Connecticut recently became the first state in the country to increase the minimum wage to $10.10 per hour by the year 2017, the same rate that President Barack Obama has been seeking for the federal minimum wage. Connecticut lawmakers passed the historic bill on March 26, 2014, and it was signed into law by Governor Dannel Malloy the following day. Connecticut had just voted to increase the minimum wage last year, to its current level of $8.70 per hour.
The new law contains three major changes to existing Connecticut wages:
- The New Minimum Wage: The minimum wage will undergo phased increases as follows: to $9.15 on January 1, 2015; to $9.60 on January 1, 2016; and to $10.10 on January 1, 2017.
- The New Tip Credit: The law does not change the fact that hotel and restaurant owners are permitted to pay their workers a lower minimum wage because the employees’ wages are supplemented by tips, and it does not change the percentage of the employer’s share of the minimum wage. However, simply by virtue of the fact that the minimum wage is increasing, the new law automatically increases the employer’s share of minimum wages for hotel and wait staff from $5.69 to $5.78 in 2015, $6.07 in 2016, and $6.38 in 2017. The new law also increases the employer’s share of minimum wages for bartenders from $7.34 to $7.46 in 2015, $7.82 in 2016, and $8.23 in 2017.
- Apprentice Rate: The law does not change the existing rule that allows employers to pay learners, beginners, and people younger than age 18 at a rate equal to 85 percent of the minimum wage for their first 200 hours of employment. The apprentice rate will increase to $7.78 in 2015, $8.16 in 2016, and $8.59 in 2017.
The increase in Connecticut’s minimum wage may have a serious impact on employers who could be forced to reduce their workforce to meet the demands of the increased wages. The new law could pave the way for other states to increase their minimum wage as well. The federal non-partisan Congressional Budget Office recently issued a report predicting that raising the minimum wage nationally to $10.10 could cost as many as 500,000 jobs nationwide.
If you have questions about how the new law may impact your business, contact: