With 2021 ending shortly, a multitude of states are preparing for the new year by updating their respective minimum wage amounts. More than ever, businesses are watching the trend in wage increases and must react accordingly. Uniquely, New York’s minimum wage increase goes into effect prior to the New Year, on December 31, 2021. This post outlines the applicable minimum wage increases for 2022.
Effective December 31, 2021:
- New York City: Remaining at $15.00
- Long Island & Westchester: Increase to $15.00
- Remainder of the state: Increase to $13.20
- Fast food workers throughout the state (as of July 1, 2021): Increased to $15
- Remainder of the state, rates for tipped workers covered by the Hospitality Wage Order: Increase cash wage rate to $8.80 and tip wage to $4.40.
Tipped Employees: Cash wages and tip wages in New York state depend on location and industry. Employers should review the information published by the NY DOL for more information.
The list below provides an overview of other states who are updating their wages for 2022.
Effective January 1, 2022:
- Increase to $10.34
The state minimum wage rate will be adjusted each year to reflect the cost of living.
Effective January 1, 2022:
- Increase to $12.80
- Tipped Employees: Increase to $9.80
In Arizona, an employer, generally, may pay any employee who customarily and regularly receives tips or gratuities (a tipped employee) a wage up to $3 per hour less than the minimum wage if the employer can establish by its records that for each week, when adding tips received to wages paid, the employee received not less than the minimum wage for all hours worked.
Effective January 1, 2022:
- Increase to $14.00 for employers with 25 or fewer employees
- Increase to $15.00 for employers with 26 or more employees
Tipped Employees: Unlike federal regulations, California law does not permit an employer to use an employee’s tips as a credit toward its obligation to pay the minimum wage. As a result, California employees must receive the minimum wage plus any tips left for them by patrons of the employer’s business.
Effective January 1, 2022:
- Increase to $12.56
- Tipped Employees: Increase to $9.30
Tipped Employee: A tipped employee is an individual who customarily and regularly receives more than $30 per month in tips. If the employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference. Employers cannot claim any right of ownership or control over tips unless the employer notifies each patron in writing that gratuities are shared by employees. Acceptable written notifications include a notice on a menu, a table tent, or a receipt. Employers may require employees to share gratuities among themselves on a pre-established basis.
Minor Employees: Minor employees are unemancipated individuals under 18 years of age. Minor employees may be paid 85% of the state minimum wage (less any applicable lawful credits) for all hours worked. However, where federal and state law have different minimum wage rates, the higher standard applies.
Effective July 1, 2022:
- Increase to $14.00
Tipped Employees: Employers in the hotel and restaurant industries are permitted to use a “tip credit” for bartenders and other employees who customarily receive tips. The credit allows employers to count these employees’ tips as a percentage of their minimum wage requirement, thus reducing the employer’s share of the minimum wage, if the tips make up the difference.
- The employer’s share for bartenders is $8.23 per hour.
- The employer’s share for other hotel and restaurant tipped employees is $6.38 per hour.
Minor Employees: Subject to certain exceptions, the minimum hourly wage for an employee who is younger than 18 is $10.10 or 85% of the state minimum wage (whichever is greater) for up to the first 90 days of their employment. However, where federal and state law have different minimum wage rates, the higher standard applies.
Special Note: The Connecticut minimum wage rate automatically increases to 1/2 of 1 percent above the rate set in the Fair Labor Standards Act if the federal minimum wage rate equals or becomes higher than the Connecticut minimum wage.
Effective January 1, 2022:
- Increase to $10.50
Tipped Employees: The minimum cash wage payable to employees who receive tips is $2.23 per hour. Tips may not be taken or retained by an employer except as required by law. Tip-pooling is permitted under certain conditions, in an amount not to exceed 15% of the actual tips received by the employee.
Employees with Disabilities: On October 20, 2021, Delaware repealed a provision that enabled employers to pay wages below the state’s minimum wage rate to employees who are mentally or physically disabled or both. Because of this repeal, employers will not be able to pay employees with disabilities wages below the state’s minimum wage rate beginning February 1, 2024. Affected employers will need to monitor communications from the Delaware Employment First Oversight Commission to learn about the details of the phaseout plan.
Effective September 30, 2022:
- Increase to $11.00
- Tipped Employees: Increase to $7.98
Special Note: If a tipped employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference.
