Earlier this morning (Friday, May 17th), the state Senate approved of a measure that will increase the state’s minimum wage to $15 per hour by 2023.

House Bill 5004 (as amended) can be downloaded here.

The bill had previously passed the House and now moves to the Governor’s office where he is expected to sign it.

There are several key components to the bill that are important for employers.

YEARLY INCREASES TO MINIMUM WAGE

The bill increases the minimum wage from the current level of $10.10 per hour as follows:

  • $11.00 on October 1, 2019
  • $12.00 on September 1, 2019
  • $13.00 on August 1, 2021
  • $14.00 on July 1, 2022
  • $15.00 on June 1, 2023

But perhaps even more importantly, beginning January 1, 2024, it indexes future annual minimum wage changes to the federal employment cost index for “wages and salaries for all civilian workers”.  (As of the March 2019 ECI, the compensation costs increased 2.8 percent, by way of example)

TRAINING WAGES

Starting October 1, 2019, the bill also changes the “training wage”.  It eliminates the training wage exceptions for “learners and beginners” and limits the training wage to only those under age 18 (and excluding emancipated minors too).  The training wage has to be the greater of $10.10 per hour or 85 percent of the minimum wage.  It also only allows for the training wage to be paid in the first 90 days of employment, rather than the first 200 hours.

In the following year (October 1, 2020), the bill bars employers from taking any action to displace an employee over 18 to hire people at the training wage.

TIP CREDIT

The bill freezes the employer’s share of the minimum wage requirement for hotel and restaurant staff who customarily receive tips.  The current levels will thus remain the same — $6.38 for hotel and restaurant staff, and $8.23 for bartenders.  In other words, so long as the employees’ tips make up the difference between the increasing minimum wage and the tip credit, employers can still rely on those tips to “pay” the employees.

POTENTIAL FOR FREEZES

Lastly, the bill does allow the Labor Commissioner to recommend that minimum wage increases be suspended after two consecutive quarters of negative growth to the state’s GDP.

CONCLUSIONS

Minimum wages will become a reality for employers in Connecticut.  Employers should review all employees at or near those levels to ensure compliance. With the first change coming later this year, employers will also have to reconfigure their budgets accordingly.