Although I am a bit late, Happy New Year! With the new year comes house cleaning, finally picking up those fallen leaves in the yard, and oh yea, minimum wage rate increases. This blog will give you an update on the various new (or existing) minimum wage rates affecting employers throughout Maryland and elsewhere in the DMV.
As a refresher, the Fair Labor Standards Act (“FLSA”) sets the federal minimum wage rate at $7.25 per hour. That rate was last increased in 2009 and has become stale. In response, various states and localities have passed their own laws which set a higher minimum wage rate than what the FLSA requires. In many of those states and localities, that minimum wage rate increases annually (often on January 1st).
To be compliant with applicable wage and hour laws, employers need to pay the higher of the state/locality or federal minimum wage rate. Failing to pay minimum wage creates a high level of liability on employers as many state and local laws have severe penalties for failing to do so. Moreover, most laws allow for underpaid employees to cover their attorney’s fees. Meaning wage and hour lawsuits are a lucrative business, and plaintiff side attorneys are on the hunt for businesses that violate the law.
The chart below provides a brief overview of what rates may apply to your business.
All counties in Maryland follow the state minimum wage except Montgomery and Howard Counties.
Large Employers (15 or more employees)
$13.25 per hour
Small Employers (14 or fewer employees)
$12.80 per hour
Tipped employees in Maryland may be paid $3.63 per hour as long as the employees earn at least $30.00 in tips per month, and as long as the total amount of combined tips and hourly wages earned meets (or exceeds) the State’s applicable minimum wage.
For more information on paying tipped employees in Maryland, here is a recent blog article I authored.
Large Employers (51 or more employees)
$15.65 per hour
Mid-sized Employers (11 to 50 employees)
$14.50 per hour (through 6/30/2023)
$15.00 per hour (beginning 7/1/2023)
Small Employers (10 or less employees)
$14.00 per hour (through 6/30/2023)
$14.50 per hour (beginning 7/1/2023)
Tipped employees in Montgomery County may be paid $4.00 per hour as long as the employees earn at least $30.00 in tips per month, and as long as the total amount of combined tips and hourly wages earned meets (or exceeds) the County’s applicable minimum wage.
Employers (15 or more employees)
$15.00 per hour
Smaller Employers (14 or fewer employees)
$13.25 per hour
Howard County does not currently have a law that varies from Maryland’s state law on tipped employees, meaning employers in Howard County may apply Maryland’s law on compensating tipped employees ($3.63 per hour). However, on January 1, 2025, food service facilities in Howard County with 15 or more employees will be required to pay tipped employees $15.00 per hour.
$16.10 per hour
$18.06 per hour + $4.60 per hour fringe benefits (through 6/30/2023)
$19.39 per hour + $4.80 per hour fringe benefits (7/1/2023-6/30/2024)
Employers Subject to the Living Wage Act of 2006
$16.50 per hour (through 6/30/2023)
$17.00 per hour (beginning 7/1/2023)
In 2022, the District of Columbia passed Initiative 82 which gradually phases out the tip credit employers can claim for minimum wage. In 2023, tipped employees minimum rates will change twice, and then increase annually each July until entirely phased out. In 2023, tipped employees must be paid:
$6.00 per hour (beginning 1/1/2023)
$8.00 per hour (beginning 7/1/2023)
$10.00 per hour (beginning 7/1/2024)
All counties in Virginia follow the commonwealth’s minimum wage rates.
$12.00 per hour
Tipped employees in Virginia may be paid $2.13 per hour as long as the employees earn at least $30.00 in tips per month, and as long as the total amount of combined tips and hourly wages earned meets (or exceeds) the Commonwealth’s minimum wage.
If you have any specific questions on the wage and hour laws that apply to your business, or how to implement these changes, please do not hesitate to reach out to any of the attorneys at Kollman & Saucier, P.A.