Effective January 1, 2022:
- Increase to $12.00
- Tipped Employees: Increase to $7.20
- Minor Employees: Increase to $9.25
Youth Wage: The youth wage applies to employees under 18 years of age working fewer than 650 hours per calendar year. Minors who work more than 650 hours during any calendar year must be paid the state regular wage rate.
New Employees: Employers can pay newly hired employees over the age of 18 a training wage during the first 90 days of employment. The training wage is 50 cents lower than the state minimum wage rate.
Effective January 1, 2022:
- Increase to $12.75
- Tipped Employees: Increase to $6.38
Tipped Employees: If the employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference. The tip credit in the state may not exceed 50% of the minimum hourly wage established under state law. A tipped employee customarily and regularly receives more than $30 per month in tips. However, the monthly minimum tip salary these employees must receive will increase as follows:
- $100 per month in tips on January 1, 2022
- $175 per month in tips on January 1, 2023
An employer who elects to use the tip credit must inform the affected employee in advance (as provided in the text of the law), and must be able to show that the employee receives at least the minimum hourly wage when direct wages and the tip credit are combined within the established seven-day workweek.
Effective January 1, 2022:
- Increase to $12.50 for employers with 14 or fewer employees
- Increase to $12.50 for employers with 15 or more employees
Tipped Employees: The minimum wage rate for tipped employees in the state and Prince George’s County is $3.63 per hour. The minimum wage rate for tipped employees in Montgomery County is $4 per hour. A tipped employee must earn at least $30 per month. The tipped employee’s tips in addition to the minimum wage must be at least equal to the state’s minimum wage rate. Employers must subsidize tipped employee wages if the employee’s tips and the cash wage do not equal the minimum wage.
Minor Employees: An employer may pay an employee 85% of the state minimum wage if the employee is under 18 years old.
Effective January 1, 2022:
- Increase to $14.25
- Tipped Employees: Increase to $6.15
Tipped Employees: A tipped employee customarily and regularly receives more than $20 per month in tips. If the employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference.
Minor Employees: Employers in certain industries may be able to pay students or minors not less than 80% of the state minimum wage in certain instances.
Effective January 1, 2022:
- Increase to $9.87
- Tipped Employees: Increase to $3.75
Tipped Employees: If an employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference. The minimum wage rate for tipped employees applies if certain requirements are met.
Minor Employees: Minors 16-17 years of age may be paid 85% of the minimum hourly wage rate.
Training Employees: A training wage of $4.25 per hour may be paid to employees 16 to 19 years of age for the first 90 days of employment.
Effective July 1, 2022:
- Small Employers (annual receipts of less than $500,000), training wage and youth wage: Increase to $8.42
- Large Employers (annual receipts of more than $500,000 or more): Increase to $10.33
Effective January 1, 2022:
- Increase to $11.15
- Tipped Employees: Increase to $5.58
Exempt Employers: Employers engaged in retail or service businesses whose annual gross income is less than $500,000 are not required to pay the state minimum wage rate.
Tipped Employees: Tipped employees must be paid half of the state minimum wage rate. However, if the tipped employee does not make up the other half of the minimum wage in tips, the employer is required to pay the difference so that the tipped employee is paid the state’s minimum wage rate.
Effective January 1, 2022:
- Increase to $9.20
Special Note: Montana does not allow tip credits, meal credits, or training wage adjustments.
A business not covered by the Federal Fair Labor Standards Act (FLSA) may pay a $4 per hour minimum wage if its gross annual sales are $110,000 or less (this exception does not apply to individual employees who produce or move goods between states or that are individually covered by the FLSA).
Effective July 1, 2022:
- Employers that offer Health Benefits: Increase to $9.50
- Employers that do not offer Health Benefits: Increase to $10.50
Tipped Employees: In Nevada, tips may not be applied as credit toward the payment of the statutory minimum wage. An employer cannot pay tipped employees less than the applicable minimum wage.
Domestic Workers: A domestic worker generally must receive wages at or above the state’s minimum hourly wage rate.
Effective January 1, 2022:
- Employers with six or more employees: Increase to $13.00
- Employers with five or fewer employees: Increase to $11.90
- Tipped Employees: Increase to $5.13
- Agricultural Employees: Increase to $10.90
- Seasonal Employees (May 1 – September 30): Increase to $11.90
Tipped Employees: If an employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference.
