How minimum wage increases may impact small business

Home News How minimum wage increases may impact small business

An increase in the minimum wage may also impact the pay to commissioned salespersons and salaried employees.

Dalton—Twenty states have raised their minimum wages, effective Jan. 1, 2021. New York’s increase was effective on Dec. 31, 2020. According to the WFCA, an increase in the minimum wage will impact the pay for most employees paid the minimum wage, but just because a retailer pays more than minimum wage does not mean it can ignore the increases.

An increase in the minimum wage may also impact the pay to commissioned salespersons and salaried employees, according to the WFCA. For example, a commissioned salesperson is exempt from minimum wage and overtime pay only if over half of the employee’s total earnings must be from commissions, and the salesperson’s total earnings from commissions and base salary adds up to an effective hourly rate that is more than one and one-half times the state minimum wage. Any increase in the minimum wage, therefore, will automatically increase the minimum total compensation required for commissioned sales.

Similarly, an increase in the minimum wage may impact the salary test for preserving administrative and management employees who are exempt from overtime, according to the WFCA. A number of states set the salary test as a multiple of the minimum wage. For example, in California a supervisor classified as exempt must be paid a monthly salary that is no less than two times the wages paid to a full-time minimum wage employee. There may be a number of other consequences from the increases of the minimum wage, such as increasing meal and lodging credits.

It is important for flooring retailers, contractors and installers to be vigilant in determining whether their state or local governments have increased the minimum wage and whether that increase impacts other salary requirements, the WFCA said.

Find a list of the states and the increase here.

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