Article by Allie Tetreault, Content Strategist, Toast POS
Flashback to November 2016: Fast Food workers all over the country left their posts to strike for a livable minimum wage. With the help of non-profit grassroots organizations, like Fight for $15, protesters were able to help lawmakers in Minneapolis and Cincinnati recognize that the current minimum wage left millions of workers living below the poverty line.
Now, nearly 2 years later, we are seeing more and more states adopt laws that promise hourly workers a minimum wage closer to the $15 goal.
Between December 31 and January 1, 2018, new increased minimum wage programs were rolled out in 18 states including New York, as well as in 20 individual cities and counties who’s home states may not have decided to enact a statewide umbrella program. Certain states and cities also made adjustments to the legally mandated minimum hourly rate for tipped wage employees, which will largely affect restaurant staff.
Hourly workers in the Metro New York area can expect to see an increase in their paychecks this year. Read on to learn more about the new minimum wage laws going into effect near you and across the country as we speak.
Overview of the New Restaurant Minimum Wage
The federal minimum wage is still $7.25 per hour, with a tipped wage of $2.13 per hour.
As Nation’s Restaurant News explains, none of these changes are unexpected. In 10 states, the increases are part of a phasing transition to reach a certain level, such as $15 an hour. Here are the states affected: Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont, and Washington
Eight more states are increasing the hourly minimum wage to adjust to the annual cost of living: Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota
Additionally, Washington, D.C. and Oregon will see wage hikes in July, rather than January.
In Washington, D.C., the minimum wage of $12.50 per hour will increase to $13.25 per hour, and in Oregon the minimum wage of $10.25 will increase to $10.75, although wage rates are even higher for employers in the Portland area.
Seventeen more states and cities, including Massachusetts, New Jersey, Vermont, Illinois, Missouri, Michigan and Nevada, have campaigns underway to increase the state minimum wage, according to the National Employment Law Project.
2018 Minimum Wage Increases by State and City
Here’s a look at the 18 states affected by the increases on December 31 and January 1.
1. Alaska – $9.84 an hour. Note: State requires employers to pay tipped employees full state minimum wage before tips.
2. Arizona – $10.50 an hour, $7.50 an hour tipped wage
- Flagstaff, Arizona – $11 an hour
3. California – $11 an hour for businesses with 26 or more employees, $10.50 an hour for businesses with 25 or fewer employees. Note: State requires employers to pay tipped employees full state minimum wage before tips.
- Cupertino, CA – $13.50 an hour
- El Cerrito, CA – $13.60 an hour
- Los Altos, CA – $13.50 an hour
- Milpitas, CA -$12 an hour
- Mountain View, CA – $15 an hour
- Oakland, CA – $13.23 an hour
- Palo Alto, CA – $13.50 an hour
- Richmond, CA – $13.41 an hour
- San Jose, CA -$13.50 an hour
- San Mateo, CA -$13.50 an hour for standard businesses; $12 an hour for nonprofits
- Santa Clara, CA -$13 an hour
- Sunnyvale, CA -$15 an hour
4. Colorado – $10.20 an hour, $7.18 an hour tipped wage
5. Florida – $8.25 an hour, $5.23 an hour tipped wage
6. Hawaii – $10.10 an hour, $9.35 an hour tipped wage
7. Maine – $10 an hour, $5.00 an hour tipped wage
8. Michigan – $9.25 an hour, $3.52 an hour tipped wage
9. Minnesota – $9.65 an hour for businesses with annual gross revenue of $500,000 or more; $7.87 an hour for businesses with annual gross revenue of less than $500,000. Note: State requires employers to pay tipped employees full state minimum wage before tips.
- Minneapolis, Minnesota – $10 an hour for businesses with more than 100 employees
10. Missouri – $7.85 an hour, $3.93 an hour tipped wage
11. Montana -$8.30 an hour for businesses with gross annual sales of $110,000; $4.00 for businesses not covered by the Fair Labor Standards Act with gross annual sales of $100,000 or less. Note: State requires employers to pay tipped employees full state minimum wage before tips.
12. New Jersey – $8.60 an hour, $2.13 an hour tipped wage
13. New York – $10.40 an hour, $2.90 an hour tipped wage.
- NYC – large employers (of 11 or more) – $13.00 an hour, $8.65 tipped wage for food service workers, $13.50 for fast food workers (defined below)
- NYC – small employers (of 10 or less) – $12.00 an hour, $8.00 tipped wage for food service workers, $13.50 for fast food workers (defined below)
- Long Island & Westchester – $11.00 an hour, $7.50 tipped wage for food service workers, $11.75 for fast food workers
- Remainder of New York State – $10.40 an hour, $7.50 tipped wage for food service workers, $11.75 for fast food workers
According to the state’s Department of Labor, the minimum wage increase for fast food workers applies to any employee whose job duties include customer service, cooking, food or drink preparation, delivery, security, stocking supplies or equipment, cleaning or routine maintenance. An establishment is considered a fast food restaurant if it “offers limited service where customers order and pay before eating, including restaurants with tables but without full table service and places that only provide take-out service,” according to the state Department of Labor. However, the minimum wage increases only apply to restaurants that are part of a chain of 30 or more locations nationwide or in New York.
14. Ohio – $8.30 an hour, $4.15 an hour tipped wage
15. Rhode Island – $10.10 an hour, $3.89 an hour tipped wage
16. South Dakota – $8.85 an hour, $4.325 an hour tipped wage
17. Vermont – $10.50 an hour, $5.25 an hour tipped wage
18. Washington state – $11.50 an hour. Note: State requires employers to pay tipped employees full state minimum wage before tips.
- SeaTac, Washington: $15.64 an hour for hospitality and transportation employees
- Seattle, WA: $15.45 an hour for businesses with 501 or more employees that don’t offer medical benefits; $15 an hour for businesses with 501 or more employees that do offer medical benefits; $14 an hour for businesses with 500 or fewer employees that don’t offer medical benefits; $11.50 an hour for businesses with 500 or fewer employees that do offer medical benefits
- Tacoma, Washington: $12 an hour
What This Means for Restaurant Employers and Workers
The National Restaurant Association has advocated that raising the tipped wage and the minimum wage would “limit hiring, increase prices, cut employee hours, or implement a combination of all three,” according to CBS News.
Of course, there are many pros and cons to raising the minimum wage. A few pros are bridging the front- and back-of-house wage gap and lowering your restaurant turnover rate. A few cons are that your restaurant may have to raise menu prices, and thus reset guest expectations or cut employee hours to make up for the loss.