Effective January 1, 2022:
- Increase to $11.50
- Tipped Employees: Increase to $2.80
Tipped Employees: If the tipped employee’s hourly wage rate does not equal or exceed the applicable minimum rate, the employer must pay the employee the difference between the wage received and the applicable minimum rate. A tipped employee is a worker who customarily and regularly receives more than $30 a month in tips.
Special Note: The higher wage rate is required for regular employees who do not receive health care benefits that are at least equal to $2,500 annually.
Effective January 1, 2022:
- Increase to $9.30
- Tipped Employees: Increase to $4.65
- Minimum Threshold: $342,000 (See Special Note)
Special Note: The minimum wage in Ohio applies to employers that gross an amount that is at least equal to a threshold that is set up annually. Employers that gross less than the minimum wage threshold must pay their employees a minimum wage rate that is at least equal to the federal rate.
Tipped Employees: A tipped employee is an individual who engages in an occupation in which they customarily and regularly receive more than $30 per month in tips. If the employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference.
Effective July 1, 2022:
- Increase to $13.50
Tipped Employees: Oregon does not allow employers to use a tip credit. Tipped employees must receive wages at or above the applicable minimum wage rate. However, employers can require that tipped employees participate in a pool tip with other workers (management cannot share in the pool).
Effective January 1, 2022:
- Increase to $12.25
Tipped Employees: As of January 1, 2017, state law allows employers to pay their tipped employees a minimum wage rate that is $3.89 lower than the state’s minimum wage rate. The $3.89 credit applies to restaurants, hotels and other industries where tipped employees usually work (except taxicabs and limited public motor vehicles). However, if an employee’s tips and the cash wage do not equal the minimum wage, the employer must make up the difference.
Minor Employees: 14- and 15-year-olds who do not work more than 24 hours per week may receive a wage rate equal to 75% of the applicable minimum wage rate. Minor employees who work more than 24 hours per week must receive the minimum wage rate.
Student Employees: Full-time students under 19 years of age working in nonprofit religious, educational, librarial or community service organizations may receive a minimum wage rate equal to 90% of the minimum wage rate.
Effective January 1, 2022:
- Increase to $9.95
- Tipped Employees: Increase to $4.98
Tipped Employees: Employers must make sure that tipped employees receive no less than the current minimum wage and must keep record of all tips received by employees.
Effective January 1, 2022:
- Increase to $12.55
- Tipped Employees: Increase to $6.28
Tipped Employees: The minimum wage rate for service or tipped employees in Vermont must be at least equal to one-half of the state’s minimum wage rate. A service or tipped employee in Vermont is a hotel, motel, tourist place or restaurant employee who customarily and regularly receives more than $120 per month in tips. Employers are required to make up the difference between the minimum wage rate and a tipped employee’s earnings if the tipped employee’s tips and cash wage are below the state’s minimum wage rate.
Effective January 1, 2022:
- Increase to $11.00
Special Note: Unless an exception applies, Virginia’s minimum wage laws generally apply to all individuals who work for any public or private employer with four or more employees in the state, and as of July 1, 2020, the law will specifically include home care providers as covered employees. In addition, the law’s coverage will no longer exclude workers who:
- Are covered under the FLSA;
- Work in domestic service or in or about a private home;
- Normally work and are paid on the amount of work done;
- Have impaired earning capacity due to physical or mental disabilities;
- Work for an employer with fewer than four employees; or Are under age 18 and under the jurisdiction and direction of a juvenile and domestic relations district court.
Effective January 1, 2022:
- Increase to $14.49
Tipped Employees: An employer generally must pay its employees all tips, gratuities, and service charges. Tips and service charges paid to an employee are in addition to, and may not count towards, the employee’s hourly minimum wage.
Minor Employees: Employees who are 14 or 15 years of age may be paid 85% of the applicable minimum wage.
Next Steps For Employers
In order to prepare for the new year, employers should be reviewing and adjusting their payroll practices and procedures as necessary to ensure employees are paid the minimum wage rate for 2022. Employers should also be mindful that where federal or state minimum wage rates differ, employees must be paid whichever rate is higher.
