
paid will increase to $4.90, if that amount combined with tips
received, equals at least $10.10.
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.
Jurisdiction Impact. Employers should also be aware that there
are several municipalities that annually adjust their minimum
wage and should check specific municipality laws for additional
information. For example, the cities of San Francisco and San
Jose, CA and Albuquerque, NM adjust their minimum wage
annually, based on the cost of living. Recently, Seattle, WA also
passed legislation increasing the minimum wage rate.
ADP Compliance Resources
ADP maintains a staff of dedicated professionals who carefully monitor federal and state legislative and regulatory measures
affecting employment-related human resource, payroll, tax and benefits administration, and help ensure that ADP systems are
updated as relevant laws evolve. For the latest on how federal and state tax law changes may impact your business, visit the
ADP Eye on Washington Web page located at www.adp.com/regulatorynews.
ADP is committed to assisting businesses with increased compliance requirements resulting from rapidly evolving legislation. Our goal is to
help minimize your administrative burden across the entire spectrum of employment-related payroll, tax, HR and benefits, so that you can
focus on running your business. This information is provided as a courtesy to assist in your understanding of the impact of certain regulatory
requirements and should not be construed as tax or legal advice. Such information is by nature subject to revision and may not be the most
current information available. ADP encourages readers to consult with appropriate legal and/or tax advisors. Please be advised that calls to and
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Last updated: June 26, 2014