As a small business owner, it’s essential to stay up to date on changes to HR laws. Depending on what state you run your business in, your payroll may need to adjust for a minimum wage hike in 2025. Additionally, many municipalities have specific minimum wages.
When the minimum wage changes, it can cause compression in your company’s wages. Many small businesses can’t afford to pay all of their workers more. However, this type of situation has to be handled with care.
In a recent Mission to Grow interview, Mary Simmons, Asure’s vice president of HR consulting and compliance, discussed why it’s important to be transparent with high-earning workers about why pay increases can happen for everyone. “You need to get ahead of this, so you don’t have a mass exodus in January. I can tell you that by saying nothing you will hurt your culture and probably significantly hurt your turnover.”
The best way to get ahead of the minimum wage increase is through planning. By knowing what to expect and when it will happen, you can ensure your workers are kept in the loop and your company is fully prepared.
State-by-State Minimum Wage Changes for 2025
In 2025, the following states will have a change to their minimum wage laws.
Alaska
On January 1, 2025, Alaska’s minimum wage will increase to $11.91. It will jump to $13 by July 1, 2026.
Arizona
Arizona’s minimum wage will increase to $14.70 at the start of 2025. Employers in the state must display the state’s minimum wage poster in a prominent location.
California
In California, the minimum wage will be increased to $16.50 per hour on January 1, 2025.
Colorado
Colorado residents must be paid a minimum wage of $14.81. However, Boulder, Denver, and other municipalities have higher minimum wages.
Connecticut
In Connecticut, the minimum wage is set to increase to $16.35.
Delaware
Delaware’s minimum wage will increase to $15 in 2025. However, tipped employees are excluded from this increase.
Florida
Until the final planned increase in 2026, Florida will raise its minimum wage by $1 on the last day of September. This means the minimum wage will be at $13 at the start of 2025. On September 30, 2025, the minimum wage will jump to $14.
Illinois
The state of Illinois will raise the minimum wage to $15 in 2025.
Maine
In 2025, Maine’s minimum wage will be jumping to $14.65.
Michigan
Thanks to a summer ruling by the Michigan Supreme Court, Michigan’s minimum wage will be increasing to $10.56 on January 1, 2025. On February 21, 2025, it will change to $12.48.
Minnesota
Regardless of size or type, the Minnesota minimum wage will change to $11.13 an hour. However, workers under the age of 20 can still be paid a 90-day training wage of $9.08.
Missouri
Missouri passed Proposition A in November 2024. The legislation is set to increase the minimum wage to $13.75 in 2025 and $15 in 2026.
Montana
For most employers, the Montana minimum wage will increase to $10.55 per hour. However, businesses that aren’t covered by the Fair Labor Standards Act can pay a minimum wage of just $4 an hour if the company earns less than $110,000 per year. The federal minimum wage may still be required for these low-revenue businesses if they are producing goods and services that will be moved interstate.
Nebraska
On January 1, 2025, the minimum wage will be increased to $13.50.
New Jersey
New Jersey will be raising its minimum wage to $15.49 per hour at the start of 2025.
New York
In New York, the minimum wage will increase by $0.50 to reach $16.50 per hour. It will jump by another $0.50 in 2026. After 2026, the New York minimum wage will increase each year according to the three-year average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the Northeast Region.
Ohio
Ohio will raise the minimum wage for non-tipped workers to $10.70 per hour. Tipped employees will also get a minimum wage increase to $5.35.
Rhode Island
In Maryland, the minimum wage will become $15.00 per hour in 2025.
South Dakota
South Dakota will start paying non-tipped employees $11.50 in 2025. Meanwhile, tipped workers will be paid $5.75.
Vermont
On January 1, 2025, Vermont will be increasing its minimum wage by $0.34 to $14.01 per hour.
Virginia
Virginia’s minimum wage will jump to $12.41 per hour in 2025.
Washington State
In 2025, Washington’s minimum wage will be $16.66 per hour.
Municipalities May Have Different Minimum Wages
For small businesses, it’s important to keep in mind that many municipalities may have higher minimum wage laws. When there are multiple minimum wage laws in effect, you must pay employees the highest one. For instance, Washington’s state minimum wage is $16.66, but Bellingham has a minimum wage of $17.28. As a result, workers in Bellingham must be paid $17.28 per hour.
Similarly, California has a minimum wage of $16.50 per hour. However, San Francisco will have a minimum wage of $18.67 until June 30, 2025. For an organization to be in compliance with the state, municipal, and federal laws, workers in San Francisco must be paid the higher rate of $18.67 per hour.
A Payroll Provider Can Ensure Your Compliance
For small businesses, tracking changes in minimum wage laws can be challenging. A payroll expert, like Asure, can handle minimum wage laws and other legislation for you. With the right support, you can let someone else deal with payroll so that you can focus on running your business.
To learn more about minimum wage legislation and upcoming HR changes for 2025, reach out to Asure’s team of small business payroll and HR experts today.