In January 2017, 40 states and jurisdictions across the country raised the minimum wage for small businesses. For many of those states, this increase is just the first step in a bigger plan to boost the minimum wage to $15 per hour within the next five years.
Nearly 4.3 million low-wage workers celebrate the change. And why wouldn't they? According to a 2016 report by the Economic Policy Institute, the minimum wage hasn't fulfilled its duty of providing workers with a fair and liveable wage since 1968. Meanwhile, the tens of thousands of small business owners affected by the raise are feeling torn.
On one hand, a higher minimum wage could result in lower employee turnover and better employee morale. In fact, a recent independent survey conducted by TSheets found that 1 in 3 business owners thinks increased wages could actually boost their business.
But on the other, raising the minimum wage could prevent business owners from hiring the additional help they need to grow. Even worse, it could force them to downsize. Nearly 14 percent say they would have to let employees go if the minimum wage were to increase in their state.
Chances are you have clients in both categories — those who see the rising minimum wage as a blessing and those who see it as a curse.
In either case, preparing for the imminent influx of minimum wage changes is key. After all, minimum wage rates can (and likely will) change at any time (as determined by the local chamber of commerce or department of revenue) and business owners have to comply. So there are a few things to be aware of.
4 Things Your Clients Need to Know to Comply with Minimum Wage Requirements
1. Their jurisdiction.
Your clients need to know the exact jurisdiction their business is in. Unfortunately, the postal ZIP code isn't always an accurate data point. On top of that, if your clients have employees in multiple locations or work remotely, determining the jurisdiction in which the work is actually performed can get rather tricky.
2. Their business.
In many states and jurisdictions, minimum wage rates vary based on the size of the business, employee benefits offered, industry, and type of work. For example, in places like New York City, minimum wage rates can change whether the worker is a server or a food worker. Business owners need to know where their business and their employees fall in the minimum wage spectrum.
3. Their employee time data.
Whether they're salaried or hourly, your clients need to know exactly how many hours their employees are working in order to ensure that they're complying with minimum wage and overtime requirements. With automated, cloud-based mobile time tracking, that information is readily available anytime you need it.
4. Their council.
The local chamber of commerce or department of revenue can have a council meeting and change the going rate of the minimum wage at any time, but those changes aren't always communicated very well. Business owners need to know how to stay on top of those changes and in the loop with their city council.
So, how are business owners expected to know all these things?
You guessed it. They turn to their accountants. At least, that's what I advise them to do.
3 Things You Can Do Right Now to Stay On Top of Minimum Wage Changes and Help Your Clients Comply
- Sign up to receive alerts for changes and rate raises through your favorite payroll software provider.
- Get on the email list for your local chamber of commerce and department of revenue.
- Keep an eye and an ear out for future rate changes — and communicate those changes with your clients.
When it comes to complying with minimum wage and preparing for upcoming changes, knowing exactly where your clients fit into the equation could mean the difference between a flourishing business and a downsizing disaster.
Frank Tresnak is Business Development Manager at Symmetry Software